So here are the top 10  stock market investing comic strip and cartoons (not necessarily in order) which will make you smile and probably make your day especially if you see the chart f your favorite stock going down.

The venue will be Cebu City Sports Club, on October 22, 2011, 8am to 5pm.

Learning investment is just Php3,000 for the whole day event, payment deadline is Oct. 14 (Friday).

The fee includes workshop materials, as well as morning snacks, lunch, and afternoon snacks.

It will be a whole day event where the participants will be guided from scratch on how to look for stocks that the investors can buy, and stay invested with peace of mind regardless of what the short-term market environment is/will be.

We will guide them throughout the process–where to get the data, how to organize it, what are the methods to use to know what a stock is worth and how to apply those methods to reach a decision either to buy, hold, or sell a stock.We will be rolling our sleeves up and start DOING what every stock market investor SHOULD do.

NO MORE staring on the powerpoint slides,

NO MORE just listening to speakers flaunting what they know and what THEY SAY they do.

The focus is finding the value of the company — what a stock is worth?
When you know the answer to that, you’ll know at what price to buy, you’ll know at what price to sell, you’ll know how long can you afford to wait.

The best part is, we don’t have to get nervous when the stock market is falling.

With what we’ll do together in the workshop, we’ll just buy the stock, sit it out regardless of market action, and sell it when the price reaches its value! Talk about relaxed investing!

Since it is a workshop, we highly encourage participants to bring their own laptops to maximize their benefit from the event. That way, they can apply instantly the learning as they come, and ask questions on the spot! It definitely is highly encouraged, but not required.

We promise you when you attend the seminar, you will become so good in anlayzing stocks ! No more need for financial translation !

For more info, please contact Mr. Rey Acebo –
reynaldoacebo@yahoo.com, 0933-406-6198, 0918-555-2413, 0926-732-0331

Or me, Aaron Say,
aaronsay@gmail.com, 0922-8229767
You may also visit :

http://wp.me/p1tiIQ-bQ

What is value investing and why do I insist that it is the best strategy to use when investing in the stock market?

The principles of modern value investing were conceived by a Benjamin Graham, known today as the Dean of Wall Street and the father of value investing. Although Graham did not have a name for his stock market investing strategy, it was later on called as “value investing” by his disciples. The core principles of value investing is embodied in Benjamin Graham and David Dodd’s book “Security Analysis” and Graham’s book “The Intelligent Investor.” Both books are widely recognized by stock market experts and regarded as sacred text by value investors worldwide.

I say that the above mentioned quote summarizes the value investing theory in a nutshell, because it the simplest explanation of the value investing concept. Value investing is nothing more but intelligent investing and investing is most intelligent when it is most businesslike. Once a stock market investor approaches stock market investing from a business perspective he will surely make rational and intelligent decisions.

Value investing has taken many forms since its inception and flavors of different types of value investing vary depending on each value investor. However the core concept of buying shares of stock whose shares appear under priced by using some form fundamental analysis remains a key concept regardless of what flavor of value investing is being used. Buying shares below their intrinsic value with a sufficient margin of safety also remains to be a key concept in value investing.

I believe that value investing is the best investing strategy when investing in stocks. Using a value investing strategy will help you survive in the roller coaster ride of the stock market and will help you avoid getting uncessary a Best Offset Mortgage. Let me give you five reasons why I use value investing in stock market investing and why you should become a value investor yourself.

1.) Logical, no-nonsense approach

The value investing approach is the most logical, no nonsense approach in stock market investing and uses a lot of common sense. When you start learning about value investing the first thing that you notice is that it makes lots of sense. No fancy gimmicks and computation and no unnecessary unreasonable risk. I mean think of it, if something you want is worth a dollar and somebody offers to sell it to you for 50 cents wouldn’t you buy it, this as simple as it gets. The value investing concept is similar, find companies that sell for less than how much it is worth and buy tons of shares! This makes a lot of sense right? This is what every businessman would do.

