BPITrade Review for 2009

The Starter Investor Reviews BPI Trade for 2009

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

NOTE: This is an old post and most of the details are not current anymore. We are not updating this post anymore since its posting on June 25, 2009. So readers are advised to go straight to the BPI Trade website for signing up and other details. Here is the link to the BPI Trade FAQs:

BPI TRADE FAQs

BPITRADE WEBSITE IS HIGHLY RECOMMENDED for the beginning stock trader and investor and to anyone who may or may not have any prior experience in the stock market. BPITrade website is neat. BPITrade website is convenient. BPITrade website is functional.

BPITrade is neat

The BPITrade homepage looks plain and is almost bare. But surprisingly, or more importantly -- like what Marginal Stock Trader would like to say -- it covers the essentials.

Other than the BPITrade logo and the VeriSign image link, there is just one other image.

This image is a composite of several pictures showing from different vantage points, the trading floor of the Philippine Stock Exhange or PSE, and the facade of Tower One Ayala Triangle building where the PSE maintains a trading floor.

Within this image is shown the BPITrade tagline: Online Stock Trading... Anytime... Anywhere...

The street address of the PSE is:

Philippine Stock Exchange Plaza
Ayala Triangle, Ayala Avenue,
Makati City 1226

Going back to the BPITrade homepage, the left-hand-side navigation bar contains eight links, namely:

• Sign In
• Apply Now
• Online Tour
• Learn More
• Contact Us
• Home Page
• BPI Direct
• BPI Online

Based on experience of the past three months, about 90% of the time Marginal Stock Trader used only the Sign In link, the most important link, to get access to his BPITrade account.

BPITrade is convenient

What more could you ask for in an online stock trading platform but simplicity and convenience.

Marginal Stock Trader only wants to do online stock trading. Simple.

Put in the money. Buy and sell stocks to your heart's content. Take out some or all the profits anytime you want to. Leave the rest of the funds behind.

Then, you get paper copies of statements of account, official receipts, and other documents for records purposes along the way. All these and more are available with BPITrade.

The best thing about BPITrade is that it can be conveniently linked to your other Bank of the Philippine Islands or BPI account through BPI Internet Banking platform BPI Exress Online at www.bpiexpressonline.com.

BPITrade is functional
Typically, one or two clicks are enough to get to the section you wanted when navigating the BPITrade website. Buying and selling stocks are completed in only a few simple steps.

Let us take for example the procedure for buying or selling 20 shares of stocks of Ayala Corporation:

Step	Action
1	Click on Trading > stocks to land on Order Entry page
2	Click on radio button BUY if you are buying or SELL if you are selling, then type stock symbol (AC for Ayala Corporation), number of shares to buy or sell, also bid or offer price, and then click on Submit button.
3	Type your BPITrade password and click confirm.

Trading stocks menu offers the following pages: Order Entry, Order Information, Symbol List and Broker List.

Other links available on the left-hand-side navigation bar when you log in to your BPItrade account are:

• Market Info
• Portfolio
• News
• Research
• Services
• Learn More
• Sign Out
  

Excluding the Sign Out link, about 80% of the time Marginal Stock Trader clicks on the links Market Info, Portfolio and Services.

Market Info

Market Info link gives us the following pages: Market Info, Stock Info, Quote Page, Time and Sales, Most Active, Top Gainers/Losers, Top Buy/Sell and Ticker Tape [ ON / OFF ] .

Most of the time, Marginal Stock Trader is glued to the Time and Sales and the Stock Info pages to check on prices, volume of trade and other information.

Portfolio

Now, when we click on the Portfolio link, we get the information about our Authorized Cash Position, Available Cash Position and Stock Position.

Favorite pages
In accordance with Marginal Stock Trader goals, his favorite pages are:

• Time and Sales
• Portfolio
• Order Entry and
• Services

Client Services

Services or Client Services page offers the following options for BPITrade clients:

Setup E-mail/Cellphone for Alerts
Allows you to change e-mail address or cellular phone number used for alerts.

Build Your Alert Profile
Allows you to specify high/low prices for alerts.

BPITrade Bank Account Funding
Information on how to add funds to your BPITrade Bank Account.

Withdrawal Request
Allows you to transfer funds from your BPI Trade Account to your settlement account.

Stock Trading Statement of Account
Allows you to view your Stock Trading Statement of Account.

Stock Trading Transaction History
Allows you to view your Stock Trading Transaction History.

Fixed Income Transaction History
Allows you to view your Fixed Income Transaction History.

Mutual Funds Quarterly Financial Statement
Allows you to view your Mutual Funds Quarterly Financial Statement.

