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Guidance for Stock Market Investing Exclusively for TrulyRichClub Members

Note: To understand the Stocks Update, first read Bo’s e-book, My Maid Invests in the Stock Market.
Click here www.TrulyRichClub.com to download now.

Volume 10, No. 4 February 2018

How Much Is Enough for Your

Retirement Fund?

People ask this question a lot.
Can I tell you my answer? It’s not the common answer you’ll hear, but I’d like to share with you: Calculate how
much you spend in a year and multiply it by 20. That’s how much you need for a comfortable retirement fund.
For example, if you spend P40,000 a month for living expenses, that’s P480,000 a year. Multiply that by 20,
that’s P9.6 million. Round it off to P10M. That’s the retirement fund you
should be aiming for.
Here’s the reason: With that amount, you can “live on interest.” Because
12% of P10M is P1.2M.
I know, I know. This answer is too simplistic. Guilty as charged. It doesn’t
ask how old you are, or whether you’re sending six kids to school, or you’ve
got kidney disease and getting dialysis. Yes, I agree that my answer is very
broad. But I give it to you so that you have something to aim for quickly.
Next? Go to www.TrulyRichClub.com/RetirementCalculator. Input the
following: (1) how much money you already have in the stock market; (2) how
much money you put into the market each month; (3) how many more years
until your retirement; and (4) growth percentage—that’s 12% a year.
Do you get the amount you’re aiming for?
If not, increase your monthly investments OR postpone your retirement. (It’s not good to stop working anyway.
I always encourage seniors to keep on working. Apply for a part-time job. Be a consultant. Sell something online or
offline.

Case Study: Debbie

I just came from Singapore. I was talking to Debbie (not her real name), a 35-year-old TrulyRichClub member.
Right now, she spends P80,000 each month. Multiply that by 12 months and multiply that again by 20, she needs
P19M to retire comfortably.
Today, she has P570,000 in her stock market portfolio. Each month, she invests P25,000 a month. By the time
she reaches the age of 60, she’ll have P48M. Pretty cool. If she retires at 65, she’ll have P96M. Even more amazing.

May your dreams come true,

Bo Sanchez

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Correction Concerns
By Mike Viñas

On January 29, 2018, we saw the PSEi hit an all-time high of 9,058.62. Since then, the PSEi has been going
through a correction. The main catalyst for this correction was the steep drop of the U.S market. This was caused by
the significant increase in the 10-year bond rate. This, in turn, was triggered
by the rise of the average hourly earnings for private-sector workers in the
U.S. by 2.9%. This is the fastest pace of increase since 2009.
Higher bond rates are not good for stocks as rising interest rates
would mean higher cost of capital leading to lower valuations. Currently,
the 10-year bond rate of the U.S. is at 2.9%, which is a four-year high.
The ongoing market correction was not a surprise, as it was
mentioned during the COL Market Briefing last January that analysts were
already feeling worried that valuations have run ahead of fundamentals.
At its peak of 9,058.62, the PSEi was already up by 5.8%. This was a few
percentage points shy of COL’s PSEi year-end target of 9,300. However, COL
maintains a positive outlook for 2018. The reasons behind this optimism
includes the strength of the global economy and the passage of the tax
reform program and its implications on the economy.
We also have to take into consideration the strong possibility that certain risks, such as a higher-than-expected
inflation and interest rates would materialize. After all, several inflationary factors were already present last January,
including the tax reform program, strong domestic and global economic growth, rising commodity prices, and the
weak peso. During the strong performance of the stock market last January, these risks weren’t priced in yet according
to research analysts.
Let me share with you two reasons why analysts are worried about high inflation.

1.Lower Consumer Spending – When prices of goods increase, consumer confidence usually goes down. This
causes consumers to buy less. Because consumer spending accounts for 70% of our economy, this puts GDP
at risk of missing the 6.6% growth target this year. This, in turn, may lead to lower corporate earnings result.
2.Higher Interest Rates – When inflation picks up, rates usually go up to compensate investors for higher inflation.
As mentioned above, the increase in interest rates is not good for equities as cost of capital increases lead to
lower valuations.

