Buying Back Shares and the Lucrative Stock Option Plan

There are 2 things that I've learned today, 1) Share Buy Backs and 2) Stock Option Plan. The first one, Share Buy Backs, is a good indication that a company is doing good. Both Peter Lynch and Warren Buffett indicated that a company buying back shares means that the company is investing in itself. It is also an indication that the company is doing well, but the market, with all their reasons, is not responding positively in its stocks. So they are determined to minimize the supply of common shares by buying them and so affecting its supply and demand in the long run.

In my previous post about Growth Stocks, and my desire to invest 3 in mind, having looked at their financial statement, all of them are really strong and great companies with sound management, with little to no debt at all. The deal breaker for me was that 2 of them are buying back shares since October 2011. This is insane! This is probably the undervalued stocks that we have been searching for. So to test this out, I added more funds to my account and started buying the shit out of these 2 stocks. Let's see if our judgement is correct.

Stock Options Plan

Stock options are bonuses for CEOs of the company and management staff. They are awarded with shares of the company as bonuses. The good thing is, it tells us that the company is doing good. The bad thing is, it dilutes the stock. They do not buy from the market, they add shares to the market. And when there's a lot of supply, sooner or later, stocks will go down. This is seen in my JFC (Jollibee Food Corp) stock which is down for consecutive days.

Freedom Fund: 6.12% vs PSE Index 8.6%

Happy Chinese New Year! Growth Stocks?

I have been contemplating in the idea of mixing some growth stocks in my freedom fund portfolio. Right now, its really safe to say that I can pretty much live with its current dividend returns. I just passed P9,000 per month (approximately) from its dividends and I am now considering buying some low cap stocks to have more risk that could make us more money.

There are some particular low cap stocks that I've been looking into. That fits in the criteria of:

#1 - Boring Industry
#2 - Manageable or No Debt
#3 - Great Management
#4 - As if No Growth Industry
#5 - Copy cat / Rehashed product

That's about it. I have 3 in mind and contemplating on how should I invest in these. Of course, If I add more of these stocks, I could spread myself too thin. So I'm asking for opinions.

Up Day Today as the Property Sector Took the Lead

The property, mining and oil sector have been all the rage this week. As the rumor of aggressive expanding of real estate businesses in the Philippines and the hype around the Mining and Oil industry for potential partnership with foreign companies spread across the trading community. I for one, don't want to invest (for now) with stocks that are hot in the traders eyes. I prefer to be on the look out for sleeping giants.

If there's a gold rush, not only does the people who mine for gold got rich, but also the ones selling the shovels.

We will look for more opportunities once the tension and hype settles down.

Freedom Fund fund was up today for +0.35% compared to the index +1.01%. I'm all excited to get my money from my job so I can reinvest. Its a very great time to invest right now as we broke into a new high in 5 months.


Year to date:
Annual Cash Flow: P107,870.33
Freedom Fund 7.38% vs PSE Index 7.51%

Invest in Telecom - The Texting Capital of the World

The texting capital of the world, the Philippines. If you are an investor in the Philippines, you probably know that one of the best stock to own is in telecom. There are 3 major players in the Telecom industry, PLDT, Globe and Digitel. But Since PLDT bought DIGITEL, its a head to head match with the 2 biggest players in the Philippines.

In my opinion, owning both these stocks is a sure win. Mainly because, these stocks have more than 5% yield, a blue chip and both are the biggest players in their industry. Timing the market right, you can have at most 8% yield for the dividends and most of all, PLDT's policy is to provide consistent dividends which they never fail so far.

Annual Cash Flow: P107,870.33
Freedom Fund: 7.03%

Stock Market Tax Philippines

Do you need to file an income tax return when you are investing / trading in the Philippine stock market? The answer is No.


Sec. 127 (D) of the National Internal Revenue Code

“(D) Common Provisions. – Any gain derived from the sale, barter, exchange or other disposition of shares of stock under this Section shall be exempt from the tax imposed in Sections 24(C), 27(D)(2), 28(A)(8)(c), and 28(B)(5)(c) of this Code and from the regular individual or corporate income tax. Tax paid under this Section shall not be deductible for income tax purposes.”

