[Investor's Profile] An Interview with Marlowe Alain Tadili and How He Got Furnitures and More Fom Investing in Stocks

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.

Investing in Mutual Funds Made Easy

What is a Mutual Fund?  
    
A Mutual Fund is a company that pulls together money from people and companies and invests it in stocks, bonds or other similar assets.

Any investor in a mutual fund earns from the increase in price of a specific fund through appreciation and from the dividends declared by the company where the pool of fund is invested.

Why Invest in a Mutual Fund?

One main reason for investing in a mutual fund is to preserve your capital.  As posted in my article, my very first investment, inflation eats up our savings.  Our savings declines in purchasing power over time.  Another reason for investing is for long-term goals like retirement fund, education fund, vacation, dream house, etc.

The main argument for this is that generally, if we maintain our investing for long period of time (i.e. 3 years, 5 years, 10 years , etc.), it will potentially generate increase in value because companies where our funds are invested will similarly increase in value.  This concept also holds true in value investing for stocks of blue-chip companies.  But, income from investments in mutual funds may also be possible in short-term basis.  As I mentioned in my previous post, I earned 40%+ in a mutual equity fund due to investment timing.  You will learn this as soon as you start investing.  Remember, in investing, whether it's buying properties or investment products, you earn from the time you buy not when you sell.

What are the Advantages of Mutual Funds?

• It is managed by investment professionals
• Money are invested in several companies which manages risks of losing capital
• You have the ability to be able to pull-out your funds in case of emergency
• There is a strong potential for high returns or income
• It is easy to start and easy to maintain

So, How Much Does an Investment Cost?

There are companies offering as low as Php 5,000.00 initial investment and minimum additional investments (at your choice of frequency) of only Php 1,000.00.  In my favorite bank, it's Php 10,000.00 initial investment and Php 1,000.00 minimum per additional investment.

Anyone can do it even students.  Let's illustrate, assuming you're a student with an allowance of Php 100 per day.  For 20 days, assuming you can save Php 50.00, savings per month is Php 1,000.00.  Wait until 5 months and your good to go to make your first step towards investing.  That would be one of the best decisions you'll ever make.  First, you'll be able to control your fear of losing money.  Second, you will be able to potentially have more.  And last but not the least, the potential to start and grow your dream business.

Financial freedom is achievable for everyone who has the information and who makes the necessary action.

First Step - My Very First Investment or Not At All

I had my very first investment in the form of a time deposit.  It was held in a rural bank which offered a much higher rate than most commercial banks.  It's 4.25% per annum enough to buy me a new cheap shoes, memory cards for psp, or a part of my desktop computer back then.  : )

Why time deposit?

Why it isn't an investment at all?

Why not other investment products?

I felt it was the safest way to let my money earn.  I was afraid, very afraid that I would lose my money which I worked so hard for years in companies.  I had no idea what am I about to do.  In fact, no one gave me advices what to do with my earnings.  I just researched and found that I would earn something like 4.25% per annum on that local bank and believed it was good considering I don't have to do anything.  There was no need to monitor or to check the banks what's happening with my money.

Years went on, my money is still with that time deposit.  I don't know why I postponed researching ways to make my money grow.  I didn't know that inflation basically eats up my savings/time deposit.  That is the time I finally thought that time deposit may be an investment but not an investment after all.

It took probably about 5 years when I finally heard about mutual funds, uitfs and stock trading.  That long period of time wasted waiting my money to lay eggs when in fact I had the chance to make my money lay golden eggs.  It took another 2 years before I finally plunged in and invested my money in mutual funds.

The money I have in time deposit is probably preserving its purchasing power at a certain point but I could have additional income if I only took the risk and opened up my mind in investing.  This is one of the reasons why I am sharing what I've learned from those years.  I encourage everyone to try investing and start with the more secure and safe ones.  You'll feel the thrill and be happy knowing that your money is working for you.  Just to give you a background, my first investment in mutual funds (equity) earned me 40% while the bond fund earned me 8%.  You do the math based on the amount you wish to invest.

