Calata IPO My Thoughts

There will be a new IPO coming soon. Its Calata. The distributor of many agricultural products and animal feeds. I personally know this company. Since I grew up in the same town where this company is based. And I also read the prospectus. And I didn't like what I see.

Let me tell you something though. Calata is partly owned by the Mayor of the town. A town in which he owns all the large businesses and franchises. He owns all the Jollibees, Chowking and other fastfood restaurants in town as soon as he took seat. Sounds familiar? He also rejects all business competition that would like to be established on his town. Since owning Jollibee, he rejected any business permit that would allow McDonalds to be built. You know what I mean? He's a kind of a dictator in some way and only cares about the money for himself. He monopolizes it.

Now let me tell you another thing, if you own a share of this company Calata, with majority stake by this government official. I hope and pray that you won't get the shorter end of the stick. Because the people owning the company is after only 1 thing. That is to make money for themselves and not for you, the shareholder. Though I love the company. I just don't trust the people running it.

The Great Extended Bull Market of The Philippines

So, how is the bull market treating you thus far? If you're still in the red with this great time for opportunity, maybe you should rethink your strategy. It is a great time to be investing, not jumping around from one stock to another. Great companies will continue to thrive and make money in this bull market. Don't make it hard for yourself. Let me ask you one thing:

If you're not making money in a bull market, what makes you think you can make money on a bear market?

Value Investing with Bill Ackman

Like a quality woman. You only want 1 that you can keep forever.

I am a trying hard to be full time stock investor with a lot of free time last night and started browsing. I thought I could read some more materials about stock investing and to get to know the gurus of today aside from Warren Buffett that invest for the long term.

And while I was surfing the net, I came across a floating university and enrolled myself to the eSeminar series on value investing for only $50. The teacher in that class is Bill Ackman.

By far, the best explanation I have experienced for value investing. He makes value investing so much easy. And I think I have a man crush on the guy. I did a search on him and he's the real deal. For 7 years, his fund returned 22% annually. Beating Buffett and anyone at the moment.

What I also like about this investor is he is an activist and like any other value investors, invests in at most 10 companies at a time. He's an activist investor, he takes over a flailing company to influence it like a corporate raider. But the difference is, the corporate raider sells what's left. Ackman on the other hand, tries to turn the business around to profit. And gets out of the company when it can stand on its own. You've gotta love this person's work.

He suggests 9 investment criteria in looking for a stock. They are:


1. Invest in public companies.

2. Understand how the company makes money.

3. Invest at a reasonable price.

4. Invest in a company that could last forever.

5. Find a company with limited debt.

6. Look for high barriers to entry.

7. Invest in a company immune to extrinsic factors.

8. Invest in a company with low reinvestment costs.

9. Avoid businesses with controlling shareholders.

One particular criteria that stood out for was #4 Invest in a company that could last forever. I remember Warren Buffett also said the same thing. "Invest in a company in which even if the stock market is to be closed for 20 years, you'll be happy owning the stock". Its investing in companies that you can hold for the long term or even forever.

Much like a quality woman.

PXP, PX and Manny Pangilinan's Other Businesses

Isn't it amazing that only one good news about the discovery of a "possible" natural gas deposit by a company can make the stock soar to 30% - 50% in just 1 day. I don't know about you, but if you're still buying into this company, just basing by that news, you're on your way to the rag house.

People who buy and sell because of news like this are the impatient ones only after the big bucks. Just take a good look at it on the newspaper... They haven't even started drilling yet. Heck, they're not even 100% sure that there are resources there. There's a high probability, but no one started drilling yet, processed the resources yet, transported it yet and sold it yet. And yet, the stock price soared, making an increase of 30% in its market cap. Its ridiculous. Its funny. And entertaining to say the least.

PXP and PX are great companies no doubt. But the price of its share today with regards with its balanced sheet is absurd considering the increase. You need to have a huge growth rate to accommodate that rise in share price.

Rumor has it, that MVP is trying to buy GMA7 but it seems like the current shareholders of GMA7 won't want to sell it without a premium of around 49% to MVP. If MVP manages to buy the said network, that would add another "basic need" that we need from his vast empire. How long before I became a Manny Pangilinan is still left unknown.

Also, MVP's flagship company MPI together with Ayala Corp will develop the new light rail. Since all businessmen in our country are busy building this and such, I'll proceed with my work so I can earn more to invest in the stock market.

IPO East West Bank GT Capital Holdings

What I don't like about IPOs is that a few people setting the price of a business in which most people do not know the true value is. Given that logic, if you're a stock market investor, buying on IPO means you are betting not investing. You can't possibly set a price on a particular company before it made public and before it actually perform. That alone should tell you to be wary.

Although there are times (only a few times out of thousands) of companies that are golden gems wherein IPOS are very good price at the start. Google and Apple are 2 that I know of. But how many companies will actually be the next google and apple? Quite a few. Just by that numbers, the odds are not in your favor.

I did bought in the IPO of puregold and still holding into it. That is because I find the idea of selling to poor communities discounted retail products an amazing idea. For one, they tend to be strong during recession as many people would be buying discounted products during those times.

