This is the second part of the article, Learnings from BPI Trade’s 2014 Year-end Conference, where I will be covering Tony Herbosa and Salve Duplito. This is not meant to be a summary of everything that was discussed, but simply a reflection of the things I’ve learned from the distinguished speakers.
What I learned from Tony Herbosa
Tony is the founder of the 10,000 strong Traders Apprentice Pilipinas (TAP) and has been a trader for more than two decades already. He was previously the CEO of PNB Capital.
Of all the speakers, it was Tony’s presentation which I found hard to grasp because of my investor mentality since he was talking from a trader’s perspective. Before, I never would have thought of setting aside “play” money for trading because it was our hard-earned savings I’m putting into the market, but I’m hoping even old dogs can learn new tricks. I do see the wisdom in his words, it was just that my mind had its biases at that time so I apologize, because I know I haven’t done him justice in this article since stock market trading was a foreign concept to me and I wasn’t able to absorb everything that he said.
1. What is TAP? As Tony put it, it is a mentoring program, because without a mentor, you’ll just listen to anybody. Ever since the conference, my husband has started following Tony and it’s been quite educational for us. Their lingo’s quite funny, with terms like SUBARU (for basura stocks), BOBO (buy on breakout), etc. Still don’t know what the terms mean since we haven’t attended their seminars, but we’re planning to, within the next quarter.
2. Think non-linear. Be like water. While TAP is a mentoring program, at the end of the day, you must have a strategy. In stock trading, don’t expect a one size fits all strategy to work for all stocks. Look at the waves
3. It’s not what you buy, it’s also how you buy because even good stocks have their bad days and bad stocks have their good days. That’s why he doesn’t give a direct answer when you ask him what stocks to pick, because to him, it’s about riding the waves, be it from a good or bad stock. It’s also not enough to say you had a 200% or 50% return, you have to consider the volume as well. What if the 200% return was only for stocks worth P10,000 pesos versus the 50% return on a P100,000 pesos. Which is the winner here? It’s clearly the second one. Because of volume, he doesn’t really advocate having a portfolio since your losses will negate your profit from the good stocks. Yes, you can start with 4 or 5 stocks but watch them closely and dispose those non-performing stocks so you can build on your good stocks.
While this was hard for me to digest, I knew he has a point here. I hate seeing a mix of red (loss) and greens (profit) in my trading account, wishing they were all green, because the reds just pull down my profits.
What I learned from Salve Duplito
Salve is the financial advisor in ANC’s On the Money Show. As the last speaker, there were topics which she discussed that were similar to the topics covered by Marvin, so I’ll just highlight those that were new to me:
1.If you want to speculate, just use 10% of your money for that and resist the urge to add. Chances are, if we see our trading portfolio in green, we’d we tempted to allocate more to it. Don’t, if you can’t bear the risk. Maintain the balance you want to strike between being a trader and investor.
2. Mister Market vs the Intelligent Investor. This is an allegory of Benjamin Graham (the father of value investing, author of The Intelligent Investor, and teacher of Warren Buffett), , which underlies the fact that mister market (referring to the stock market itself) will always quote you buy and sell pries, sometimes, they’re expensive while at times they can be low when the market is depressed. The goal is not to be swayed by mister market because you are an intelligent investor. Don’t be afraid by market volatility, instead use it to your advantage to find value stocks.
3. Invest with a margin of safety. Again, this assumes that you are an intelligent investor, which is the same as buying a value stock, which is a stock that is priced below its true value or at a discount. What is the right price? Look at the company earnings and identify its intrinsic value.
This concludes my 2-part article. Hope you learned something from it.