Click here to review your possible investment options.  Remember, I don't advice to invest now and expect to have the same results like mine.  I just wish you to start considering and start with an amount you feel comfortable and willing to take risks and rewards with.

The Vehicles - Investing Options and Features

There are a lot of investment options available offered by banks, fund managers, government, companies, insurance companies, and related institutions.  The options are limitless.  It's just a matter of opening up our minds into the possibilities of earning more from our income.  Let our money work for us.

Investment products suit people depending on their needs and lifestyle.   Below are the available investment options for everyone:

Special Savings and Time Deposits
     These are always available in your banks.  They vary in amount to invest but there are banks that offers as low as Php 10,000.00 with a special rate already.  Normally, interest income would vary from 1% to 4%.    Generally, these are safe investment instruments since these are bank products and are therefore covered by PDIC.  Special savings vary depending on the bank and the amounts.  Remember, PDIC has a deposit-insurance ceiling of Php 500,000.00 per depositor.

Unit Investment Trust Funds (UITF) / Mutual Funds
     Nowadays, these two type of investments are generally similar.  They differ as to who manages the funds.  Banks normally offer UITFs while mutual funds are offered by investment companies but are at the same time partnered with a bank.

     They are generally categorized into three types:

• Bond fund - invested in government securities, treasury bills, bonds, notes.  Risk is very low since they are backed-up by government.  You earn from the stipulated interest rate from the bond usually ranging from 5% - 8% annually.  Low risk, low income.
• Balanced fund - invested in stocks, government securities, treasury bills, bonds, notes.  About 50% of the fund is invested in stocks and the rest are managed like the bond fund.  Simply put, this is the middle category.  Potential income could go higher than the bond fund but risk of loss of capital equally applies.
• Equity fund - invested heavily on stocks and a few bonds.  High risk, high income.  Good for people who are aggressive and willing to take risks in hope of bigger income.

     There are variations of funds.  You just have to check out the fund prospectus so you will know where the product is actually invested.  Ask your favorite bank or investment company if they have product similar to of the above-mentioned items.

Stocks

     Investments are managed by stockbrokers notably Citiseconline.com and BPITrade.com.  Your money is specifically invested to your chosen companies.  The potential for income is endless and so as the loss of capital.  My strategy at the moment is to invest only in blue-chip companies for the long term.

Life Insurance
     You basically pay premiums and your beneficiaries will get an amount when you die.  Not the investment you wish to earn from right?  However, this is a must.

Pension, Educational and Memorial Plans
     I don't really know where to invest in companies offering these types of products.  I still have a phobia on this.

Healthcare and Hospitalization Plans
     A good instrument in ensuring your medical bills are managed wisely.  But, if you feel that you're healthy and has a lifestyle free from bad habits, then by all means, enjoy the one offered by the government.

Real Estate Investments
    If you already have sufficient courage in investing, real estate investments are good passive income source.  The way they do it is that you buy a property loaned from a bank and analyzed if rental income could cover the amortization the property needs to pay every month.  Sounds easy?  I don't know in actuals yet.  I have yet to invest on my first property for renting.
     Another strategy for people who have huge savings is to buy a foreclosed property, have it renovated, then sell it out.  You may need a million or two for starting.

Business and Other Investment Opportunities
    Of course, the best investment you could do is to run a business.  The potential to be rich is there but not everyone has the capacity, the drive, the perseverance, and patience to run one.  You may also resort to franchising but you must take a good look whether a company is really a franchising business or a seller of a business and products.

These are basic information for you to start thinking whether one investment product fits you.  There are already tons of information available and feeding you more will only complicate your mind already made-up to invest.

