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Your Wealth Thru Stocks

The Truly Rich Club Way
By Laurent Dionisio, CPA, RFP

Many of us Filipinos are struggling in our daily financial status. Some of

us are born rich- either continue being rich or ended up being poor.
There are also some that are born poor - either stay poor or strived to
succeed. However, only a few of us are enjoying the benefits of being
wealthy through investing in stocks.
Did you know that there are only less than 1 million individual Filipinos
who are investing in the stock market?
Are you one of them? If not, why?
I wondered why there are still many of us who are skeptical about the
subject of stock.
Did you find this subject so good to be true, too abused or
Well, lets take a deeper discussion about it and see how you can build
your wealth through it.
First, lets see if you can answer these sets of 5 questions.

Based on your answers, you will know if you are qualified to invest in
the stock market or not. So, lets see:
1. Are you already satisfied with your current regular income? Do
you find a way to expand it?
2. How much money do you have in the bank? Is is enough for an
emergency situation?
3. How about an investment, do you have any? How much money
have you already earned from it in the past 6 months?
4. How many years are you willing to work to earn a living? Are
you young enough to do it?
5. Are you familiar with stock investment? Do you want to take a
Now, it is up to you if you will build your wealth through stocks.
To give you a wider understanding of stocks and the things that you are
curious about, lets discuss it one by one.

Definition of Stocks
The term stock referred to as the ownership of an individual to a
corporation. The individual is called as a stock investor or a stockholder.
A corporation can be owned by many stockholders that are unknown to
each other.

Types of Stocks
Stocks have two types, the common stock, and the preferred stock.
These two are different to each other. A common stockholder has the
right to vote at a corporate meeting plus he can also practice his
preemptive rights. In case a company declared bankruptcy, a common
stockholder is the last one to receive the share or what is left. On the
other hand, a preferred stockholder doesnt have the right to vote, but
he has a higher claim than a common stockholder. Unlike a common
stockholder, a preferred stockholder is the one who is first in line when
a company is on bankrupt status.

Common Names of Stock

You may hear a lot of unfamiliar terms referring to stock such as equity,
equity interest, shares, common stock, stake, ownership and ownership
interest. These terms are being used in the stock market.
To have a better understanding, take a look at the examples below and
see how these terms are used.
1. Ana has a 5% stake in a fast-food chain so Ana owns the 5% of
all outstanding stock.
2. Juan has a 10% equity position in company XYZ. The company
has 1500 shares. Therefore, Juan owns 10% of all stock in
company XYZ. He owned 150 out of 1500 shares of stock.
3. Maria owns a 20% ownership interest in a famous salon chain.
This means that Maria owns the 20% of all stock outstanding in
this salon chain.

The Stock Market Defined
The stock market is similar to a typical market, there are sellers and
buyers as well as the middle man.

The place where buying and selling of stocks take place is called as the
stock market. On the other hand, the buying and selling of a
stock known as a stock trading. The place where stock trading is being
executed is referred to as the stock exchange.
The national stock exchange in the Philippines is located in the Metro
Manila, which is known as The Philippine Stock Exchange or
abbreviated as PSE. The most popular and largest stock exchange in the
world is the New York Stock Exchange.

People in the Stock Market
There are three types of people in the stock market. The stock buyer,
which is you in this instance. The stock seller is the one who sells the
stock. Lastly, the stockbroker who acts as a middleman.
The stock buyer needs a stockbroker in order to buy stocks. It is very
important that you do your research on stock brokers first and if
possible do an extensive research. As a new stock buyer, you should
only buy stock, according to what you can and avoid borrowing. A stock
buyer can also be a stock seller if you decide to sell your stock.

The stock broker can be any of these two types: the full-service broker
and the discount broker or also known as the online broker. The fullservice broker is a little bit expensive than the second type, but they
provide financial analysis and planning as well as financial advice. The
discount broker earns through commission rates, which is usually low.
This type of broker also provides some financial advice but only limited.