Mutual Funds Transaction History
Allows you to view your Mutual Funds Transaction History.

Change Account Information
Updates your Personal Information.

Change Password
Allows you to change your existing password.

Sign In Trail
Allows you to view your sign-in history.

Comments/Contact Us
Allows clients to send in their comments and other issues.


Admittedly, BPITrade does not have the usual bells and whistles of similar commercial websites. Nevertheless, it gets the job done to the full satisfaction of The Starter Investor.

Ayala Corporation Stock Investment Update

The Starter Investor Tracks AC Investment Yield

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

AYALA CORPORATION (AC) STOCK INVESTMENT YIELD for the original 10 shares of stocks bought February 1, 2007, is tracked through this post and updated regularly.

Details of acquisition of these shares were mentioned in a previous post Buy Stocks or Hold Cash in High Market Levels.

Upliftment of Shares

A request for upliftment or withdrawal of the AC shares was forwarded on February 16, 2007 to BPI Trade. Upliftment means the issuance of the AC stock certificate in our name.

The uplifted AC stock certificate was received May 22, 2007 after over 3 months of waiting.

Marginal Investing

Merriam-Webster Online Dictionary defines the word marginal as "close to the lower limit of qualification, acceptability, or function: barely exceeding the minimum requirements" among other definitions presented.

This description fits exactly where Marginal Investor is in terms of his investment in Ayala Corporation: starting with the purchase of just one board lot of 10 shares, the minimum buy order for this issue.

Investment Yield Update

The total cost of the 10 shares including the total buy price and BPI Trade upliftment fee is 6,515 pesos. The cash dividends and other receipts net after tax to date are indicated as follows:

Date		Stock Dividend		Shares Held		Cash Dividend per Share	Cash Dividend Net After Tax & Other Receipts		Cash Receipts To Date
01-Feb-07		-		10		-	-		-
16-Jun-07		20%		12		-	-		-
31-Jul-07		-		12		4	43.20		43.20
05/Nov-07		-		12		2	21.60		64.80
29-Jan-08		-		12		2	21.60		86.40
21-May-08		20%		14		-	128.00		214.40
21-Jul-08		-		14		2	25.20		239.60
03-Feb-09		-		14		2	25.20		264.80

Last Update: April 30,2009

This post tracks the performance of the Starter Investor Stock Portfolio consisting of just one issue: the common stock of Ayala Corporation.

Marginal Investor Savings Program Update

The Starter Investor Begins Saving to Build Equity

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

SAVING IS THE BEST STARTING POINT for the beginning marginal investor to build equity for stock trading and investing.

If you have nothing to start with but your definite desire to become a successful investor with millions in assets, then it is most important we find a way that can squarely monetize our talents. One can be employed and receive a salary in return for the services rendered to the best of our abilities. Thus, we can generate some cash flow from which our savings may come. Let me share with you a principle lifted from the book The Richest Man in Babylon:

"A part of all you earn is yours to keep." 

The practical application of this idea was illustrated in one of my previous posts Finding the Money for Investment. For one with a salary of about 150,000 pesos a year, the savings rate of 2% to 3% will result in cash savings of about 3,000 to 4,500 pesos in one year. This would be enough to open a BPI Express Teller Savings account and a BPI Direct Trading account for our BPI Trade stock trading operations. 

Savings Program

Our Savings Program inception date is October 1, 2007. The gross savings amount is the balance at the end of the month indicated.

No.			Month		Gross Savings		Savings To Date		Monthly Average		Per Cent of Salary
1			Oct - 07		160		160		160		1.3%
2			Nov - 07		440		600		300		2.4%
3			Dec - 07		-		600		200		1.6%
4			Jan - 08		-		600		150		1.2%
5			Feb - 08		100		700		140		1.1%
6			Mar - 08		25		725		121		1.0%
7			Apr - 08		-		725		104		0.8%
8			May - 08		-		725		91		0.7%
9			Jun - 08		600		1,325		147		1.2%
10			Jul - 08		500		1,825		183		1.5%
11			Aug - 08		100		1,925		175		1.4%
12			Sep - 08		-		1,925		160		1.3%
13			Oct - 08		-		1,925		148		1.2%
14			Nov - 08		400		2,325		166		1.3%
15			Dec - 08		120		2,325		163		1.3%
16			Jan - 09		1,600		4,045		253		2.0%
17			Feb - 09		2,000		6,045		356		2.8%
18			Mar- 09		350		6,395		355		2.8%
19			Apr - 09		850		7,245		381		3.1%
20			May - 09		575		7,820		391		3.1%
21			Jun - 09		1,975		9,795		466		3.7%

Last Update: July 4, 2009 This post is updated monthly until we reach our goal of 50,000 pesos in savings for this Marginal Investor Savings Program.

