Archive for May, 2009
Why Not to Buy from this Financial Advisor as told to me
Why Not to Buy from this Financial Advisor (as told to me).
by: Kendrick Chua, the Wealth Warrior
Someone I know started complaining about how unprofessional this financial advisor is. This FA works for a financial company and have requested an appointment from my her. My friend, despite sensing that she will be asked to buy a product agreed nevertheless as a courtesy to her friend.
First thing that peeved my friend was that FA was 45 minutes late. As a general rule, arriving late for a meeting is already disrespectful to the other party. Arriving late for a meeting we personally set is insulting! To begin with, we should also be sensitive enough to other people’s time and being late should not be accepted especially if you don’t have a good reason to be so (traffic is not a valid reason).
Tags: sales blunder
The Concept of Hyperwage
The concept of Hyperwage
by: Kendrick Chua, The Wealth Warrior
The word may be alien to most of us. We are after all more familiar with the term minimum wage-the least compensation that a worker should take home. Hyperwage however is different. It is giving the employees much more than their current income.
Susan Bigay, one of our lecturers in the Tax Planning class in the 14th RFP Course shared to us this concept. To grasp the idea better, she shared to us the story of her dermatologist friend.
Now her dermatologist friend has a clinic in one of the malls in Metro Manila and is earning rather high-only Ps. 300,000.00 per day (yes, per day). That translates to Ps. 9M a month of sales and when we deduct the operating expenses, it still gives her 80% profit or Ps. 7.2M. For some, this is already a whole life savings. For the others, this figure is only a dream.
To say that she is quite successful in her career is an understatement and that is why it upset her when one of her trusted staff stole 3 days worth of sales from her clinic. This staff has been with her for the past 5 years and yet she did what the doctor thought was impossible.
Tags: salary
Investing in the Fine Wine Market
Investing in the Fine Wine Market
by: Kendrick Chua, The Wealth Warrior
This could be the most unusual investment an investor can ever make. After all, most of us see wine as liquor that is to be savored and enjoyed in special occasion and the rarer ones are enjoyed in even more special occasions. But what do we know about this aphrodisiac and its investing opportunities?
Thanks to the Global Investors Center, I was able to attend a seminar on Investing in the Fine Wine Market. The speakers are from Premier Cru, a fine wine specialist investment company in Europe and they travel all over the world in educating the public about the immense opportunities that lie beyond the grapevines and chateaus of France.
Why Invest in Wine?
Wine investment can be classified in the Specialized Investment in the investment spectrum such that it is not for everyone.
According to the speakers, the price of wine like any other investment is determined by the Supply and Demand market. A price of a particular wine goes higher if there are fewer bottles in the market due to consumption.
The bottom line here is that wines are meant to be consumed. And sooner or later (like twenty years later), those bottles will be opened and drank thereby diminishing the market of a particular batch of production. The wines are limited so if the supply goes down and the demand is high, price goes up. Vintage wines produced are never made again.
Wines are also tangible assets. You know exactly how many bottles the company can buy for your minimum investment of 10,000 Euros. They will go out and create a portfolio of wine for you depending on your risk profile. You can even have them ship your wines to the Philippines and just drink them.
They are also largely non-correlated to stock markets, properties, or other asset classes. They stand alone and that is why they have low risk investment and less volatility compared to other standards.
What is an investment wine?
Not all wines are meant for investing. Some are just for drinking, others are for cooking. To know which wines to invest on, Premier Cru recommends that it must an instantly recognized label or brand (First growth like Latour, Lafite, Margaux and Haut Brion) with a long tack record of quality and high prices.
An investment wine must also come from good or great vintage and be highly rated by leading wine critics on both sides of the Atlantic. Ideally, it should have a 95% rating.
It must also have strong, consistent global demand for previous vintages of similar quality and it must show consistent upward price movement beyond a minimum set of return.
And lastly, it must have the ability to age and improve over a long period of time.
How much can I earn?
From January 1990 to February 2009, Fine Wine has yielded a 15.52% compounded average growth rate (CAGR). That return is definitely much better than what the equities have generated over the past two decades. (Click here to see chart).