Value investing is simply investing from a business perspective. Benjamin Graham captures the essence of this point in his very own words.” Investment is most intelligent when it is most businesslike. It is amazing to see how many capable businessmen try to operate on Wall Street with complete disregard of all the sound principles through which they have gained success in their own undertakings. Yet every corporate security may best be viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise. And if a person sets out to make profits from security purchases and sales, he is embarking on a business venture of his own, which must be run in accordance with accepted business principles if it is to have a chance of success.”

See you next post on Part 2 of the “Reasons why you should use value investing when investing in the stock market”

Last time in Part 1 of this two part series, we discussed what an IPO is and why you should not invest in an IPO. In this post, we are going to discuss why and when you should say “YES” to an Initial Public Offering (IPO)

1.) You should invest in an IPO when it is not overpriced

I know, I know, some stock market pundits calls an IPO as “It’s Probably Overpriced” instead of Initial Public Offering (IPO), because in most instances it is and I gave you two reasons why in Part 1 of this series. However there are certain instances when the IPO is under priced. Underwriters sometimes do this to generate more interest on a certain stock. Let me quote Wikipedia on this:

“Historically, some of IPOs both globally and in the United States have been underpriced. The effect of “initial underpricing” an IPO is to generate additional interest in the stock when it first becomes publicly traded. Through flipping, this can lead to significant gains for investors who have been allocated shares of the IPO at the offering price. However, underpricing an IPO results in “money left on the table”—lost capital that could have been raised for the company had the stock been offered at a higher price. One great example of all these factors at play was seen with theglobe.com IPO which helped fuel the IPO mania of the late 90′s internet era. Underwritten by Bear Stearns on November 13, 1998, the stock had been priced at $9 per share, and famously jumped 1000% at the opening of trading all the way up to $97, before deflating and closing at $63 after large sell offs from institutions flipping the stock. . . “

In instances when a stock is under priced, then its good to invest in an IPO ! Personally I have not encountered an under priced IPO in the Philippine stock market. But I have encountered an under priced Secondary Offering recently. (The issuance of new stock for public sale from a company that has already made its initial public offering (IPO)) San Miguel Corporation (SMC) whose book value is about P 90+ has recently made a secondary offering of only about P 110.00. Now that’s really cheap considering the price to book value and the prospects of the company!

2.) Study shows that you should invest in an IPO at the offering price but do not hold this for the long term

In the book “Stocks for the long run” Prof. Jeremy Siegel gives this advice for those investing in an IPO. “The lessons from studying the IPO market are clear. If you can get an IPO at the offering price, it is often a great buy. But don’t hold on! The subsequent performance almost always disappoints.” He makes this conclusion based on a study by Tim Loughran and Jay Ritter. According to their study those who bought IPOs at the market price on the first day of trading and held the stock for five years reaped only an average annual return 5 percent.

I decided to personally try out Prof. Siegel’s advice. I usually don’t buy in an IPO, I prefer to sit it out and wait until the market under prices the stock. But anyway, I decided to experiment. Airline Cebu Pacific (CEB) recently made a debut at the Philippine Stock Exchange so I bought at the IPO offering price of P 125.00. On its first trading day, the price went up to P 132 ! A gain of P 7.00 per share (5%) in just one day ! I thought of selling in the next two days thinking that the price will further go up. Unfortunately the price closed at 131 the next day then to 125 two days later. Taking my cue from Prof. Seigel, I decided to sell at 125.80 and 127.20 in the next few days True enough as Prof. Siegel said the “subsequent performance really disappointed”, because after 4 months, the price dropped to a low at 77.30 and until now it never went back to its IPO price.

So there you have it. Should you invest in an IPO ? The answer is both a YES and a NO. A NO in most instances, a YES with certain conditions. So get Best Offset Mortgages and decided whether you will invest in an IPO !  Have fun investing in stocks !

I apologize for taking a very long time to write again. In fact, I forgot who asked this question. I usually contact readers asking a question and inform them that I have now composed an answer. Anyway, whoever you are asking this question at least you now know, that I have not forgotten your request.