Savings Program Reactivation Date: March 15, 2023

After 185 months and 14 days since starting on October 1, 2007, we are concluding this program. We have a net cash savings of Php5,000.00, which we have forwarded to GCash. 

Additionally, we have Php10,000 in savings for maintaining the balance of our Bank of the Philippine Islands (BPI) Settlement Account.

And another Php5,000.00 for maintaining the balance of our BPITrade account. 

We have also used some of our savings to purchase common shares of Banco De Oro (BDO) Unibank, Inc. and Jollibee Foods Corporation (JFC) through BPITrade for a total of Php15,000.00 stock portfolio.

• BDO acquisition cost: Php 5,000.00

• JFC acquisition cost: Php 10,000.00

Despite the time elapsed since the inception of our savings program, we were only able to accumulate Php35,000.00, which is a small portion of the desired amount. As a result, we have decided to restart the program. This will be the final update for this post.

However, we are not ending our journey here. We are restarting with a renewed sense of purpose and a broader investment horizon. Our goal is to continue providing valuable insights and guidance to our readers as we navigate the ever-changing landscape of the investment world.

We understand the importance of constantly learning and adapting, which is why we are excited to embark on this new chapter. We will be sharing our progress and experiences with you through future posts, so be sure to stay tuned.

In the meantime, if you want to follow our journey as we restart, you can refer to the related post that we will be sharing. We are committed to maximizing our returns while managing risk effectively, and we invite you to join us on this exciting new venture.

Related post:

Building Wealth in Later Life: Investment Opportunities for the Fourth Quarter (Ages 55-65)

Trading Profits of A Swing Trader: Our Basic Formula

The Starter Investor Trading Profit Formula

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

TRADING PROFITS ARE RECKONED according to the formula suggested by Benjamin Graham, author of the book The Intelligent Investor: The Classic Text on Value Investing.

The use of this equation was illustrated in a previous post entitled Measuring Our Stock Trading Profit. We define trading profit as the difference between the previous total sell price and the new total buy price.

Hence, our stock trading operating cycle starts with our cash position which is then converted into our stock portfolio upon completion of our buying order. Selling our stocks creates receivables. Upon collecting cash from the sale transaction, the operating cycle starts anew when we use the cash collection to pay for our new buying order.

Swing Trading

Swing Trading is, at this time, the primary business activity that drives our stock trading operating cycle, as well as our main profit generator.

Trading Profit Updates

The main goal of our operations is to demonstrate how many trading cycles it will take before we double our money.

We achieve this by generating a trading profit of at least 4,050 pesos based on initial trading capital mentioned in one of my previous posts Awakening of the Marginal Investor or Speculator.

Cycle No.		Date		Shares	Total Buy Price		Total Sell Price		Trading Profit		Profits To Date
		23-Feb-09		20	4,055		-		-		-
		27-Mar-09		20	-		4,414		-		-
1		01-Apr-09		20	4,067		-		347		347
		17-Apr-09		20	-		4,434		-

Last Update: April 26, 2009

This post is updated regularly with the latest completed Stock Trading Operating Cycle.

The BPITrade Settlement Account: BPI Direct Savings Bank

BPI Direct new maintaining average daily balance

The BPITrade announcement

BPI TRADE LOWERED THE MONTHLY MAINTAINING Average Daily Balance of BPITrade settlement account with BPI Direct Savings Bank, says the email advisory it sent out to clients:

--- On Thu, 4/23/09, bpitrade@bpi.com.ph wrote:

From: bpitrade@bpi.com.ph
Subject: BPI Trade Settlement Account
To: Marginal Investor
Date: Thursday, April 23, 2009, 4:12 PM

Dear BPI Trade clients:

Greetings!

Please be informed that the monthly maintaining Average Daily Balance (ADB) of your BPITrade settlement account with BPI Direct Savings Bank has been lowered from P5,000 to P500.00. As a non-ATM deposit account, the BPITrade settlement account will earn interest as follows:

Interest Rates (per annum)
If daily balance is:
PhP 0 - 499 0.000% p.a.
PhP 500 and above 1.750% p.a.

Please visit the FAQs on the BPITrade website for more information.

Thank you.


BPI Trade Team

Visting the BPITrade FAQs

Following the suggestion, we visited the FAQs page on the BPITrade website for more information:

"What is the minimum investment required to open a BPITrade account?