When a private company becomes a public company, this is where the
IPO takes place. The IPO stands for Initial Public Offering wherein
referred to as the beginning point of stock. It is also sometimes referred
to as the stock market launch. This is the very first time when a stock is
being offered to the public wherein stock buyers can buy the stock
through a stock exchange. After an IPO, a public company can revert as
a private company.

Reasons Why Companies Issue Stock

There are many possible reasons why a company issue stock, here are
1. To allow expansion
2. To acquire another company or business
3. To acquire assets through other investors
4. To decrease debt and liabilities
5. To develop new products and services
6. To present more jobs and add more employees
7. To provide value to the company
8. To pay for new buildings instead of loaning
9. To buy more equipment and technology
10. To offer for an acquisition or merger

Advantages of Investing in Stock

Unlike other forms of investment, investing in stocks is very beneficial.
As a stockholder, you have a claim on the companys assets. For
examples, you owned a 1 % share in the company then technically, you
owned the 1% of the equipment and other things in the company. You
also take part of the branding and contracts that the company has.
You can either take hold of your share or sell it anytime you want.
When the value of your stock increases, it is up to you if you will take
hold of that or sell it. The company will not control your share. The
higher the potential of the company you belong, the greater your
capital gains will be. You can also earn through dividends, which will be
discussed later.

Disadvantages of Investing in Stock
Aside from its advantages, investing in stock can also be risky
sometimes. Actually, there are risks in any investment. It is up to you
where you put your money. One of the possible disadvantages of
investing stock is when it decreases its value or when the company
declares bankruptcy. This may refer to as capital loss.

Finding the right time of buying stock

Today is the right time to invest in a stock. If you are young, the best
time you have to invest. Timing the stock is just a myth. The stock
market has its ups and down, whats important is you make your first
step in your wealth. Also, take note that you should control your
feelings when it comes to investing in stock, do not let your emotion
interfere That is why there are stock brokers that will help you analyzed
the market.

To Sell or To Hold
Selling or holding the stock may be the hardest decision you will make.
You need to analyze the market and avoid getting into conclusion.
When the stock price decreases, most investors think of selling because
the company is not doing fine. This may be just a minor setback. It is
still up to you if you will sell or hold the stock. Selling can also be
expensive due to taxes and brokers fee. Holding the stock can also be

Ways to Make Money from Stock

There are two ways to make money from stock, the first is called as
capital gains and the other one is dividends.

Capital Gain
When you sell a product, you will have a profit. In stock, it is referred to
as the capital gain. This profit can be realized once the stock is sold. To
have a better understanding, lets take a look at this example:
A month ago, Juan bought a share from the XYZ company. He
bought 100 shares, each share costs $10 so he spent $1000.
Today, the current value of this stock in the stock market is $15,
so technically he gained $5 each share so with the total of $500
capital gain. However, this is not yet the actual capital gain
because it is only on paper unless Juan sells his shares. Once Juan
sold his shares, he will get $1500 from it and the capital gain is
$500. If the value decreases and Juan sold it at a lower rate, then
it is called as a capital loss. Each day, the value of stocks fluctuate.

If the company performs well, it will declare a dividend to all of its
stockholders. The dividend is known as the payment of the company to
its stockholders. The amount of payment depends on your share, if you
have a bigger share then you will get a bigger dividend. The dividend
will be divided accordingly to the shares of all stockholders. To have a
better understanding, lets take a look at this example:
In the XYZ company, Juan has 100 shares. The company declares a
20 cents dividend to all shareholders. Juan will get 20 cents on
each share as dividend payment from the XYZ company.

Steps in Getting Started With Stock
You need to follow these 5 simple steps so you can start with stock.
Each step is completely discussed below:

Step #1: Open an Online Stock Trading Account
As discussed earlier, you cannot buy your preferred stock alone. You
need the help of a stockbroker.