So should you get a Flexible Mortgage and invest in an IPO ? Llet me answer the above question simply and straightforwardly, the answer to both questions is both a YES and a NO.

For those who are new to stock market investing let me first discuss what an IPO is. An IPO stands for “Initial Public Offering.” Wikipedia defines an IPO as one “ . . . when a company (called the issuer) issues common stock or shares to the public for the first time.” The most popular reason why a company offers to sell its shares of stock to the public is to raise capital. But Wikipedia list other reasons such as:

- Bolstering and diversifying equity base
- Exposure, prestige and public image
- Attracting and retaining better management and employees through liquid equity participation Facilitating acquisitions

- Creating multiple financing opportunities: equity, convertible debt, cheaper bank loans, etc.
- Increased liquidity for equity holder

So now that you know what an IPO is, let’s go to answering the question and why I am answering both YES and NO to both questions. Let’s go to the “NO” part first. Here are some reasons why you should not invest in an IPO

1.) IPO – Read this – I-t’s P-robably O-verpriced

Yep, that’s right, most IPO is not only probably overpriced, its SURELY OVERPRICED ! Let me give you two reasons for this:

a.) Thinking like a business man - To really understand this, let us put on our business thinking caps and think like a business person. Here you are, owner of a small to medium size company operating for several years and most likely growing in size and income. Why are you listing publicly? Because you want to expand and you need capital for this. Why do you want to expand? Because there is a demand for your product or service or that there are business opportunities you want to exploit. So if you are the owner of this business, would you sell your business for less than what it is really worth? Of course not! It would not be logical. You would not even sell it for what its assets or book value is worth, you would sell it at a premium! Would you just allow other investors to take part in the growth of your company without them even participating in the “growing pains” of the company? You would only allow that if they pay you a premium for it.

b.) Blame it on the “underwriters” – The company offering its shares enters into contract with an underwriter (one or more investment banks) (Read underwriter not undertaker) to sell its shares to the public. The underwriter then approaches investors with offers to sell these shares. The underwriters keep a commission based on a percentage of the value of the shares sold. Of course since it is the underwriter’s job to ensure that an IPO is successful they have to make sure that the price is attractive to the public, however they have also to make sure that the price is attractive to the company. The underwriter is the “promoter” of the stock, so they have the tendency to paint a “good picture” or a rosy outlook of the company’s prospects hence increasing the tendency to further jack up the initial stock price.

2.) Study shows why you shouldn’t invest in an IPO

To support this point let me directly quote from the book “Stocks for the long run” an excellent book on stock market investing by Prof. Jeremy Siegel:

“While many investors recall the newly-issued story stocks, such as Intel, Microsoft, and Wal-Mart, which have made investors rich, most forget about the many such firms that fail to fulfill their promise when they are issued. A study by Tim Loughran and Jay Ritter followed every operating company (almost 5,000) that went public between 1970 and 1990. Those who bought at the market price on the first day of trading and held the stock for five years reaped an average annual return of only 5 percent. Those who invested in companies of the same size on the same days that the initial public offerings (IPOs) were purchased gave investors a 12 percent annual return. . . ”

So there you have it ! Here are the supporting reasons on why investing in an IPO is a “NO.” Want to know when you should say “YES” to investing in an IPO ? Find out more in “Should you invest in an IPO ? – Part 2”.

The stock market can be a tricky thing, especially for a new investor looking to get started. One must research and form a solid foundation of the market system before jumping in with both feet. Learning the language, history, and mechanics of trading will ultimately help any new investor. Stocks are always changing and can sometimes be seen as random patterns. Throughout history, the “stock” has been ever changing and continues to progress into different bodies and states.

Since the climb of out the Great Depression, stocks and trades have evolved into various entities and commodities. No longer are companies trading in single stock ideas, but have progressed exponentially with multiple options such as; Mutual funds, Stock Options, IPO’s, Common Stocks, Preferred Stocks and many others.