There is no minimum investment required to open a BPITrade account. However, before you can purchase shares of stock, fixed income securities, or mutual funds, you must first deposit funds into your BPITrade Bank Account. The BPITrade bank account ("Settlement Account" maintained with BPI Direct Savings Bank) requires an Average Daily Balance of only PhP 500.00 (emphasis by Marginal Investor)."

 

Good for starter stock traders

This development is a boon to the beginning stock trader. First, it decreases the time required to accumulate sufficient funds for starting your first stock trading operating cycle. Second, it contributes to the much needed liquidity or cash position of the beginning stock market investor.

For those familiar with the game plan proposed in my earlier posts How to Build Equity for Your Speculative Stock Trading and Finding the Money for Investment, we said that for one who saves a minimum of 275 pesos monthly or on the average 2% to 3% of his or her monthly salary or earnings, we need a year to accumulate funds for opening and maintaining a BPI Expressteller Savings Account.

With the lowered monthly maintaining ADB of a BPITrade Bank Account, it would now make sense to open a BPITrade Account in just over a year of saving money, and place our first stock market buy order in under two years of accumulated savings. Third year into our savings program, we are already warming up on the stock trading game, and well on our way to converting our stock trading profits into a more secure investment vehicle like investment funds.

Measuring Our Stock Trading Profit

The Starter Investor Measures Trading Performance

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

KEEPING TAB OF OUR TRADING PROFIT is more about tracking our success in the stock trading game. But how do we measure our accomplishments?

Reinvestment

"In a continuous program" says Benjamin Graham, the author of The Intelligent Investor: The Classic Text on Value Investing, "no market profit is fully realized until the later reinvestment has actually taken place."

Trading profit

In more concrete terms, the "true measure of the trading profit" Graham says in Chapter Two entitled The Investor and Stock-Market Fluctuations, "is the difference between the previous selling level and the new buying level."

For illustration, let us use the completed stock trading operating cycle mentioned in a previous post on  BPITrade Updated Fee Structure:

This shows a trading profit of almost 8 percent based on our previous total sell price. Just maintain similar results in the next 9 to 12 stock trading roundtrips and you are on your way to doubling your money probably.

Buy Stocks or Hold Cash in High Market Levels

The Starter Investor Buys Stocks

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

DECIDING TO PUT YOUR MONEY IN STOCK OR KEEP YOUR CASH ON HAND during high market levels may not be an easy task for the marginal investor.

But the following insight should help: "On the whole it may be better for the investor to do his stock buying whenever he has money to put in stocks, except when the general market level is higher than can be justified by well-established standards of value" says Benjamin Graham in Chapter Two of his book The Intelligent Investor: The Classic Text on Value Investing.

Sometime in February 2007, we needed to make a choice between keeping our cash on hand or making an investment and buying 10 shares of Ayala Corporation at 630 pesos per share when the general market level is high by my reckoning.

Deciding to invest in stocks

Keeping the money with me will expose my funds to the greater risk of tempting alternatives like buying a digital camera, eating out and going shopping, or enrolling in that short course for a home-based business. I ended up buying the Ayala Corporation stock and assuring myself that it is better to have a long-term investment and a possible paper loss of 50 percent that can be fully recovered over time than no investment at all.

Stock and cash dividends

By the end of March 2009, I had received 4 shares for stock dividends, about 137 pesos for cash dividends, and 128 pesos for value of fractional shares from the stock dividend.

Based on the closing price of 206 pesos, the nominal valuation of my investment portfolio is about 3,150 pesos. The total cost, however, of my investment including BPITrade upliftment fee is 6,515 pesos. This meant I had a paper loss of nearly 52 percent.

Precisely, my paper loss is almost the value approximated by Benjamin Graham that an investor may experience in a well-defined bear market.

Therefore, so long as there is no "convincing indication that the underlying values have been permanently affected" - this Starter Investor has no worries.

How to Build Equity for Your Speculative Stock Trading

The Starter Investor Strategy for Building Equity

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

STRATEGIES FOR BUILDING YOUR EQUITY for the purpose of stock trading are derived from what I shall call the Marginal Investor Triangle.

We start out with generating savings being our main objective, hence making us Savers.

Since savings does not offer protection against inflation, we seek a complementary activity that shall serve as a hedge. Thus, we become attracted to the hedge provided by capital gains obtained from engaging ourselves in the stock trading business, partly transforming us into Traders.

When the saver and the trader are placed in the presence of each other, they attract one another and from their union is born the Investor and his investments. This point completes the formation of our Marginal Investor Triangle. 