The current IPO east west bank and gt capital are in the industry that are easily affected by recession. And as an investor, you don't want to lose money. Finance and Real Estate are as volatile as the stock market. We may be seeing a real estate boom in the Philippines, but I would still prefer to bet my money on things that are sure and boring and people will always use recession or not.

PSE Very Strong - Investing in Yourself

It is said that the average bull market run lasts for about 3.8 years. Since 2009, we have been in a very strong bull market. And it has been almost 3 years. Although we are enjoying the benefits of the bull market. What happens tomorrow is not something that we can control. What we can do is accumulate more funds in cash and wait for the right time to take advantage of a correction or another recession.

It is also a good time to invest in yourself. Buy books or get yourself back to school to get that masters degree or learn new skills that you always wanted. Buy yourself a good set of books that can help you develop more good habits and more good ways to invest. Also, don't forget your appearance and health, enroll yourself in a gym and keep yourself groomed. Buy yourself a new pair of shoes and a watch.

In a bull market, anybody can be a winner. All the stocks go up. You can always be right most of the time. But remember to not be greedy. Stocks go up and they also go down. This kind of volatility makes investors wary and forget the true goal what each one of us once have before investing. It is to be financially free. Taking profit is good and it can never hurt. But taking profits also means giving up your position for an instant gratification. Always remember that you are here for the long term and the more you stay in that position, after a couple of years, will reward you of financial freedom you'll always dreamed of.

Investing for Money & Women

It always comes out in every drinking session with close friends. They ask why am I still single after having been well off in the financial sector of my life. And most of the time, I answer with a joke or an evasion to the question. Quite frankly, its hard for me to explain in the most simple terms why I'm still single. But in this blog, I would explain since you don't know me, and I don't know you. I think my secrets are safe.

First of all, I view all things as investing. Though being a playboy and having a new girlfriend every few weeks is a temptation to some. For me its shallow. Its fun, but its never happiness. I take great care in knowing about the person before I commit. But if I do commit, I make sure I go all out. Just like stocks.

Second, relationship eats a lot of time and money. Resources that I'm not willing to sacrifice just to get the approval of a person who doesn't know my true value. Most of the ex girlfriends I have in the past are girls that knew what I'm made of and I didn't tried to get their approval thru courtship. Courtship is a relationship based on lies and masks. You put your best front for the other person to get her/his approval. Its not a good way to start a relationship in my opinion.

I let the girls choose. I make the first move if it so happens I like them as well.

Third, mother nature are more generous to men when they age. Men age like wine. The more they age, the more they improve, the more valuable they become thru assets and knowledge and experience and the more they become irresistible. I only laugh at my friends that marry early because they thought its too late or the world is about to end. I'd rather take my time and let the pieces fall where they may.

Fourth, investing is my top priority as of now. Women are a great creature. You just don't know what they are thinking and while some of us spend time analyzing them. I'd rather spend that time investing. Time is the most valuable resources we have. It is the resources that we all have at the same amount and its up to you on where you spend it.

The Lower Class, Middle Class and Upper Class

Truth be told, in movies (especially in the Philippines) its the poor class (masa) that gets the spot light. In politics, they are the heroes and the one you should court if you want to win. They are uneducated, easily manipulated yet people seems to want to get their side because its politically correct. The poor class seems to be the oppressed one and the heroes of any true to life story.

I beg to differ. The real oppressed ones are the middle class. Let's take a closer look.

The Lower Class

They don't have a job. If they don't have a job, they are not contributing to society. Which means, all their time are spent on loitering around, squatting private properties and probably adding to more problems like over population and petty crimes to support themselves and their families. Human resources put to waste and instead of being part of the solution to make the country progress, they add to the problem.

They don't pay taxes. Since they don't have a job or have a low paying job that make them tax exempt. They don't pay taxes. Which means, all the infrastructure, health care, relief operations and any other expenses by the government comes from the taxes paid by middle class and upper class.

They are majority. What happens when the majority are uneducated and easily manipulated? Leaders that get seated are shit. Since the lower class vote based on emotions, they tend to vote people that looks good on the outside and makes them feel good vs the intelligent, competent leaders that make them realize that they are shit. This is the reason why actors are easily seated in the government. The same reason why charismatic idiots are in the government in any country.

So what do we have? The lower class, don't pay taxes. They use up resources of the country without anything in return. Being part of the problem and elects shitty leaders.

The Middle Class

They have a job. They are the ones who went to school and works a grueling 9 hours a day for (most of them) the rest of their lives. They power industries. Make businesses run and they have kids that they can sustain to go to college and are a great contribution to human resources in the future.

They are consumers. They move money around (a good thing). They buy things in which businesses can use the money to support the needs of more people. Businesses thrive because of them.

They pay full taxes. Income tax from middle class are full. No cuts. They are the one that finances government spending.

They contribute to the society. OFWs mostly are middle class. They send money to the Philippines which keeps it afloat. Money used for education or spending which are all good thing for the economy.

So what do we have? We have people that break their backs to support their families for as long as they are able to work. Most of them stuck on routine jobs for the rest of their lives. The are the ones that powers our economy.