The everyday man is now more intent on approaching the stock market with the ability to day trade and access multiple accounts with the stroke of a few simple computer keys. Trading has been brought to the masses, to there very own home, and the possibilities are endless.

Many start up investors get caught up in the nomenclature and sub-culture of the market. Taking time to set up trading strategies are essential for the long term goals of any investor. Knowing Fundamental and Value investing is vital to the successful growth of your portfolio.

To find the stock value of a particular company, new investors must realize that stocks are valued by cash flow, earnings analysis and sales. Most “blue chip stocks” (or established firms) seem the likely beginning for first time investors.

Stock Brokers can be used to facilitate investments for those wary of the market system. Most reputable brokers will have the knowledge and training to invest your money in profit turning companies. Although be wary, there services can be costly and no one person is a psychic.

New investors should be warned to invest money that is in excess and not from a cash advance or borrowed money. Markets rise and fall in a single day or hour. Be informed and educated in the system that you are intending to conquer. With all endeavors, learn and listen and above all, learn to master and stick to value investing and always invest from a business perspective. This you will avoid taking out Off Set Mortgages to pay for your over leveraged portfolio.

As far as possible without surrender be on good terms with all market participants. Speak your truth quietly and clearly and do not spread false rumors about stock prices nor immediately buy and sell based on rumors. As a wise stock market investor used to say “With enough inside information and a million dollars, you can go broke in a year:” Always remember a fundamental law in stock market investing, “Returns decrease as motion (actively-managed trading) increases”

Listen most especially to the value investors and fundamental analyst. However learn lessons from the pure technical analyst even the seemingly dull and the ignorant, for they too have their story and you can certainly avoid their mistakes. Avoid loud and aggressive traders especially those who use pure technical analysis for they are vexations to your portfolio.

If you constantly compare your portfolio with others, you may become vain or bitter; for always there will be those who have greater gains in their portfolio than yourself. Enjoy the gains that you have and stick to your game plan. Keep close monitor of the stocks of the companies with durable competitive advantage that you are holding, for they produce real wealth in the changing fortunes of time.

Exercise caution in your investing, for the world of stock market investing is full of trickery. Avoid getting excess Offset Mortgage and over-leveraging your portfolio. But let not this blind you to the potentials of making money in stocks. The stock market is the greatest money making machine invented by man and if done properly will most certainly let you achieve great returns.

Be yourself. You may learn all you can from books, seminars and from mentors and gurus but in the end it is you who will do the actual buying and selling. Take kindly the counsel of the years for as you learn more about stock market investing especially if you read and learn about investing from a business perspective you become a much wiser investor.

Nurture strength of spirit to shield you during volatile market down turns especially during bear market. For as long as you are investing from a business perspective you can be assured that you are making the right decisions. Do not distress yourself with what the market participants are doing. Many who get burned in the market are those who follow blindly what others are doing. While knowledge of stock market investing is crucial to investing success of equal or even utmost importance is the emotional stability amidst market noise.

You are an intelligent investor and if you have done your homework well, your buy and sell decisions are correct, no less than the decisions made by the famous value and intelligent investors of the past and present. And whether or not it is clear to you, there is no doubt that you have made the right decision.

Therefore, be at peace with how your portfolio is doing no matter how seemingly small your gains are in the present because in the long run as the father of value investing says “the stock market behaves like a voting machine, but in the long term it acts like a weighing machine.” True value will in the long run be reflected in its stock price. And whatever your labors and aspirations in the noisy confusion of the stock market, keep peace in your soul. With all its sham, drudgery and broken dreams; it is still a beautiful place to grow your money. Be cheerful.

Strive to be happy and contented with your portfolio. Above all, strive to always be an intelligent investor.

(Adapted from Max Ehrmann’s Desiderata written in 1927 and revised for stock market investing by Zigfred Diaz, D’ Intelligent investor)

The mistake is not about payday loans per sé, but the concept of borrowing to invest. First off, all borrowing is investing on some level. Your house loan should, over the long-haul, be a worthy investment. A loan on a car is to fund something of diminishing value, but at least the car helps you get to work to earn a living. And when you take out a payday loan , it might be to make a short-term investment.