The stockbroker is a firm in which will buy or sell stocks on your behalf.
The firm will be the one who is going to participate in the Philippine
Stock Exchange. There are two types of a stockbroker, the online and
the offline brokers. You can make all your transactions through an
online broker, except for opening an online stock trading account with
a stockbroker firm. It is like opening a savings account in a bank
wherein you have to present yourself as well as some documents.
Opening an online stock trading account requires the following:
Photocopy of 1 valid id, it can be any of the following
o Voters ID
o Passport
o Postal ID
o Drivers License
o Company issued ID (plus birth certificate)
Duly filled up form(s)
Proof of billing under your name (if not available, under one of
your parents' name, should not be later than 3 months)
Miscellaneous requirements (depending on your preferred
stockbrokers list of requirements)

After opening an online stock trading account, you can now do all your
transactions through online. You can do the following transactions:
Funding of account
Buying of stock
Selling of Stock
Withdrawal of money
It is easier to have an online account wherein you can monitor anytime,
anywhere. As a member of Truly Rich Club, I learned a lot about stocks
and how things work around it. There are many online stock brokers
that you can find, you just have to be vigilant. If you are a newbie, you
can check COL Financial which is the recommended stockbroker of
Truly Rich Club. It is easy to open an online stock trading account with
COL Financial. This stockbroker accepts newbies, OFWs, professionals,
as well as students, but no younger than 18 years old. They even accept
non-Filipino residents. The service provided by COL Financial is so
competitive. You can always compare the rates and services such as
financial analysis and planning.
On the other hand, if you want to do it offline then you need to be
presented to the stockbrokers office every time you will make a

However, you can also make a call if it is not convenient for you to be
present in their office. This is what we called a traditional trading
account. The requirements are almost the same with an online stock
trading account. It is up to you which type are you going to open, but
an online stock trading account is highly recommended.

Step #2: Fund your Online Stock Trading Account
Now that you have an online stock trading account, the next thing to do
is to fund it. You can choose which type of account depending on the
stockbrokers available accounts. The minimum amount required in
funding your account is 5,000php. You have 2 options to fund your
account, these are as follows:
Online transfer
This is my favorite means of funding my account, especially if I am
always on the go. If you hate long lines and going to the bank
makes you uncomfortable, then you should do an online transfer.
It is easier, faster and more convenient to transfer money via
online banking.

Bank deposit
If you prefer the traditional way of funding your account, you can
go to the nearest bank which is compatible with your
stockbrokers bank account. After depositing the money, you
need to scan the bank slip and send it to the email of your
stockbroker for confirmation.
Once you fund your account, you can now go to the next step. For sure,
this is exciting for first timers.

Step #3: Buy Your Very First Stock
Lets get this part more exciting and try not to be overwhelmed. I have
to warn you, this part is a little bit tricky (because you are a first-timer).
However, do not be easily discouraged as this thing is very easy to
understand. So, what will you expect? You have to expect that you will
see a lot of numbers, figures and unfamiliar menus. Dont worry, your
stockbroker will help you with this. You need to choose which stock to
buy, this is a little bit challenging at first. These are some guidelines that
will help you in choosing which stock are you going to buy:
Invest in mutual funds than in individual funds, it is like putting
your eggs in many baskets.

Fund only what you can and avoid borrowing for the first time
Consider buying international funds and see its potential
Buy stocks from companies which are familiar to you
Do not buy stocks based on the message board as there are some
people that might mislead you
Check the companys balance sheet
Research, research and do extensive research
Ask the experts, it is always better to ask

Step #4: Sell Your Stock
After some time, you will see the changes in the value of your stock. It
will either decrease or increase. If you see an increase, then it is time
for you to sell your stock. To have a better understanding, refer to the
example below:
Juan invested in XYZ company for 1000 shares. Each share costs
P10, so he invested a total of P10,000. After a month, the value of
a stock of XYZ company goes up to P15 from P10. Juan can have a
gain of P5,000 if he will sell it now. So, he decided to sell it. Now,
Juan has P15,000 and his profit gain is P5,000.