You do not need to declare your income thru trading stocks. This does not mean that the stock market is the haven for task reduction. There is still tax in doing business in the stock market, that is called the stock transaction tax, which is around 1/2 % of the total stock transaction. Also, dividends paid out to investors are under a 10% withholding tax. If there is withholding tax, you do not need to declare it in your income tax just like money earned thru interest on banks, they are subjected to withholding tax, so you do not need to declare them.

PSE Going Strong

Its a surprise that PSE went strong today. I thought that TEL won't be going up further so I deposited more funds to my account, wanting to take advantage of the opportunity to add more shares. I thought the stock would go down today to retrace. But what happened today surprised me. The slow and big TEL went up 4.45% today.

Because of that, I looked for more opportunities elsewhere and see if we can take advantage of other stocks that are down.

After realizing that stocks are far better than real estate in liquidity and hassle free business, I'm more determined to put my money on stocks. I plan to make more money in stocks to invest in real estate. Rather than investing in real estate to put money on stocks. Real estate is a very slow moving industry so I could probably use the time spent in real estate to do stocks and my other business.

Actually, all companies in the PSE went up today. Its a very good economy we have now.

Freedom Fund: 6.63%

Stocks vs Real Estate

Just got back from the real estate business seminar. I must admit that real estate industry is not what I thought it was. More than anything, its all hard work. And for me to start a new business for part time in real estate is something that will not be possible. This kind of business needs and deserves your full attention because of the underlying processes that needs to be accomplished.

When I got back home, I started to compare Stocks vs Real Estate. The main points and probably the decision maker for me is the capitalization. In stocks, your capital can be any amount of money that you are willing to invest. In real estate, you need almost always around P1M to risk the money in this venture. And P1M is not little in our country. Stocks win.

Second point, that I probably like in favor of stocks is that, stocks don't need a lot of people to do business. You just need a broker and you can transact easily. In real estate, there are a lot of people involved. Engineers, contractors, lawyers, accountants, brokers and most especially, the government, bribes for government employees are there to take part in your profits. I don't want to talk to a lot of people when doing business. And don't have much patience in managing tenants for rental properties as well. So I think that stocks win (for me) in this category for a lot less hassle in doing business.

Third, Stocks are liquid. Real estates are not. It takes you an instant to sell a stock of a company and takes your 3 - 6 months to sell a real estate. Stocks win.

Fourth, stocks are almost always valued at the right price. There are some companies that are under valued and will adjust accordingly overtime. But since it is public, there not that many opportunities to spot undervalued stocks to gain more than 200% in profit for a particular stock. But this depends entirely on the investor's skill to spot these opportunities.. Most of the time, prices will adjust accordingly. In real estate, pricing can be lucrative. In a way, it is a good thing because you can get away even with a 200% profit, but this is also less frequent. Real estate's gain can be lucrative and depends entirely on its marketing. Both win.

I think there is an obvious winner here for me. In starting a new business part time, I think real estate won't be that viable. And in terms of investing. I think stocks wins over real estate in my personal objective. But! I still think I will use the things that I learned in the seminar. To invest in real estate. Its just that, the capitalization is too much for the returns that is comparable to stock. And I believe that I'll be buying lots only real estate until I know more about building and developing the land.

Real Estate Business Seminar Tomorrow

Ahh... Real estate, people say its one of the pillars of wealth. Every time I think of a new business to start, I will need a place to put up my business and then I realized, why not learn how to invest in real estate since my problem is acquiring properties to put my business into.

When I think of putting up a fast food chain, I thought that I don't have real estate. So I'm back to square one. Before I learn to put up any new businesses, I need to learn how to acquire perfect spot properties.

I'll be attending a real estate business seminar tomorrow as part of my goal to start a new business this year to put in more funds to my freedom fund. I don't know what to expect but I'm open to learning something new and I have been keen in entering the real estate industry since almost all wealthy people seems to know how to invest in real estate.

It should be a different feeling owning a portfolio of real estate than stocks since real estate, you can see and touch.

Not much has happen in the stock market today. I added some more money into our funds because I liquidated some of my mutual funds to invest in the stock market. I added positions to strong stocks with high dividend growth rather than the yield.

There are rumors floating around that the financial sector and the construction sector will boom this year. But like I say, its rumors.