Saver

Clearly, the starting point for the investor described in my previous post Finding the Money for Investment is generating savings. Set aside no less than 275 pesos monthly and within a year, we shall have a desirable balance for opening a BPI Expressteller Savings account: 3,000 pesos.

Investor

Continue with your savings program and by the second year, we shall be ready to open our BPITrade account in preparation for our stock trading operations.

 

The First Step: Starter Stock Trader

By the third year of our savings program, we shall have the equity for speculative stock trading. From being savers, we now become swing traders looking for buying opportunities and capital gains by investing in the Philippine Stock Exchange.

The Goal: Intermediate Stock Trader

We shall continue with our saving and trading activities until we can build a fund of over 50,000 pesos. Why this amount? Because this is the minimum price of our ticket to the world of BPI Investment Funds.

BPITrade Updated Fee Structure as of April 1, 2009

NOTE: This is an old post and most of the details are not current anymore. We are not updating this post anymore since its posting on April 11, 2009. So, readers are advised to go straight to the BPI Trade website for more details. Here is the link to the BPI Trade FAQs:

BPI TRADE FAQs

BPITrade Updated Fee Structure

BPITrade updated its fee structure beginning April 1, 2009. Here is the email message sent to BPITrade clients:

From: bpitrade@bpi.com.ph
Subject: BPITrade Updated Fee Structure
To: Marginal Investor
Date: Tuesday, March 31, 2009, 1:48 PM

Dear BPITrade Client,

In line with the implementation of the Documentary Stamp (DST) for Buy transactions, we are sending an updated Excel file which will aid you in determining your Buy and Sell transaction costs and proceeds. The breakdown of your Net Buy and Net Sell amount are presented in detail.

In addition, we are also providing you with our updated fee structure in the table below. Effectivity and implementation of the updated fees/charges will be on April 1, 2009.



For further inquiries, please call us at 816-9190 or 816-9192. Thank you very much.

BPI Securities Corporation

For illustration purposes, let us use a buy and a sell transaction under 8,000 pesos in value that we did while trading our Ayala Corporation shares:

From our total sell price of 4,414.27 pesos , we take out the total buy price of 4,067.08 pesos to give us a capital gain of 347.19 pesos or about 8.5% yield based on total buy price.

In these two transactions, our selling price of 223 pesos less buying price of 202 pesos will make a 420 pesos gross margin for 20 shares.

Then, we split our gross margin with BPITrade by about 4:1 ratio. We take over 80% while BPITrade gets under 20% of the gross margin in this completed stock trading operating cycle.

Next Post: How to Build Equity for Your Speculative Stock Trading Operations

Marginal Investor Swings with the Stock Price

The Starter Investor Learns Swing Trading

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

BECOMING A GENUINE INVESTOR in common stock is our ultimate goal. You may read that the previous two posts are parts of a series that will show how Marginal Investor understood and applied the principles and techniques described in the book The Intelligent Investor by Benjamin Graham in the context of a beginning investor who is a Filipino, residing in the Philippines and with a shoestring budget to begin with.

Investment Money

You may also find in Awakening of the Marginal Investor or Speculator that I suggested using the speculative method of stock trading and taking advantage of quick price changes until one has the amount of over 50,000 pesos. Of course, one may invest in common stocks through the Philippine Stock Exchange with funds under 50,000 pesos. But this would be insufficient to create the suggested diversified portfolio of common stocks giving one the expected 4% to 8% average annual return. For this reason, I would put on hold the series about the Intelligent Investor until that time when we have complied with Marginal Investor's proposed fund requirements.

Investors and Stock Traders

Nevertheless, Chapter Two of The Intelligent Investor is so much related to the stock trading game that I would still venture to include some portions of it here. Entitled The Investor and Stock-Market Fluctuations, this chapter offered some description of the proper attitude that investors should take in the matter of price fluctuations in common stocks. Since, for the time being, we shall play the role of stock traders with speculative tendencies at that, we shall note the warnings and pick up suggestions as they apply to us.

Buy Low, Sell High

In discussing Market Fluctuations in Individual Stocks, it mentioned that the principle of buy-low-sell-high can be applied more satisfactorily with primary reference to individual stocks and with comparatively little regard for the level of the general market. The maxim is: "Buy during periods of of pessimism and low prices; sell during periods of optimism and high prices." This is just exactly what we need to understand because we are focusing only on one issue: Ayala Corporation. And we shall use the facilities of BPI Trade for our online stock trading.