In this case, the selling price is P15 higher than the buying price
that is why Juan has a capital gain.
When Juan invested, the buy price is a little bit low and when he sees
the growth on his investment he then decided to sell it. You can either
sell it or take hold of it. However, for a first timer- it is a joy to have
your very first sale. The increase in the stock doesnt happen always,
there are also times that you will experience capital loss. It is important
also to have your target price so when that time comes, it is easier for
you to sell your stock. There are times that the price of a stock goes up,
but because of greed, some stockholders are hesitant to sell it and wait
for the time it will go up again. You should learn how to separate greed
in making decisions about your stock. The value of stocks fluctuate
from time to time, a stock can worth P1 dollar yesterday, P20 today and
becomes P10 tomorrow.
The stock market can be a complicated world, but it pays when you
have patience with it. It takes a lot of patience, deeper understanding,
experiences and a high tolerance of risks to stay in the stock market. If
you have a capital gain, then congrats on your first sale!

Step #5: Enjoy Your Profit

Filipinos always like to enjoy their fruits of labor so enjoy it. You can
withdraw your funds to your bank account, you need to make a request
from your stockbroker so they can make the transaction. You can also
leave your money in your online stock trading account and treat it as
your investment, so you can always buy a new stock. In buying a new
stock, you just have to repeat the whole process and be a wiser
investor now.
After reading this, have you already make up your mind in building your
wealth with stocks?
I know how skeptical you are right now, Ive been in that situation too!
You have some doubts and that is totally normal. However, I wanted to
help you achieve what I did...
Stocks are just a combination of numbers, numbers that can have a
higher value if you will only allow it...

Now how can you invest effectively?

Follow the Strategic Averaging Method (SAM) of Truly Rich Club
What is SAM?
This is extracted from the Stocks update Report introducing SAM.
Meet Your New Friend, SAM.
By SAM, I dont mean Uncle Sam.
By SAM, I mean Strategic Averaging Method.

There Were Only Two Ways of Getting into the Stock Market, Until
In my mind, there were only two ways to invest in the stock market: (1)
passive investing and (2) active trading.
With SAM, Im introducing a third way. (I didnt invent SAM. My mentor
did. Hes a billionaire who has done all three methods with incredible
success. The stock market has been his playground for the past 38
Before SAM, I taught people to be passive investors, not active traders.
Reason? Eighty five percent of people lose money in the stock market.
Thats a fact. And most of those are active traders. Active traders buy

and sell stocks every day. I have friends who are successful active
traders, and believe me, theyre very rare. They trade fulltime, they
study every day, and they follow very strict rules. Without these rules,
active trading is gambling, period.

Passive investing is long-term. Active trading is short-term.
Passive investing only looks at the quality of the companies. Active
trading only looks at their share price. Passive investing comes by many
names. Many people call it money cost averaging, or peso cost
averaging, or dollar cost averaging. Citiseconline, our preferred
online broker, calls it the Easy Investment Program (EIP).

So what is SAM?
SAM is in between passive investing and active trading.
SAM is semi-passive investing.
SAM uses the 4 Rules of Passive Investing, tweaks them, and adds a 5th
To refresh your memory, here are the 4 Rules of Passive Investing:

Rule 1: Invest Monthly for 20 years or more.
Buying stocks each month using your small monthly savings. Its really
making the stock market your piggy bank. You do this long-termfor
20 years or more!
But in SAM, we tweak this rule. If you use SAM, therell be times when
you dont invest, and choose to stay away from the market. These are
times when we believe the market is overbought and is going down.
Wed rather wait for the market to go down and buy when the prices
are cheaper.

Rule 2: Invest even When Theres a Crisis.
Passive investing means disregarding if the prices are up or down, if
theres a tsunami, earthquake, coup detat, or recession. You just keep
buying month after month after month. In SAM, we tweak this rule too.
If possible, we try not to buy on the way down, we try to buy when its
already down.