Annual Cash Flow: 106,523.63
Freedom Fund: +3.42%

It Goes Up, It Goes Down - Investing for Income

Well, our freedom fund went down today. It made me kind of sad for letting the profits go. But I'm already decided that I'll be making this a long term goal... To have a passive income from the stocks thru dividends. I added more funds into my account and bought some stocks that I researched yesterday with yields ranging from 6 to 10. They were great finds but not that liquid and its hard to find any sellers and also, price were wacko as one transaction can immediately affect your position in the trade. Some of these picks were already -4% just after 2 transactions.

I just keep reminding myself that I'm here for the dividends.

Annual Cash Flow: 100,587.43
Freedom Fund: +2.71%

Stock Investing Means Putting Money Regularly

Investing in the Stock Market means putting away money from your day job to invest in the stock market. And I see many stock investing blogs nowadays that teaches fundamental analysis and value investing but  fail to teach the value of investing regular amounts to their fund.

And today, I failed to do that as well. Because I don't have enough money yet to set aside. Probably the end of the month. But! On the other hand, our Freedom Fund performed quite good. And, I did some research on my free time and made a list of companies that fits our criteria for dividends and growth for our Freedom Fund. Once I got the money from my job, I'll try to invest more in these new stocks.

Annual Cash Flow: P87,876.43
Freedom Fund: +5.40%

PLDT & DGTL Acquisition - Stock Investing Philippines

Being a fan of TEL for dividends, its kind of fun to see our Freedom Fund go wacko as traders trade our stock. This acquisition news made the stock a hot pick for traders as well as its competition Globe. I am just fearing now that there might be an incoming profit taking and sell offs and our stock will decline once again.

Today, I added new funds to up our cash flow. Our annual cash flow is now at P87,876.43 or P7,323.04 per month. The new funds went to new "unhot" stocks while we wait the usually boring stock to subside so we can up our position. Freedom Fund made an increase capital gains and now at 4.02% from previous 2.05%.

Annual Cash Flow: P87,876.43
Freedom Fund: +4.02%

Lucky Strike in Dividend Investing?

Are we lucky or is it sound investing eye? Yesterday has been a good day, not because we received a dividend from our investments, but because our stocks has been in play. Our stocks particularly in the business of cement manufacturing gained 7% and our gains in our over all portfolio boosted. I am not sure if we should be happy or worried. Because traders trading in our stock can only mean 1 thing, volatility.

Our stock can either be overvalued or undervalued when traders trade our stock. But the one thing that puzzles me is that, we have been in this stock earlier and its stock is as silent as a ghost town. Is it purely luck that we picked a stock that is now a hot favorite of traders? Or is it sound investment strategy that allows us to be in a very good position for a possible lucrative capital gains?

I want to test my strategy even more so I bought a couple of new stocks that are not in the eye of the traders. Let's see if we are truly good investor or just damn lucky (beginner's luck).

THE FREEDOM FUND
I'll also post the current standing of my portfolio in which I'll rightfully call "Freedom Fund". Because Freedom Fund is our main ticket to being financially free. Freedom Fund's performance will be posted here and we'll see if we can beat the benchmark in capital gains while still earning for passive income. That fat check at the end of the month.

Annual Cash Flow: P81,576.43
Freedom Fund: +2.05%

Philippines Stock Exchange Longer Trading Hours Effective Today

The new trading hour is effective today for the first Monday of 2012. Today we built up our cash flow to P73,935.43. Which is P6,161.29 per month in passive income.

At this point, we need only a few addition to our fund and we'll be able to reach our target P9,000 as my first salary in my first job.

I think I'm starting to think differently now. I'm starting to think in terms of cash flow and not in terms of capital gains. So, I tend to look for real strong companies will lesser risk than thinking about if this company will revolutionize the world. I want to build my cash flow at this point, get enough cash flow so I can re-invest it to buy more shares of more income producing stocks. If I have excess money to that point, I shall risk in capital gains. But for now, lets focus on income.

I also start to think in terms of "How can I earn more money so I can invest in stocks and produce more money?". Because of that, I've been looking on some seminars that may improve my capabilities to earn more. And thinking about it all day makes me hungry. But fun though. The thought of not working and earning and the journey of building wealth is really fun.

My Foreign Stock Brokerage Account

My foreign stock will be postponed for now. Because the broker has a security feature where they will send you a card that you will use to login to their system, they secured my account of only allowing people with this card. And this card is currently flying around on the other parts of the world to be delivered to my doorstep. Until I receive this card, I won't be able to invest in foreign markets, so all funds for now will be Philippine stocks.

Annual Cash Flow: P73,935.43