That is because the nature of payday loans is they are among the best examples of short-term borrowing (example: http://www.cashnetusa.com/). You are borrowing against the value of a paycheck in the near future, no more and no less, and most payday loans are repaid about 30 days later. Ideally, it works that when you borrow you can invest, from which you can reap a profit by selling the investment a day or a week later. That accomplished, you then repay the loan.

There are of course other ways to borrow, but each comes with a downside:

Home equity – Temptation to borrow larger amounts, which could add up to larger losses; paperwork is unwieldy for a first loan.

Car title – Similar to home equity; still could mean a large loss with an ultimate repossession of the vehicle (also, not available in all states).

Friends/family/fools – It’s always a question of whether the lenders will suffer, as would your relationship with them, if the investment pays out poorly or they are unwilling to wait for the stock value to rise above the purchase price.

Payday loans , in contrast, are limited in size and make you beholden only to yourself in situations of loss. Of course, you have to be able to stand up to conventional wisdom to try this course – but successful investors rarely just followed the crowd. Click here for information on Offset Mortgage Calculator.

Before I go on writing new articles about stock market investing, let me answer a question from one of our readers named Ben. This is long been overdue. Here is his original question.

“Halimbawa po bumili ako ng stocks sa isang company, kailangan ko pa po bang isama sa income tax return ko ang tungkol dito, i mean, do i have to pay taxes pa for my income from stock market.”

(Translated in English: For example I buy stocks of a certain company, do I have to include it in my income tax return, do I have to pay taxes for my income in the stock market ?)

Now I’m sure there are lots of people that are also asking this question. I hope I will be of help to Ben as well as to other readers of this blog and to those of you seeking answers in the internet.

Dear Ben,

First of all, let my state clearly that I am no tax expert. True, I am a lawyer and taxation is included in our curriculum. But like most law students I hated, despised, abhorred (throw in all the negative adjectives here) taxation. (That’s why I understand why you probably got conflicting answers:-) ) For one thing also, our taxation laws are so complex (hence the seemingly conflicting answer:-) ), that there has been recent calls to make it simpler.

But nevertheless, since I managed to pass the bar exam subject on taxation (which is ironically my highest grade in the bar, and as of today I am still confused why this is so) let me answer the question the best way I can. Finally I have also found some use for my taxation books which has been gathering dust in my law library hehehehehe

To answer your question the answer is no, not anymore. You do not need to include the income you learn from stock market investing when you pay your income taxes.

My answer to that is based on Sec. 127 (D) of the National Internal Revenue Code (Which is the BIR “bible” of taxes) of the Philippines which states and I quote

“(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.”

So it is very clear in this section that gains derived from stock market transactions are exempted already from the taxes imposed under the above mentioned sections and the regular individual income tax.

Why is this so? Will the government not be making any money off the profits of stock market investors? Well they are still subject to tax which is called a “stock transaction tax.” This tax is in the nature of a “Final withholding tax”

To understand this further let me quote Revenue Regulation 2-98 issued by the Bureau of Internal Revenue in 1998. According to this revenue regulation a final withholding tax works this way:

“Under the final withholding tax system, the amount of tax withheld by the withholding agent represents the full and final payment of the income tax due from the recipient of income. Thus, the taxpayer is no longer required to file a tax return for the particular income, or to include such income as part of the taxable income that he will be reporting under in his annual income tax return.”

So it is very clear in this revenue regulation, for income subject to final withholding taxes, the tax payer is no longer required to file a tax return. Gains derived from stock transactions are subject to final withholding taxes hence they are not required to be included as part of taxable income when reported under your income tax return.

A similar illustration of this is bank interest. You don’t include bank interest when reporting your income tax return, why? This is because they are subject to final withholding tax.

So how much is this stock transaction tax? Well currently it is at ½ of 1% of the value of the transaction. On the other hand dividends we received from stock we are holding traded in the stock exchange are subject to 10 % final withholding tax. Again since this is a final withholding tax, there is no need to report this in your income tax return.