Rule 3: Invest only in Giants.

Passive investing means buying only established, enduring, blue chip
companies that we believe will be there for the next 50 years. We dont
dabble in penny stocks. Because we believe in people who buy penny
stocks will become penniless.
In SAM, we tweak this rule too. Generally, we dont buy penny stocks.
At rare times though, we find gems among them. And we make an
intelligent speculation. Because of its volatility, we only put extra
funds in these gems.

Rule 4: Invest in many Giants.
Passive investing means not buying one Giant but a handful of Giants.
Why? Theres such a thing as Black Swan in the stock marketwhen
an unexpected event happens. We dont want all our money to be in
one companyand tragedy hits that company.
If youre doing passive investing, we recommend 10 Giant companies or
If youre doing SAM, we recommend five to six companies only,
because were able to move from one company to another.

I repeat: SAM uses all 4 rules, although tweaked a bit. But it adds Rule
5. And Rule 5 is the magic sauce that makes SAM more profitable than
passive investing.

The 5th Rule of SAM
What is the Rule 5?
Rule 5: We buy when the price is beneath our Buy Below Price and
we sell when the price is near our Target Price.
In my Stocks Update Report, Ill provide both the Target Price and the
Buy Below Price for you.
Remember, SAM is in between passive investing and active trading. In
one sense, it is semi-passive investing. Passive investing never use
timing. Active trading is all about timing. SAM uses a little bit of timing.
Passive investing looks only at how good the companies are. Active
trading looks only at the share price.
SAM looks at both: companies and share price.
Passive investing never sells. Active trading always sells every day or
every week. SAM sells after a few months. Well give you the Buy

Below Price and the Target Price of each of our recommended


Here Are 4 Big Advantages Of Sam
1. Faster Giants
As I write this, Citiseconline is recommending 16 stocks for its Easy
Investment Program (EIP). Theyre fantastic, enduring companies that
will most likely be there 50 years from now. But from experience,
having so many stocks to choose from can cause confusion. And
confusion causes inaction.
For SAM, well narrow down the list to five to six stocks only. Lesser
choices mean lesser stress for you!
Why narrow down the list to five to six stocks? Because not all Giants
are created equal. Some Giants are so gigantic, their growth may be
Some Giants are in a mature industry, so the growth will be minimal at
best. So well choose the Giants that we believe will rise faster.
Obviously, we dont have a crystal ball with 100 percent accuracy. So
we could be wrong in one or two of our selections.

But were hoping that our right picks will be enough to make your
money grow faster than if you were doing totally passive investing.

2. Lower Prices
Just like in passive investing, youre to buy a particular stock each
month. But in SAM, you only buy when its price is beneath our Buy
Below Price.
Heres a secret in making more money in stocks: You make your money
when you buy, not just when you sell. What do I mean? If you buy it at
a cheaper price, your earnings increase many times more.
How does SAM do this? Ill give you a Buy Below Price for each of our
recommended stocks. This will prevent you from chasing a rising stock
all the way to the top.

3. Secured Profits
In passive investing, you never sell.
In SAM, well tell you to sell after a few monthswhen our
recommended stock hits our Target Price. By selling, you lock-in your
profits. You take your profits off the table.

You take your money from a company thats already gone up and put it
in another company that still has room to go up. This multiplies your
earnings nicely.

4. Nice Jackpots
And then there are jackpots. Lepanto (LC) was our jackpot stock this
year. My mentor mentioned it to me last December 2010and I wrote
about it right away. If you bought when I recommended it last
December, you would have earned 157 percent by now.
I warned people that its a volatile stock. It may go up or down. So this
isnt our bread and butter in
SAM. But I told you that if you had extra money (that youre willing to
lose if things go wrong), you can buy Lepanto (LC).
My mentor calls these calls intelligent speculations. I repeat: As a
rule, we dont speculate with penny stocks. But every once in a while,
he finds a gem among the penny stocks. Its very rare. But when he
finds one, hell tell meand Ill tell you. The risks are higher, thats why
I ask you to put your extra money only.

