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Warren Buffett of the Philippines' Stock Market Investing Tips - An Interview by Truly Rich Club Founder Bo Sanchez

This one is something NEW from the Truly Rich Club. Warning: This will be the first and last I am going to share an interview like this from the club. If you want more and future interviews, then you should join the Truly Rich Club, Now.

Here's the interview transcript of brother Bo Sanchez with COL Chairman Edward Lee. Let's read and learn from them.  
Bo: Hi everybody! This is Bo Sanchez of the Truly Rich Club. I know a lot of people are asking about the stock market. So we will do this regularly, every single month. We will pick the brains of my mentor, our mentor, Chairman Edward Lee. He’s someone who’s been in the stock market for 30+ years. And with that incredible experience, he will give you that wisdom.We’ve been receiving questions from TrulyRichClub members and they’ve been asking the question, “Am I doing something wrong? Why is my portfolio all negative? Why is it all red?” And so we’re going to get the answer from the man himself, Edward Lee.

Edward: Well, the problem with most people is that when they’re investing in the stock market they don’t differentiate between long-term and being short-term. I think when you have a short-term pullback like this, it really scares people because you see your portfolio go down. If you’re investing for the long-term, you should look at it as a great opportunity to be able to accumulate all these good companies at market price. You should not be doubting about the long-term strategy. The discipline should be there. You should continue to deploy on all these companies, especially during this
difficult time.

Bo: I think what happens Edward is that sometimes they question, am I doing something wrong, or is the system wrong. 

Edward: That’s right. It’s all about validation. A lot of times, they know that stocks outperform all other asset class. It has been validated so many times from the 1920s till today. The stock market is still high even going through a lot of depressions, a lot of oil crisis, a lot of deleveraging. Today the US Stock Market is still in a new high. The Philippines with so much coup d’etat during Martial Law, today the market is still P6,200-P6,300. It’s still way, way high compared to what it is before. You know that the answer is really correct, that stocks outperform all asset class and stocks is still the best way to go. Because if you’re looking for
emerging market, you’re talking 14-15 percent growth every year, much, much better than your regular 1 to 2 percent interest rates.

Bo: So it’s better than all other assets like real estate, the banks, the fixed income…

Edward: Compared to inflation. So they have to stick to it. That’s why it’s called a program, an investment program, that they continue to deploy and the best is to buy all these good companies with dividends and reinvest these dividends to the stocks. We think that because of the K Trade in the U.S.

Bo: You have to discuss about that because somebody was asking me a very good question. She said, “The stocks went down even before Yolanda. People are saying Yolanda is the one that made the stock market go down.” So please explain why the stock market went down even before Yolanda.

Edward: Before the talk of this tapering, what happened was the 10-year U.S. Treasury started moving up from 1.6 to 1.8 percent. Today it’s around 2.7-2.8 percent. This is a long-term treasury bill as compared to the short (the short has not moved). What happened is that the Philippines’ 10-year is about 3.3-3.5 percent today. In comparing with the U.S. which is 2.7-2.8 percent, there is really no more meat for people. So what happen is that the money flows out from the emerging market going back to the developed market because of the long-term interest rate which has moved from 1.6 to almost 3 percent today.

Bo: So what you’re saying Edward, just to simplify for people who don’t have this background—that includes me—is that foreign funds that were invested in the stock market because of that change in the increase of the 10-year Treasury in the United States, they started pulling out their money from our stock market. So that’s why we have this depressed stock market.

Edward: Yes. Yolanda is just an excuse for us here in the Philippines. But for the U.S. fund managers, they’ve been selling even prior to Yolanda. Now, please TRC members must understand, the drop is not only in the Philippines. It includes Indonesia, it includes Thailand. So it cannot be Yolanda. Yolanda is just for Filipinos to basically get scared. 

Bo: So that’s bad news in a sense that foreign funds have left the Philippine Stock Market but it’s good news for you, for me, because we’re long-term investors. And what Edward is saying, take the opportunity. Every month, we follow a program. It’s called Strategic Averaging Method (SAM) and every month you’re supposed to buy. So when your whole portfolio is red, it’s good because we’re long-term.

Edward: What is really key here is that the emotional cycle investing is always in play. So when prices go down, people start doubting. Maybe they’re doing something wrong. But what they don’t understand this is part of the investment promo for the long-term and for short-term, it always go through this volatility. That’s one of the reasons why we always make the comment of Peter Lynch that for the short-term, there is really no correlation. Meaning success of the companies’ performance and success of the performance of the stocks are not correlated. But long-term, it’s a 100 percent correlation based on earnings, earnings, earnings. As this company continues to generate more earning moving forward then it’s just temporary pullback, set back, but for us, it is the best time for us to continue to deploy. I think what we need to tell them is that the maximum really is only 20 percent of their savings that goes into stock market investing. Because if they do more than that, they will really get scared. They will have their stomach ache and they will probably sell at the bottom.

Bo: Edward, one last question and I think this is the question for all our viewers that have it in their minds. “Okay, Edward, we’ll really try to deploy now, buy now, close our eyes and just buy no matter how red it is. Question: How long will we see it finally going up? Will we finally see it going up a few months?”

Edward: Well, the sad part about this is that we have an earning’s peak. We have the highest earning for the Philippine Composite Index in 2013 and the problem is that by 2014, you will have a single earnings growth. Meaning, the estimate is about 6.5 to 7 percent in terms of earnings of EPS growth for the Philippine Composite Index. Because of that we believe that the market will just continue sideways for about a year, nine months to a year. That’s supposed to be good for us because when we have the sideways environment, whatever we’re deploying today, we will have a lot of time to deploy further because we believe by 2015—because this year is a high based and next year will be a low base—so going to 2015, we will go back to the double digit earnings growth. So 2015 should be the best year but you need to accumulate this time.

Bo: So that’s it. From our great mentor, Edward Lee. You know we’re foreseeing a sideways movement for December and for one whole year which is fantastic for all of us because that means you have to keep on buying every single month. And then, I want you to go to your friends, your family, now is the time to start investing because by 2015, the stock market will start going up. That’s our projection, that’s the projection of Edward. So they’ve got to accumulate now and then we’ll be all smiling after all this sideways movement.


So there you have it. The interview of Truly Rich Club founder, Bo Sanchez to Sir Edward Lee, the founder of COL financial. 

To get their future insights about the stock market in the Philippines, you can join or subscribe and be part of the Truly Rich Club.  

Interested in Stock investing in the Philippines?

Join the Truly Rich Club.

For more information about the Truly Rich Club, go to this link http://bit.ly/BoTRC or hit the get instant access button below.
The Truly Rich Club is an online private membership group founded by Bo Sanchez. It’s called “Truly Rich” because the subscribers are taught not only to be financially free and wealthy, but also how to be blessed in ALL areas of life: whether in the relationships, career, spirituality, health, and of course in financial life.

More Success and Happy Investing,

PS.  YOU, yes YOU! Just in case you have not read this yet, Read this now... 21 Reasons and Benefits Why I SUBSCRIBED To The Truly Rich Club and Why YOU Should Too  a lot of people also commented on this review, you can read their comments too. Thanks and God bless.

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