Swing Trading

Furthermore, while we were digressing from our main focus of investing towards stock trading, we will be maintaining a clear view of our overall goal at all times. Talking about stock trading, stock traders typically gravitate around any one of the major styles of equity trading and stick only to that style. For our stopover, this Starter Investor decided to play the role of a swing trader.

Playing the role of a swing trader, we shall hold our Ayala Corporation shares for a period of time, generally a few days or two or three weeks, and we will trade this stock on the basis of its intra-week or intra-month oscillations between optimism and pessimism, following our maxim.

Stock Trading Operating Cycle

In the introduction to my previous post, I explained how I completed my first stock trading operating cycle, from 4,050 pesos cash to buy 20 shares of stock to generating receivables, then collecting the receivables and converting it back to cash and picking up 350 pesos appreciation of my principal in the process. Here is what the operating cycle looks like:

Waiting for the Swing

In the first week of April, we started a new roundtrip by using 4,080 pesos of our cash to buy 20 shares of Ayala Corporation at 204 pesos per share. Since our goal is to generate a minimum return of 6% for our total available cash position every roundtrip - which at this time is 4,400 pesos - then we need to obtain net capital gains of 265 pesos.

Transaction Cost

Transaction costs for selling our stock inventory are about 1% to 2% of gross sales. For this cycle, we should consider selling only when the price is over by a minimum of 8% based on our total purchase cost of 4,080 pesos, which means an offer price of 221 pesos per share. What we need to do now is simply wait for the stock price to swing from 204 pesos to 221 pesos per share.


Next Post: BPITrade Updated Fee Structure and Stock Cost-Proceeds Computation

Awakening of the Marginal Investor or Speculator

The Stater Investor Triangle

As of our April 5, 2023, update, we have changed our name from Marginal Investor to our current name, The Starter Investor. Please refer to our About Us page for further information.

TO SELL AT A MODEST PROFIT was an opportunity so tempting I took advantage of it without hesitation. I am referring to my decision last week of selling all of what my so-called stock portfolio consists - the 20 shares of Ayala Corporation at 220 pesos per share. I bought these shares in two board lots of 10 shares each:

• 10 shares on January 29, 2009 at 207 pesos per share; and
• 10 shares on February 23, 2009 at 198 pesos per share.

My total acquisition cost for these 20 shares is 4,050 pesos. This trading cycle gave me a net earnings of 350 pesos or close to 9% capital gains in three months.


Precisely, this is one situation the book The Intelligent Investor warns about when one is seriously involved in investing. Specifically, Chapter One of the book was entitled What the Intelligent Investor Can Accomplish. This chapter was organized as follows:

• Introductory paragraphs

• Investment Before World War I and Today

• Results to Be Expected by the Defensive Investor

• Tax-Exempt Bonds: State and Municipal

• Results to Be Expected by the Aggressive Investor

• "Yes" and "No" Table for the Investor

• The Investor as Security Owner

Of course, some portions of this chapter may no longer be relevant today. But that is offset by the larger portion describing the valuable insights and suggestions that any beginning investor should know. The introductory paragraphs presented several concepts that are fundamental to understanding this whole idea of investing.

Investing Defined

"An investment operation is one which, upon thorough analysis, promises safety of principal, and a satisfactory return. Operations not meeting these requirements are speculative."

The Investor

Our typical investor contemplated by the book is one who:

• emphasizes the safety of the principal.

• buys securities outright.

• holds these securities for a considerable period.

• more interested in annual income than in quick price changes.

The word intelligent was given the meaning endowed with the capacity for knowledge and understanding. Interestingly, however, the intelligent investor is more about character than of the brain.

The two categories of investors are the defensive or conservative investor, and the aggressive or enterprising investor.

Defensive investor

For the defensive investor, intelligent action is largely the exercise of firmness in the application of relatively simple principles of sound procedures. 

Aggressive investor

In contrast, the first rule of intelligent action for the aggressive investor is never to embark on a security purchase which he does not fully comprehend and which he cannot justify by reference to the results of his personal study or experience.

Investing in Common Stock

The emerging trend at the time the book was written, was the inclusion of common stock as an integral and important part of a sound investment program. Among the advantages cited, related to tax considerations, is that common stock can be selected more on the basis of capital gains expectation rather than current income. There must be some caution, however, because paying attention to the appreciation of the principal may lead the investor into speculative attitudes and operations resulting in financial loss.

Another advantage of common stock is based on long-term experience. A diversified holding of representative common stocks was found to be more profitable than a bond portfolio. Provided, the shares were purchased at reasonable market levels, that is, levels that are reasonable with respect to well-defined standards derived from past experience.