The Budget

So you have finally made up your mind of considering investing.  That's what I felt too when I was starting.  But I did everything in a spreadsheet.  I monitored my income and expenses and then prepared the budget for my calendar year.  Set aside a portion of your income for food items, clothing, shelter, health and hygiene, transportation and communication, occasions, and of course, vacation and leisure.  This is my view of managing expenses.  A balance is a must.  Saving without unwinding is boring and prone to healing.  : )

From that budget, try to find areas where you could cut costs, normally on clothing, transportation and communication and occasions.  It is actually so easy but the attitude to change spending habits is difficult.  You just have to identify which ones are expenses on the luxury side rather than necessity.  Be true to yourself.  It is your budget and money anyway.  It is your life that eventually will harvest the fruits or reap the pains.

Surely, you would arrive at a projected income and never a loss on a monthly basis.  So, where will you put that excess moolah?  If you let it sleep in your ATM, more often it will be withdrawn and spent on useless stuffs or your money will be eaten by inflation.  This is the time you think of investing.  The key here is consistency.  You must apply your financial strategy throughout the days and stick to your budget.  Next post, products to get you started investing.

Let me know your thoughts or if you need help preparing a budget, don't hesitate to interact whether through comments or contact me page.

Onward to Financial Freedom!

The Spark - How I Got Into Investing

It started way back in 2004 after 3 years of having my first employment.  There was this seminar regarding money management and ways primarily on how to save-up for your retirement.

A lot of principles were actually taught starting from 'piso yan' principle, the value of tithing, the 70-20-10 principle, and the four questions.  These were the principles I could clearly remember.  I didn't indulge in all of the principles at once.  In our family, I have not heard of anything related to investments whether it be from my parents or from my siblings or relatives.  Most I can remember is to save and to save every peso you can.  I don't blame them, maybe it was just the way of life passed on by generations.  Put everything I save in a bank and then what?  Perhaps, those were the reasons, why I postponed aggressive investing.  I didn't really know where I'm heading.  Financial freedom was non-existent yet.

Although in the same year, I decided to apply for an insurance.  It was actually a pension plan from a pre-need company which will be discussed soon in another post.  There is a lesson I got from this.  In this blog, you will also see my, let me say, setbacks.  But those will and should never let me down.  Get up and take the learning with you.

I would like to mention that the seminar did not really put me to start investing but rather sparked me to focus first on seeing where my income is going.  I prepared a monitoring file to outline my income and expenses on a daily and monthly basis.  I just want to see whether there is still enough left for me to try investing.  Frankly, I am really mindful of where do I spend my money.  I don't feel the need to apply the principles just yet.

This is also what I want you to do.  Start first by seeing how you are doing in terms of your income and expenses, then we could talk later regarding investing.

Keep following.  If you want a file regarding income and expenses, contact me.

The Seed - Onward to Financial Freedom and Happy Life!

I really don't have any idea of what to and how to blog.  I remember way back in 2006, I really wanted to blog but I don't have a clear topic or one that I feel an expert to start with.  Thanks a lot to Google (and a few bloggers), I could ask anything and surely, information overload would be definite to happen.

I regularly read (and am actually a subscriber to) a lot of blogs from gaming to gadgets, to travel and vacation, to business and career, up to photography and of course money management.  I gain a lot of education from those blogs.  However, none really provide a bit of this and that that suits best my taste.  I wanted it to be like a magazine type.  Don't get me wrong, I don't claim that I know best.  I just want a blog which focuses on achieving Financial Freedom but at the same time living the life in my opinion given to us by the Creator to enjoy and have fun with (of course following the law of the people and the law of God).

An idea came in that there may be more people (just like me) who would like to grow their finances but at the same time still feels they are alive.  We have material needs that once in a while must be filled-in.  C'mon, tell me if you don't feel any itch of buying the latest technology or enjoying the latest DSLR or at least your dream lenses or even take the time to vacation; unwind and have quality time with your loved-ones, family and friends.  From these circumstances, I found myself.  I found out that it's the real me.  I wanted to build a solid financial future but simultaneously be able to enjoy things that would add value to my family and to mine as well.  Remember, adds value.  :)

Those were the reasons why this blog finally came to life.  From it's very title, join me as I embark on a journey that will affect your views on how to handle your finances and how to acquire stuffs that you like without spending a peso.  (At least, the peso you really worked hard for.)