Hang on, this is quite a lengthy post but if you are a determined investor and you want to really take advantage of reaping huge gains from the stock market, better read, study and learn from this man.
I met Marlowe thru an online facebook group pinoyinvesting. He entertains questions from newbies in investing and I am one of the many whom he had helped understand stock investing. I thought he might be also open to an online interview to benefit other new investors to understand stocks.
Our first featured stock investor is Marlowe Alain V. Tadili, a married man with a full-time career as a Software Engineer. He derives most of his finances from employment but has now started picking up the fruits from stock investing. Get to know him more at his Facebook Profile Page and interact with him at this Facebook Group.
I asked few questions and unbelievably, he responded with generous answers. He was very candid but I felt the sincerity and his strong desire to share his experiences and his life lessons which made him a seasoned trader / investor, a successful person and a good family man. Learn from him as he journey towards becoming one of the successful investors and mentors in the field of stock investing.
So, how and when did you start investing? What prompted you to start investing?
I have been wanting to invest since my childhood days when I was still in my elementary and highschool days. I hired friends who are willing to sell pandesal and balut in the streets for me. I remember I also used to ask my mom to buy chichirya in Balintawak so I can sell it to classmates at a fair price so they can resell it also to our classmates. When I was in college, I set-up an electronics shop, assembled antenna and find middlemen to do the selling for me. I also worked a part-time job as a bagger in SM Supermakets and invested my salary in poultry and piggery through a joint venture with my mom. After I graduated from college, I gave up my investing passion because I thought after I became a licensed engineer money will easy pour into my pocket. Well, I was wrong. : )
I got married at the very early age of 22, just 2 years after I graduated from college. We had lived a very simple life and started to feel the lack of money when our 3rd cute baby came in to our family. I am a very optimistic person, so I invested in a computer shop and providing medical supplies as a capitalist partner since I am busy with my career as software design engineer in a management capacity of a semiconductor company.
All our savings and invested money vanished instantly. We even sold our first family car when my father-in-law suffered from stroke. So, my wife and I started again sometime last 2008. I gave up my management position in my previous company to find a high paying job but this time in an IT industry. Just last year, I was promoted as a manager so I expected our finances to improve and feel the comfort in our lifestyle, however I noticed we are still getting the same problem with our finances.
Month of May last year, that’s the only time when I investigated where exactly the root cause of our financial problems were coming. We found out budgeting, excessive expenditures and not saving habitually were the main reasons. My wife was the one who had been handling our finances from the very beginning, so we need to change and restructure our system. We agreed our new system was like, I will handle her salary for my personal expenses and my salary for our family expenses (basically we just exchanged our ATMs). In short, I am now involved in handling our finances.
In just 3 months, after we have changed our system, I was surprised seeing savings from our salaries growing bigger. I became interested in investing again in September. This time, our money for investing now comes from our salaries different from the previous years where the usual source is Christmas bonus and perks. At first, I wanted it to be completely passive so I was thinking of MF and UITF until I landed in the facebook group of Omeng Tawid’s Investing in the Philippine Stock Market – Tips and Tricks http://www.facebook.com/groups/pinoyinvesting/ which is obviously about stocks investing.
So, I started learning about stocks in September and immediately jumped in last October and the rest is history. : )
Do you still remember what were your first investments (mutual funds, time deposits, stocks, real property, etc.)?
I think real property because I consider our house and lot as investment too, I loaned money through in-house financing to buy a new house for my family last 2009 and paid everything to finished my obligation last September 2012 prior to getting into stocks investing.
They say that before investing, it is important to plan your investments. You will gain more if you have a plan. So in your experience in stock investing, what do you think were your effective entry and exit strategies?
Planning plays a critical role on any investment vehicles same goes in business. Before I went into stocks investing, I already created plans and systems which I should follow blindly. Review and assessment of the plan in a quarterly basis is a must so I also placed metrics to measure my defined system’s performance. Thus, giving me direction whether to improve or sustain it.
At early phase (September), part of the plan was to study (remember at this point my objective/purpose has been defined already), I study hard during weekends and I alotted time 2-4 hours every weekdays without compromising my regular job. Part of the plan is to set deadline, my deadline was one month learning curve so by October I should start to put my money in the stock market. Next, I browsed all potential PSE listed companies that I believe are safe to invest with. See, proper scheduling matters even in the early phase of my learning in stocks investing.