Results to Be Expected by the Defensive and Aggressive Investors

Defensive return on investment

The defensive investor may expect a 4% return for his money. True, this is not a brilliant achievement. Nevertheless, it is attainable with minimum intelligent effort. 

Aggressive return on investment

The aggressive investor, should he or she listen to the warnings and positive suggestions presented, may expect to double the average annual return of the defensive investor.

Furthermore, The Intelligent Investor offers this encouragement: The genuine investor in common stocks does not need great equipment of brains, and knowledge, but he or she does need some unusual qualities of character.

Marginal Investor Notes

Let us go back to the main purpose of this website described in our page About Us. We said that it is about how one may start his or her stock trading and investing activities in the Philippines from scratch. In addition, we also said that we shall limit our investment to common stock and with only one issue: Ayala Corporation.

Considering the suggestions of The Intelligent Investor and the practical situation of our beginning marginal investor, it led me to the observation that there can only be a meaningful talk about investing when one's fund is in excess of 50,000 pesos.

For any amount less than this, it is impractical to create a diversified portfolio of common stocks because of the minimum board lot requirements for purchasing shares of stock in the Philippine Stock Exchange.

In addition, focusing more on capital gains at this level may easily give one more opportunity for earnings than just waiting for the dividends. This is why we sold out my portfolio of 20 shares of Ayala Corporation and gained 9% in the process. All we need to do now is to wait for the next price change until we could buy the same number of shares at our lowest purchase price of 198 pesos or even just about 10% discount on our selling price.

Stated in a different way and sounding more like an oxymoron, we shall grow our starting capital of 5,000 pesos using the speculative methods of stock trading that take advantage of quick price changes until we have the amount of over 50,000 pesos required for our investment goals. Therefore, any lesser amount should better be applied in the only alternative available: stock trading.


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Awakening of the Intelligent Marginal Investor: Introduction

The Starter Investor Reads The Intelligent Investor

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

This article is the first of a series that will show how The Starter Investor understood and applied the principles and techniques described in the book The Intelligent Investor by Benjamin Graham in the context of a beginning investor who is a Filipino, residing in the Philippines and with a shoestring budget to begin with.

The book is not an easy read but given sufficient interest and careful thought, any start-up investor may pick up jewels of insights that may guide one in this game of money and investing. The contents of the book are as follows:

Part One: General Approaches to Investment

• What the Intelligent Investor Can Accomplish

• The Investor and Stock-Market Fluctuations

• The Investor and His Advisers

• General Portfolio Policy: The Defensive Investor

• Portfolio Policy for the Aggressive Investor: Negative Approach

• Portfolio Policy for the Enterprising Investor: The Positive Side

Part Two: Principles of Security Selection

• United States Savings Bonds: A Boon to Investors

• Security Analysis for the Lay Investor: General Approach

• Stock Selection for the Defensive Investor

• Stock Selection for the Enterprising Investor: The Appraisal Method

• Detection of Undervalued Issues by Security Analysis: Three Examples

• The Pattern of Change in Stock Earnings and Stock Process

• Group Studies of Earnings and Price Developments

Part Three: The Investor as Business Owner

• Stockholders and Managements

• A Study of Stockholder-Management Relations in Two Industries

Part Four: Conclusion

• "Margin of Safety" as the Central Concept of Investment

• Appendix: Buying and Selling by "Central Value" Method

Since the book was first published in 1949, the examples may no longer be relevant. Even some suggestions may already be obsolete at this time. Nevertheless, I would never hesitate to recommend the purchase of the book by anyone who is seriously interested in buying common stocks for investment purposes.

Speaking of common stocks, we just got a copy of the Notice of Annual Stockholders Meeting, being an investor of Ayala Corporation to be held at the Grand Ballroom of the Hotel InterContinental Manila, Ayala Center, Makati City, on Friday, April 3, 2009, at 9:00 a.m.

Reading from the accompanying SEC Form 20-IS, we found out that Ayala Corporation as of December 31, 2008, has:

• 496,983,784 number of common shares outstanding.

• 103.7 billion pesos market capitalization based on the closing price of its shares.

• 209 pesos/share closing price.

• 7,916 is the approximate number of registered holders of common shares.

• Henry Sy, Sr. is the top 6 registered holder of common shares with 1,296,636 shares.

Our next post will be related to the topic What the Intelligent Investor Can Accomplish. Check it out.

Finding Funds for Investment: Tips and Strategies

The Starter Investor Guide for Accumulating Investment Funds

Effective from our update on April 5, 2023, we have rebranded from Marginal Investor to The Starter Investor. For additional details, please visit our About Us page.