In conclusion
Investing in the Fine Wine market is something that is still alien for us Filipinos. If I have not had the privilege of attending the talk, I wouldn’t have an idea about this as well. The market posts lots of potential for those who want to diversify their offshore holdings. Wouldn’t it be pride as well to personally own some of the finest wine in the world?
But before tasting this asset class, remember the age-old investment wisdom: Invest only the money you can afford to lose.
Other references:
Tags: fine wine
How to think like a Billionaire
From Early to Rise newsletter. I take no credit for this article.- The Wealth Warrior
How to Think Like a Billionaire
By Michael Masterson
In his thoroughly entertaining book The Prime Movers, Edwin A. Locke gives this example of the way entrepreneurs think:
An average person observes evergreens growing along the roadside and thinks that they look pretty, especially when partly covered with snow. At this point, his thinking stops. An entrepreneur observes the same trees and thinks, “These trees would look good in people’s living rooms at Christmas. I wonder what people would pay for them?
And he would continue to ask such questions as:
* How hard is it to grow evergreens?
* What investment is required?
* How big should they be before being cut?
* How difficult would it be to cut and transport them?
* How much would it cost?
* How long would they keep before losing their needles?
* Where would they be sold?
* What would the competition be like?
* Could I make other, related products – e.g., wreaths?
* Can I make money in such a seasonal business?
* How much?
* How can I get started?
This kind of active, directed thinking is one of the things that separate entrepreneurs from the rest of humanity. In fact, the most successful entrepreneurs in history – all of them mega-billionaires by today’s standards – seemed to have dynamic, pragmatic minds.
Locke gives plenty of examples, including these:
Thomas Edison: He was a “virtual thinking machine. Almost until the day he died, his mind poured forth a torrent of ideas, and he might track as many as 60 experiments at a time in his laboratory.”
Steve Jobs: He bombarded people with his ideas – his investors, his board of directors, his customers, his subordinates, and his CEO John Scully.
Henry Ford: “He threw himself into every detail, insisting on getting small things absolutely right…. But he never lost sight of the ultimate, overall objection. He had a vision of what his new car (the Model T) should look like. From all the improvisation, hard thought, and hard work came a machine that was at once the simplest and the most sophisticated automobile built to date anywhere in the world.”
You may be thinking, “Hey, I’m no Thomas Edison or Steve Jobs or Henry Ford.” Well, neither am I. And I could rattle off a dozen multi-millionaire entrepreneurs I know who don’t have that kind of brain capacity either.
Raw intelligence is not the issue. If it were, Einstein would have been wealthy. What matters in the world of commerce is how you think.
Some people, whether because of their upbringing or their DNA, have a natural billionaire mind. But just about anyone who is smart and ambitious can learn to think like a billionaire.
You can transform your mind completely and permanently in a matter of a few short months by making small changes, one at a time. It will take some effort, though. As Joshua Reynolds once said, “There is no expedient to which a man will not resort to avoid the real labor of thinking.”
Begin by vowing to talk to every successful person you know or meet. Tell them how much you admire what they have accomplished and ask them how they do what they do.
You may be amazed at how open they will be to such inquiries. Nine times out of 10, they’ll be eager to tell you just about everything they know.
Unfortunately, many of the twentieth century’s greatest entrepreneurs have been disparaged by historians and the media. As Locke points out in The Prime Movers, if you mention the names Andrew Carnegie or John Rockefeller or Cornelius Vanderbilt to most people, they think “greedy robber barons who took advantage of their circumstances.” They know nothing about their accomplishments. What they know, for the most part, is based on persistent myths that prevent them from learning from these men and prospering.
Locke says:
“It is often claimed that the Prime Movers have been viewed with suspicion at best and with distaste or repugnance at worst…. The most basic motive [of those who envy them] is… hatred of the good for being good… it is hatred of the Prime Movers because they are intelligent, successful, and competent, because they are better at what they do than others are.
“The ultimate goal of the haters of the good is not to bring others up to the level of the most able (which is impossible) but to bring down the able to the level of the less able – to obliterate their achievement, to destroy their reward, to make them unable to function above the level of mediocrity, to punish them, and, above all, to make them feel unearned guilt for their own virtues.”