Mixing value investing and lump-sum strategies were my initial strategies that I intend to execute. When I was still studying stocks, I don't have COL that time yet so I compute my own FV in my very own way.
Part also of my plan is to invest 60% of our savings, and my money intended for a new car, a gift for my wife (coming from my December bonus) was changed to a second-hand car instead so I can invest the rest to stocks.
October came, opened my COL, one week learning curve for the platform, the following week is to populate my money to my stock picks.
I already laid out my plan when is my entry and exit points before I put my money to particular stocks. I don’t ride in rising stocks because of hype. My strategy is to put it to stock that has big potentials before market sees it and hype it. That’s how I found AGI, MEG, MPI, CPG, EEI, FPH, BLOOM, GREEN/ANI, GTCAP, etc. last October. The strategy for exit is upon hitting my own TP or my defined FV in quarterly basis too. I don’t calculate FV for one year or 5 years rate of return, I wanted it to be on a per business cycle only.
January 2013 came, time for quarterly review and need to rebalance my portfolio. Also time to find new candidate list for 2013 (prepared it on December) so I added HI, SGI, JGS, SMDC, PF, ANS and so on. Also I thought of corrections might happen so I mixed 2nd and 3rd liner in my candidate list.
I have candidates list but only holding maximum of 6 in my portfolio. There are times only 1 for all-in cases when I feel my confidence level is very high like when CPG, SMDC strikes.
I have already secured my profit for Q1 which I am actually suppose to do by end of March but since I am happy with my gain (32%) for Q1, I am now preparing for March and Q2 potential stocks..
What's your portfolio composition normally? Do you keep a certain percentage of your total portfolio to be in a certain industry or that type of company at certain points / time?
I mixed BC, 2nd, and 3rd Liners in my port and focused on 2 sectors only at a time. The allocation sometimes varies BC (20%), 2nd (20%), 3rd (60%) unlike last Q4 it was like BC(60%), 2nd Liner (30%), 3rd Liner (10%).
I am bullish for property for Q1 which I call it my core driver and mixed it with power/infra as my parking lot while waiting for shifting to new stock.
In fact, I have already created my plan which stocks that I will invest into for the whole 2013 per quarter. For Q2, I will be shifting to consumer as my core driver and utilities as my parking lot.
So what do you consider yourself, a trader or an investor? What is your take between a trader and an investor? Do you see yourself doing both? Which do you think would give the most gains or headaches?
Technically, I should say yes I am a seasoned trader because my holding period should only last for 3 months at most. I may also want to consider myself as pseudo investor because I am investing to good companies only and my picks are based on solid fundamentals.
But I have one case of -11% loss because I traded that is not in my plan and not even in my candidate list. I thought I am ready to do short trade at my current level of TA. Well, I have proven, it’s not really my arena.
I think swing trader or short traders require amount of their time to monitor the market price action. In my case, I don’t since I have daily job to attend to. You would be surprised if I tell you, I am busy with other portfolio than mine especially those people who are sending messages asking about what my take on their chosen stock (even speculative stocks).
Long term investor doing EIP or peso cost averaging on the other hand should give you more peace of mind and it is completely a passive investing. Thus, allowing you to focus on your regular job where your source of your income is coming in.
I guess potential gain is relative to skills of the trader, which of course exposed you to higher risks . Unlike in long term and doing peso cost averaging, the risk is being populated as you are buying in regular basis.
Investing should not give you headaches or worries, it should give you pleasure if you know what you are doing. If you are into passive, why worry of red market today if you plan to use your invested money in the future, of course choose solid companies only that you believe will last for 100 years.
What I am sure of is headache will strike you if you are doing trading in speculative stocks without setting your entry, exit and risk/reward. In short, you don't have a trading plan. I think you need to invest learning on what normally traders study like Technical Analysis and books for traders.
To date, what have been your acquisitions from your investments that mostly came from the gains? What other acquisitions do you plan to get from investing gains?
Recently, I just took profit from my stock investments and bought complete set of fine furnitures for our new house as a surprise gift to my wife after the adversities we had been through from 2005 up to 2008. Also looking forward to buy a new car hopefully before the end of this year to replace our second-hand one that I bought for my wife last Christmas.