Finding the money

Finding the money to fund our investing activities is among the most important first steps of our journey to financial freedom.

Budget deficit

Let us imagine someone who has a monthly salary or earnings of between Php10,000.00 to 15,000.00 monthly. And assume that this employee or this self-employed individual has one or more of the following financial commitments:

• salary loan either from the Social Security System (SSS) or the Government Service Insurance System (GSIS);

• personal loans like those offered by Chinatrust, Citifinancial, Banco de Oro, Asialink, or even your local credit cooperative;

• business loan from commercial banks, rural banks, or even the now familiar micro financing institutions;

• obligations arising from cash advances and purchases using credit cards offered by Citibank, Banco de Oro, BPI, AIG, Metrobank, among many others;

• housing loan from PAG-IBIG;

• assortment of borrowings including those from relatives, friends, and others.

In addition to the above obligations, we must also include household expenditures like the following:

• living expenses (food, clothing, medicine),

• utilities (water, electricity, telephone),

• education,

• transportation,

• entertainment,

• miscellaneous expenses.

Most likely than not, under this scenario, expenses will be much more than what we have for income. Living within our means will now be a very challenging proposition given the existing commitments and fixed expenses that demands our limited resources. What can we do? Where can we find the money to invest? Is there a way out of debt?

First Law of Gold

We cannot delay investing for our future. There is a huge opportunity cost when we consider the impact of compound interest, whether it applies to our debts, or to our investments. Our desired situation is to diminish in an orderly fashion, the outstanding balances of our debts. At the same time, we also gradually accumulate funds for our planned stock trading activities.

The first place to look for funds, of course, is our paycheck or any regular income that comes our way. These funds should not just pass through our hands straight away to our creditors.

We find an excellent solution from the book The Richest Man In Babylon. Stated as The First Law of Gold, here is our strategy:

"Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family."

Described in the a different way as the First Cure For A Lean Purse, the book further explained the first law in this manner:

"For every ten coins thou places within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul."

Allow this thought to sink into your subconscious mind and meditate on it. Once you started believing in it, express it in action.

Practical application

Let us say we apply the above principle at that point when we have decided to start saving for our nest egg. Some compromises may have to be made here and there. But the important thing is we start the program. Here is what our savings schedule may look like in Philippine peso (Php):

Savings for Year 2007

• October - 160.00
  
• November - 440.00
  
• December - nil
  

Savings for Year 2008

• January - nil
  
• February - 100.00
  
• March - 25.00
  
• April - nil
  
• May - nil
  
• June - 600.00
  
• July - 500.00
  
• August - 100.00
  
• September - nil
  
• October - nil
  
• November - 400.00
  
• December - 120.00
  

Savings for Year 2009

• January - 1,600.00
  
• February - 2,000.00

Our total savings would have been Php6,045.00 after 17 months, or close to Php360.00 monthly savings on average. This amount represents about 2% to 4% of our monthly salary or earnings assumption.

BPI Trading Account service charge

In another post entitled BPI Trade: Best Online Broker for Novice Trader, we mentioned that our BPI Direct Trading Account requires an Average Daily Balance of PhP 5,000.00. In practice, however, we learned that BPI will stop charging the Php100.00 monthly service charge if your account balance is over Php1,000.00.

Thus, using our example above, BPI would have applied the service charges for the first 14 months of our savings program or a total of Php1,400.00. This is equivalent to about one-fourth of our gross funds accumulated.

Flow of money

Presented here is how our money will flow once we started our stock trading activities. To avoid further expense, we will consider someone who has a payroll ATM account with BPI. What we mean is an employee who was given by his or her company a BPI Savings Account wherein an employee's salary is directly credited. This type of account has no stated maintaining balance; and consequently, it does not incur any service charges.

We enroll this BPI Savings account with BPI Express Online to be able to transfer funds over the Internet to our BPI Direct Trading Account.

To withdraw funds from our trading account, we will fill up a web form with BPI Trade, which then will transfer the withdrawn amount into our BPI Saving Account. The funds is now available for withdrawal through ATMs.

Money accumulated

After deducting the BPI Direct service charges, our net saving is about Php4,645.00 or roughly Php275.00 monthly. On the average, we would have saved 2% of our monthly salary or earnings.

Now is the right time to invest

Clearly, it takes tremendous effort, patience, and resolve to start a savings program for investment purposes especially if you are deep in debt or have lots of financial obligations and limited income. But this should not stop us from making our first step however small, towards financial freedom.

In the end, we should rather be more motivated now than ever to accumulate that money we need for investment.