When you become super-successful, you’ll have to learn how to handle the people who are going to resent you for achieving what they themselves have been unable to do. But first, you have to get yourself into that enviable position. And you do that by practicing the thinking of the great entrepreneurs who thought like billionaires and so amassed billions.
I’ll be writing more on this subject in the future. But for right now, here are eight characteristics of the billionaire mind that you can emulate:
1. A “normal” person is concerned with protecting his ego. When dealing with a problem he doesn’t really understand, he pretends he understands the contributing factors and doesn’t try to find out what anyone else thinks. A person with a billionaire mind asks questions incessantly. He has no ego when it comes to learning. He knows that knowledge is power.
2. A “normal” person has a consumer mentality. He looks at a hot new product and thinks about how he would like to own one. A person with a billionaire mind has an entrepreneurial mentality. He looks at it and thinks, “How can I produce this or something similar in my own industry?”
3. A “normal” person is wish-focused. He daydreams about making gobs of money. A person with a billionaire mind is reality-based. He is always analyzing his own success and the success of others and wondering how he could learn from it.
4. A “normal” person, when confronted with a challenging idea, thinks of all the reasons why it might not work. A person with a billionaire mind sees the potential in it and disregards the problems until he has a clear vision of how it might succeed.
5. A “normal” person resists change. A person with a billionaire mind embraces it.
6. A “normal” person accepts the status quo. A person with a billionaire mind is always looking to make things – even good things – better.
7. A “normal” person reacts. A person with a billionaire mind is proactive.
8. A “normal” person looks at a successful business owner and thinks, “That guy’s lucky.” Or “That guy’s a shyster.” A person with a billionaire mind thinks, “What’s his secret?” And, “How can I do that?”
Start by being humble and asking questions. Do this until it becomes a habit. Then take on another characteristic of the billionaire mind – like looking at a successful new product and thinking, “How can I do something like that?”
Go through the list, mastering one characteristic at a time, and within three months you will be able to create new businesses almost automatically. You will become a natural leader. Money will flow to you like water coming down a hill. And then you’ll be ready to deal with all the “normal” people who are jealous of your incredible success.
Tags: billionaires
ING Equity Funds: “Phoenix” Funds
ING Equity Funds: Phoenix Funds
by: Kendrick Chua (The Wealth Warrior)
According to the legend, the Phoenix is a bird that dies in flame and reborn from its ashes. You might be wondering by now what has that got to do with finance and investment when the similarity is like heaven and hell.
Last year was a very dreadful year for the financial markets world wide and our local funds were hit hard by it to say the least. The ING equity fund and high-conviction fund have been the worse performing funds across all Unit Investment Trust Funds (UITF) and Mutual Funds (MF). They both had losses of 56% and 58% respectively compared to the 48% of the index.
In other words, they are already dead. Come on the index has already suffered a lot (and so did the investors) and it doesn’t provide any comforts that the funds did a whole lot worse.
Tags: Mutual Funds, stocks
A Second Look at the PSEi
A Second Look at the PSEi
by: Kendrick Chua
The PSEi has been going on a very strong run. The question in everybody’s mind is whether this bull has the legs to run all the way or it will stop short and take a break?
Since the start of the year, the PSEi has risen 22% from 1872.25 to 2,283.60. Certainly, nothing to sneeze at considering it fell 48% the year before and so the gain is certainly a very welcomed development to say the least (Hurray!).
Current sentiments I surveyed, although an improvement from depression mood last year, is still cautious. With much uncertainty still going around, people still maintained the wait-and-see attitude. After all, this may be just the infamous, bear-market rally that dupes all investors into jumping into the woods again, only to be sized up by the bear and chow down.
Tags: stocks, technical analysis
Money Management Lessons From My Mother
Money Management Lessons from my Mom
by: Kendrick Chua
Mother’s Day is fast approaching and I thought I’d dedicate an entry to my mom and what better topic to write than to share money management lessons I learned from my mom.
Amongst her five sisters (and six brothers), I can say my mom is the least educated having only graduated from highschool and immediately working as a teacher after. In contrast, her sisters took up college and pursued their respective degrees.
My mom never regretted not going to college. I guess the reason why she never did is that she earns more than her sisters and has built a sizeable nest egg that can let her live a comfortable life.
Tags: Special Occassions