Of course, investing is not always about gains, there are times when the tides are against you. How do you manage your losses? Do you do cut-loss / stop-loss at percentages? Or do you let it fly and pray that eventually paper loss would turn back to a profit?
When I started last October, considering I was new to stock investing I already committed some mistakes but I am not actually worried because the system I created dictates me that I should sell even at a loss. I bought ANI but had observed it was going to down trend so I sold it immediately, same thing happened to LOTO which until now is in consolidation. The funny thing, just recently I bought CHIPS which was actually not in my plan and not in my list so I lost -11%. The story why I invested in CHIPS was, we were arguing with my friends about the staircase pattern which I am not actually good at charting, I dare to trade to prove that I am correct and hoping for instant gain but yes I failed.
There were also instances that I don't cut losses like what happened to BLOOM, I am pretty sure this company is promising, I profited when I bought it at 11/share when it was still in consolidation and sold it when it soared to 14.5. I re-entered at 14.1x but it stayed at 13 even went down to 12.x giving me -10+% loss for the last 2 months but I still kept it since I already planned to hold it until end of Q1.
I don’t normally sell when correction time comes as long as the company’s fundamentals are still intact. My magic number of cut loss is -8%, that may only be true if the potential reward is at least 16%. I basically assess the price swing for me to be able to know if it is worth to take risk to get the reward.
What would you suggest those who are really beginner to investing? Where should they start? What type of investment should they acquire first?
I always emphasize they need to set solid objectives, goals, purpose first (not the motherhood one) matching their time horizon. That simply translates to invest portion of my savings for my kid’s college enrollment by 5 years from now. Same way for trader, I need an additional source of income by doing part time trading job in stock market. So I need to sharpen my skills for that kind of work.
For those who don't have time and wants passive investment, go for UITF or MF, let the experts do the investing on your behalf.
If you really want to go into stocks, I strongly suggest to go to passive only if you don't have time to monitor the market especially for those who are relying heavily on their regular jobs. They must love their jobs with passion and treat it as their business too. But if they wish to be a bit aggressive, follow COL’s Investment Guide (or their broker) and do value strategy method where BBP (buy below price) and FV (fair value) are important parameters that they need to be aware of. Or better subscribe to TRC (truly rich club) for SAM (strategic averaging method) strategy.
For those who wish to become a trader, they need to study Technical Analysis and has to set plans for entries/exits and risk rewards. They should remove their emotions to the equation as this will trigger wrong decisions.
Those who wants to be a true investor in mind or has passion to know stocks investing in the context of business, they need to study Fundamental Analysis and learn the company’s business as much as they can. Learning FA doesn’t mean the strategy should be focused on value investing, they should also know the growth and income/dividends strategies. Same goes with real business, they need a very long patience before it kicks in. The non-tangible benefit that I am enjoying is the knowledge that I can also apply in my current job given my management role. I can now anticipate the directions of our global corporate executives by just reading our own financial reports and public disclosures.
Also, don’t focus your attention on amount of gain or loss, be more concerned on percent (%) even if you are dealing with small amounts. So that when time comes that you will be dealing with huge amounts like millions of pesos you won’t be distracted with the figures.
Again, it doesn’t always follow that his or my strategy will work for you. Find your own style which is comfortable to you. Strategy should match your personality, therefore it is all about you. Knowing your personality is very important.
Final shoutouts, greetings, and/or word of advice to investors and soon-investors. Hot stock picks maybe? Haha.
I wish you all the fortune in life. Let’s increase the number of local investors here in our country for the sake of our future generation. Please when you become successful or even if you are still at the stage of learning, share your knowledge to others so we can fast track the learning thus we can multiply ourselves exponentially.
I don’t recommend any stocks but I can share my opinion on your chosen stocks. Just to let you know, others think that I am an expert, that’s funny because I am not a financial analyst, I don't work in a brokerage firm, I am not a businessman with success story to share. I am still a newbie, remember I just started 5 months ago.
I am just a regular guy like you, I'm just enjoying and sharing my views on stocks investing.
See friends, he just started 5 (not years) but 5 months ago and he has acquired furnitures for his family and is looking for more. Some may think that those can easily be acquired but isn't it much better if you acquire it from the money who works for you?
Dream now but start learning. Learn now and start reaping.
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