Almost no influence in politics.

The Upper Class

They provide jobs. Upper class owns different kinds of businesses that provides the middle class jobs.

They provide innovation. They finance research for innovation.

They set up charities. Upper class have so much money they create charities to give money back to the community. Helps the poor. See money goes to the poor again.

Tax Incentives. Upper class people earn more money. But they have incentives from the government and have smaller tax than the middle class. They can legally reduce their taxes by ways of investing and business.

They Provide necessities. Upper class owns large corporations that provides all the needs of the people. The phone you use, the clothes you wear, the car you drive, the computer you use are all provided by the upper class so you can have a better lifestyle.

So what do we have? You have a rich person that pays lesser tax. Which means, they get richer and richer over time.

Less voting power yet more influential in politics. This says it all.

Conclusion

If you're going to think about it more... The one that you should pity is the middle class. They are the ones working for all their lives, pay all the taxes, but the money they worked hard for goes to the poor class (by way of government spending) in which money never returns.

The lower class picks the leaders of the country, the upper class controls those leaders in one way or another while the middle class can just sit and watch as the country goes into turmoil.

If you're a middle class and you know it. You have 2 choices in order to live a more hassle free life without having to sell your soul/health working for a life time.

1. Be poor.
2. Be rich.

My Thoughts on Vacation and Investing Goals

Ahh... My facebook wall is being raped by vacation pictures of friends and acquaintances. This is the time of the year that's hard for me to resist. I love to go for a vacation, but when I think of the money I would spend in that vacation, makes me want to think about it twice. Its good to have some R & R every once in a while, but for the enterprising investor such as myself, I don't see the benefits of this in the long term. And I wouldn't feel any better even if I go to other places. I'm quite happy in life right now. The only thing that really makes me jump off my seat is the dividends that has been coming. I'm loving it.

The money spent on vacation can be very well invested so I can reach my goal faster. I want to use every bit of money as fuel to make compounding work more effectively. See this video about compounding:

Well, what a young investor to do in this kind of situation. Stuck in his chair looking at vacation pictures of friends... Well, we can use our imagination. A hot chick in white sand beach.

Helping Your Family Investing

I just realized that its hard to keep track of my freedom fund. When I add new funds to the account, its % changes. So I decided to divide it into number of shares like a mutual fund. That way, even my family members can invest with me and help them earn money.

So far, the freedom fund has performed really well, 13.76% YTD, while the market is around 16%. It is good in my opinion since I'm still learning the ropes and managed to make some mistakes.

Right now, I'm handling money for my relatives. I think its good for them to be invested and take part in this bull market. Since, they do not know how to invest in the stock market, I'll be handling the money for them. And making the freedom fund into a mutual fund - like fund is a great thing so I can add more money without recalculation of its % gain or loss.

My thought on hot stocks: Magnum Ice Cream & Petron

For the Philippine market, I think the hot stocks as of the moment are still the mining sector, the nickel - copper industry to be exact. I've been hearing a lot about PCOR (Petron) and the maker of the Magnum Ice Cream (RFM). 

I think the product is good. Everybody loves it even if it is with the same name as the condom and is overpriced, people are still willing to pay for it. A lot of people are taking pictures of them eating magnum and posting it in their facebook wall. It became a status symbol for some due to its steep price and also, since its summer. I'm just not sure if this is a long term investment or just a fad. Petron for me, is not a good investment. People who follow this blog will know that we are here for the long term and we want to have an investment that will bring the most money to us. I just think a company with its price that is being regulated by the government and a very volatile commodity is not a good investment in my opinion. There are a lot of good choices out there. Like, cement products, construction engineering services, paper plates and plastics and more. Those are the stocks that will bring in money. Boring stocks that people will puke to look at.

Thoughts on Trading

I think trading, particularly in this market is a stupid thing to do. As Mr. Bacon will say on the Reminiscent of a Stock Operator, "Why sell? It's a bull market after all!" Its easy to lose yourself within the crowd, when gurus are proclaiming what stocks to pick and sell. Do not be swayed by their opinions. You have your own mind to decide, and its your own money to risk.

Approach Everything in Life Like Investing

Me and my friend were walking down the street and suddenly asked what I look for in a girl. A few years back, I could have answered she must be gorgeous. Nevermind what she has in her head, as long as she looks beautiful, she's good to go. I was very naive that time. Growing up as a nerd and a fan of computers, I realized that everything in this world can be viewed in an investing principle.

A gorgeous girl will never be gorgeous forever. Their value goes down each year to their senior year. And the more money they need to maintain that beauty. This is not a good investment in looking for a partner. Meanwhile a nerd girl just like you might be a better pick for she likes to read and gain more knowledge. Everyone withers away, the cute face of yesterday could be the the old grandma of tomorrow. It is fleeting. Invest in something that would last for a lifetime.

Having said that, Warren Buffett told in a speech on what to look for a partner in life... Think about it... Should you search for a loving spouse that is thoughtful, intelligent, hard working, simple, religious, whatever you pick based on you investing style, Warren Buffett said that the best spouse to have is the one who has low expectations. :)

Happy april fools and happy investing.