Saturday, November 25, 2017

Challenges Millennials Face in the Stock Market

Image by Samantha Gonzales / Business World 

I came across this article by Fehl Dungo of DailyPik encouraging millennials to invest in the stock market. The Philippine population is now dominantly young—with an average age of 22, it puts our country in a sweet spot that allows it to grow in the next 30 years. Which means that young people have a lot of time ahead of them to let their money grow. 

There is also ease of access. Stock trading and investing used to mean having money enough to fund a broker, whom you call to buy and sell stocks for you. But with a number of online platforms, all you need is a minimum of Php25,000 (perhaps even less) to get started. Once online, you can now personally choose which stocks you want to trade, in real time, as long as you have access to good internet. 

Now this is where things get interesting. Yes, I agree with most of the article: a young population, coupled with a long time horizon and ease of access to trading—all of these favor the young. And perhaps the challenge would be combatting the nature of youth as well. 

Hello, FOMO and ADHD. 

Once online, not everyone is educated enough to know which stocks to pick and how long to hold on to it. Look at trade forums and Facebook groups, and you always get that newbie question: “Hi, I have ___ thousand pesos. What stock is good to invest in?” Then other members would jump in with “recos” of their favorite stock. It’s very tempting to jump on the loud, popular, trendy stocks. It’s so easy to fall for “hyped” stocks if you don’t know what you’re getting into. Most of the time, newbies then buy those “hyped” stocks. You see the price going up and then you chase it all the way to the top. Then cry and complain online when the price of the stock they just bought start correcting. It’s succumbing to the fear of missing out, or FOMO. 

When the price falls, you switch to another stock which starts to move fast, hoping to recover your losses. Do it again and again and your capital might just be wiped out by bad, ADHD trades. 

This could be easily avoided by studying the market first, then the stocks and the companies behind them. One also needs to be patient. A stock you buy now might climb high and then correct, so be prepared for that. Don’t panic and dump it all to transfer to another stock. 

In a way, I’ve been one of those ADHD/FOMO traders. Had maybe 5-6 stocks on a less than Php50k portfolio. The gains and the losses basically just cancelling each other out and leaving me with minimal negligible gains. Jumped on a stock that seemed like a good idea and then it started to drop and drop. Cut my losses, only to see that stock climb up again. 

I learned from it and started pruning my portfolio. Sold all the losing positions and placed my money on an undervalued stock. After 4-6 months, it went to its all time high. But I didn’t know how to lock in gains, or place a stop loss. I saw a stock with 70-85% in gains wither down and melt to a negative port. But I held on through those rough, red months. Waited for the stock dividends, saw it climb up, go down, sold some. Yet all told, after holding the stocks for around 16 months, the stock has gained over 115%. 

Of course, there are still a few coulda, woulda, shouldas. Shouldn’t have sold when the price was going down. Should have added on that sharp drop. These are hard lessons to learn, and I’m still learning. 

The Philippines has a population of over 100M, and depends on the data you look at, only less than 1% invest in the stock market. We also have a low financial literacy late, and a large part of the population that’s unbanked.

Another interesting development is that the profile of investors has changed and has “skewed towards the lower income bracket.” Those with less than Php500k income per year are now 40% of online investor accounts. We are expanding, but we still have a long way to go. 

So, yes, we should invest in the stock market—not just millennials. Heck, even the Titos and Titas of Manila need to learn more about how money works and how saving and not spending it all on #travelgoals will help us in the long run. It’s not about #FOMO-ing on the trendy, hot stock. We need to be patient and diligent, in order to be truly #blessed.

Saturday, November 11, 2017

Bob Ong: Living Off Writing

Bob Ong's proof of life: his 1998 Webby PH Award

I found out too late that Bob Ong, author of the book ABNKKBSNPLAko?! and probably responsible for getting a lot of Pinoys to read, had an AMA (Ask Me Anything) session at Reddit PH. 

It took place on October 26 between 1-3PM, but because of the huge interest, it took him a good 6 hours to answer all the questions posted for him. 

While I didn’t make it on time to personally ask him a question, my favorite queries have to do with what Bob Ong does with his time. He said he fills his days with “hayop at halaman.” So basically it’s a more leisurely, less stressful life in what is probably his middle age years. 

From Bob Ong's Reddit PH AMA

What enables this life? A reader asked this: “At what point in your career did it become self-sufficient just by writing books?” 