So what do you think?

For me, I follow this method for my long term investments. =)
So here are the SAM House Rules

1. Invest Small and Slowly

Invest comfortable amounts. Dont invest big chunks of money all at
one go.

Invest small amounts regularly to get good opportunities to buy at low
prices when stock prices are down. In other words, invest small
amounts to get good average prices overtime. This concept is known as
Cost Averaging.

Like Bro. Bo suggested before, if your money is smaller than P300,000,
divide your money into 6 parts, and invest each part for the next 6
months. On the other hand, if your money is more than P300,000,
divide it by more than 6 parts. Perhaps by 12 parts and invest each part

2.Buy at Buy Below prices

For each SAM stock we recommend, we have what we call a Buy Below
Price. This tell us when to buy that stock. As long as the price of that
stock remains lower than our Buy Below Price, we continue to buy
regularly (every month, every quarter, or every week).

You can check the Buy Below Prices of our SAM stocks below.

For example, one of our SAM Stocks is Ayala Land Inc. (ALI) and its Buy
Below Price is P16.73, while its current market price is P15.90 (As of
November 9, 2011). This means that as this price we can buy shares of

3. Stop buying when prices go beyond our Buy Below price.

When the price of a SAM stock goes higher than our Buy Below Price
that means we should stop buying. However, if the prices of our SAM
stocks go back lower than our Buy Below Price this gives us a signal to
start buying again.

We want to be buying at Buy Below prices because we want to buy at

attractive prices or valuations. On the other hand, we stop buying when
prices go beyond our Buy Below Price to avoid buying at high priced

Going back to our example earlier of ALI with its Buy Below Price at
P16.73, if at one point the price of the stock goes up to P16.76. This
would signal us to stop buying such shares for it has crossed beyond
our Buy Below price.

However, if ALIs price goes back to P15.80, then this means it once
again below our Buy Below price. This means, we can buy again shares
of ALI at that price.

4. Wait for the Target Price. Sell when the Target Price is hit.

The Target Price is a projected future price of a stock that we believe
the stock will go to or go close to given the performance of the
company. This price is used by Brokers to estimate the potential growth
of a company considering a 1-year point of view.

So after accumulating shares at Buy Below prices, all we have to do

now is wait.

Like tea that we steep, or wine that we store over time, we wait
patiently and let time coupled with the companys consistent good
performance drive up the price to our Target Price.

As soon as the market price of our SAM stock hits or gets close to our
Target Price, we sell. This means that were selling our shares and were
locking in our profit. By this time, weve already made money! Were
one step closer to becoming millionaires!

Now using the same example of ALI with its Target Price of P19.75, if
the current market price goes up to P19.75 or close to that price, then
this would raise our sell flag signifying that we should already sell.

5. Reinvest to other SAM stocks.

Use the money you made from selling a SAM stock at our Target Price
and reinvest it, buying shares of our other SAM stocks that are still
priced below are Buy Below Price.

By doing this youre compounding your previous profit with the

potential profit youll be making with this new SAM investment. Its like
rolling-over a time deposit in the bank.

Ill talk about the concept of Compounding on our next issue. This is
another key to making our millions in the Stock Market.

Stick to SAMs System

This is our treasure map to the millions in store for us. We just need to
follow it, follow it to the dot. Follow the system and youll make money.

Its that simple.

The only thing challenging about it is the discipline it requires. So
choose to be disciplined and stick to the system, stick to SAMs system
no matter what, even in times of crisis.

One day your discipline will be rewarded.

Example of a SAM Table

So are you now convinced?
Here are the top winners of Truly Rich Club in the previous years.

So what are you waiting for? Start investing now!
Join us now at
See you inside! God bless!
Laurent Dionisio, CPA, RFP
Got questions? Email me at
Skype: luranski_19