I hope this answers your question. Let me be clear that I am no tax expert and you can recheck my answer with those who are taxation law experts. But I’m sure my advice to you will certainly aid you as it is clear as reading information on Offset Mortgage Rates.

Sincerely,

D’ Intelligent Investor

“Why using technical analysis in stock market investing does not work – Part 2” discussed reason number 3 and that is using technical analysis in stock market investing does not work because a lot of credible long term studies reveal that it does not work. Getting Offset Mortgages to invest in the stock market while using technical analysis will certainly give you more problems as it will over-leverage your portfolio and as pointed out.

We continue with the last part of this series with reasons number 4 and 5.

Reason #4 – Using technical analysis in stock market investing does not work because it based on a wrong premise

The premise of technical analysis is that you can maximize profit by buying low and selling high. This is achieved going in and out of the market within a short period of time. Technicians think this is possible since you can predict where most the stock price will be headed by using charts. This makes technical analysis very tempting to use. The reasoning seems to be based on logic that is why it has attracted lots of people. If you can buy stocks today for $10.00 and tomorrow it becomes $100.00 why not do it? After all buying low and selling high is the name of the stock market game. The fluctuation of stock prices is based on supply and demand which in turn is based on market sentiment about individual stocks so it is logical to conclude that the charts should reflect where the stock price is headed.

It may sound logical but it isn’t effective because as discussed technical analysis does not work because of its nature. Market sentiment is just so unpredictable and cannot be confined to a chart. The premise that you can maximize profit by going in and out of the market within a short period of time using technical analysis is severely flawed. Investors end up loosing more instead. According to the Wall Street Journal Europe “Whether technical analysis is really useful … is a matter of some dispute on Wall Street. Some investors believe that it is impossible to forecast the market’s ups and downs. Academic studies have shown that when most people, professionals and amateurs alike, try to move money in and out of stocks to beat market fluctuations, they tend to wind up with losses.”

Another reason why the premise is wrong and people using pure technical analysis end up loosing more is because of the transaction fees and taxes. By moving in and out of the market rapidly you get slapped with lots of transaction fees and taxes such that your expected net gain becomes much smaller. This is what Warren Buffet calls as the “4^th law of motion.” He writes “Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, ‘I can calculate the movement of the stars, but not the madness of men.’ If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.”

Reason #5 – Using technical analysis in stock market investing does not work because the real stock market experts who made billions in the stock market says it does not work.

The real stock market gurus who made billions in stocks and had consistent market returns for a long period of time has revealed their disdain for technical analysis.

Famed value investor Peter Lynch who has grown Fidelity’s Magellan fund from a mere $18 million in assets in 1977 to $14 billion in assets in 1990 (An average of averaged a 29.2% return) has this to say about reading charts “Charts are great for predicting the past.”

It is said that the world’s greatest stock market investor, Warren Buffett spent years learning technical analysis during the early part of his career This proved to be a futile effort and an expensive mistake. What was his conclusion on technical analysis and reading charts? Well he has this to say “I realized that technical analysis didn’t work when I turned the chart upside down and didn’t get a different answer.” He added “”If past history was all there was to the game, the richest people would be librarians.” Warren Buffett then decided to turn to what Benjamin Graham taught – Value Investing. This proved to work wonders for him.

Famous investors who were very consistent in getting high rates of returns for a long period time such as John Templeton, Shelby Davis, Philip Fisher, David Dreman, John Neff and many others all succeeded in the stock market by being value investors and relying heavily only on fundamental analysis.

In conclusion technical analysis does not work; those who insist that it does are only deluding themselves. To become an intelligent investor, there’s no other way but to approach stock market investing from a business perspective. To invest in stocks from a business perspective you have to know the business inside out and do a diligent study of its financial statements. An intelligent investor is a good businessman. As Warren Buffett puts it “I am a better investor because I am a businessman, and a better businessman because I am an investor.”