Bob Ong said that he doesn’t really need much and lives with just water and a loaf of bread. Of course I understand that’s *not* literal. But because he lives simply, he’s been able to afford his life of “hayop at halaman,” and his peanut butter and bread by the time he published his second book. 

Part of his “proof of life” post was a picture of his Webby Award from 1998, which he got for the “People’s Choice for Weird/Humor.” This means that Bob Ong has been writing for nearly or more than twenty years, since the early days of the internet. Two decades! Wikipedia (not the best source, I know) lists his second book as “Bakit Baligtad Magbasa ng Libro ang mga Pilipino?,” which came out in 2002. This implies that if he went “self-sufficient” *after* the second book, then Bob Ong has been living off his writing by 2003. That’s nearly 15 years of living as a creative person. 

I’m not sure if he’s still working a day job. But he does mention that only his friends and family know of his true identity as Bob Ong. So if he does have co-workers still, then they don’t know they’re breathing the same air as greatness. (Naks!) 

Still interesting is that someone has been going around introducing himself as Bob Ong and then proceeds to ask for discounts and freebies in restaurants. Not cool. But then perhaps expected that someone will try to steal his identity since Bob Ong is famously reclusive and we don’t know what he looks like despite the two decades of his publishing life. 

But still, this is a goal. It’s possible to live off creative work, but then Bob Ong is like the one in a hundred million in the Philippines. You have to be Bob Ong successful to be able to do this. But the real take away for me is that you need to live simply and want not. I’ll be happy with living with “hayop at halaman” for the rest of my days. I think. 

Saturday, November 4, 2017

What to do with your (championship) bonus

Bonus season is coming. 

The thirteenth month (or 14th and even 15th if you're lucky) is something that employees with regular jobs look forward to come November or December. Unfortunately, once the money is there, most people will spend it on expenses, paying back debts or bills, or worst, living large. Before you know it, it's all gone. Or as one saying goes: "Dumaan lang sa palad," or "Nahawakan ko lang sandali, wala na agad." 

Yes, the 13th month is mandated by law. But if you're a "service provider" or "contractor," then that extra money is dependent on the largesse of those we work for. 

Similar to gig workers, athletes are notorious for having boom and bust careers. At their peak, they can command super high salaries. It’s easy to live large if you’re also earning outstanding sums of money. The wear and tear on the body is just too much, that by age forty, it’s time to consider retirement. But they are also prone to injuries. And all it takes is one misstep, one moment before the sport you love leaves you debilitated, in pain, and worse, bankrupt. 

In the Philippines, we see this fate in our athletes. Item: At 63 years old, Efren “Bata” Reyes is still playing the rounds because he can’t afford to retire yet although he already wants to. In his heyday, a championship could get him $100k. Competing in tournaments abroad cost a lot of money now. Expenses could be as high at $5,000 and you need to place at least third to break even. These days, he admits things have changed. After an eye operation in 2005 and an unsteady wrist and tiring easily, Reyes cut short his stay in the US , citing fatigue. 

Item: Then there's Rolando Navarrete, former boxing champ who went on a drug addiction down spiral and is now broke

It’s just sad to see them like this. At their peak, with all their money, there will be entourages and people who ask for a little help. But one should also think about the future. 

I don’t follow basketball as much. But I’m glad to come across this piece of news: the bonus received by Scottie Thompson of the Gin Kings was enough to open “three, four” franchise branches of a barbershop. What’s better: the article from Spin reveals that the business was his own. With a capital of nearly 1 million pesos, Scottie debuted Thompson’s Sports Hair Shop in his hometown of Digos in Davao in late 2016 and now has a franchise out in Paranaque. He’s also gotten some more inquiries about opening up branches in other places. His shop’s signature service, the Thompson’s Cut is relatively affordable at Php120, but also has a student friendly rate of Php99. He’s even thinking of learning the trade himself. So it’s not farfetched that you will have a PBA player cutting a customer’s hair. 

All in all, it’s good that he was already thinking ahead. At 23, he’s only going into his third year playing professionally in the PBA. But he knew that he wasn’t going to be in the game forever, and it was never too early to plan for the future. 

So if you get a windfall or receive your 13th month pay, don't spend it all. Be like Scottie: enjoy some of it, and then save and invest the rest of it. 

Good job to that and congratulations on the championship, Scottie Thompson.