In fact, for January, inflation hit 4% as against the 3.5% forecast of analysts. That’s a three-year high for inflation.
Inflation for the month of February may also remain high because of the implementation of high excise taxes on oil
as a result of TRAIN, along with the depreciation of the peso.
Because of the higher-than-expected inflation rate for January, the Bangko Sentral ng Pilipinas (BSP) increased
its inflation forecast for 2018 and 2019 from 3.4% to 4.3% and from 3.2% to 3.5%, respectively during its meeting last
February 8. However, it maintained its interest rate on the overnight reverse repurchase facility at 3%. While the BSP’s
decision to keep interest rates unchanged is understandable, financial markets responded negatively. Also, with this
decision of BSP, the Philippine 10-year bond rate went up significantly. Put this along with the news that our trade
deficit widened to US$ 4 billion in December, the peso further depreciated. Based on history, a weak peso has not
been good for the stock market. But with higher inflation and the weak peso, interest rates (10-year bond rates) will
most likely remain high. As such, COL Research and TRC raised their risk-free assumption by 50 basis points to 5.5%.
With this, they cut their 2018 year-end target for the PSEi from 9,300 to 8,750.
However, in spite of concerns on inflation and interest rates, we would like to remind investors not to be afraid
of this correction. Actually, this correction is a good opportunity to accumulate our SAM stocks at lower prices.
Moving forward, analysts don’t think inflation will remain high on a permanent basis. Some of the factors

Stocks Update Volume 10, No. 3 • February 2018 Page 2 of 4

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causing the increase in inflation, such as the higher excise taxes on fuel and certain products, are non-recurring in
nature. Furthermore, the BSP has the necessary tools in order to control inflation. In due time, analysts are confident
that they will use these tools.
The positive long-term economic outlook of analysts remain. This is driven by favorable demographics, resilient
OFW remittances, growing BPO sector, and the tax reform program. Moreover, history has also proven that equity
markets still go up in spite of higher rates. This is caused by the stronger economic conditions that allow companies
to earn better profits, even with higher rates. This, in turn, justifies share prices to possibly go higher.
In terms of how deep and how long this correction would go, admittedly no one knows. Nobody knows for
certain when and at what level the correction will end. Based on their research, analysts are saying the PSEi could
bottom anywhere from 7,900 to 8,100 and this may happen anytime between March to May this year.
May you be guided during this market correction.

Happy and successful investing!

Here are our SAM and Mutual Fund Tables (as of February 23, 2018 closing):

Stock Current Price Buy Below Price Target Price Recommendation

AP  38.65 42.16  52.70  Continue buying 

CEB  99.50 101.53  132.00  Continue buying 
RLC  19.90 24.84  31.05  Continue buying 
ALI  43.90 42.45  53.07  Stop buying 
CHIB  35.00 34.40  42.00  Stop buying 
UBP  90.00 85.60  107.00  Stop buying 
GTCAP  1326.00 1248.00  1560.00  Sell 50% @ P1350 or better 
MBT  96.65 96.00  120.00  Sell 50% at P99 or better 
MEG  4.75 5.06  6.33  Sell 50% @ 5.35, Hold rest to TP 
MER  319.20 297.60  372.00  Sell 50% @ 313, Hold rest to TP 
CHP  3.77 7.44  9.30  Hold 

NAVPS WHEN BOUGHT  CURRENT NAVPS 

FUND CODE FUND ESTIMATED RETURN
( 2016-01-12 ) (as of 2018-02-23)

XPEEQ Philequity Fund 31.0639 41.2453 32.7757%

XPEIF Philequity Index Fund 4.2155 5.7038 35.3054%

Sunlife Prosperity Equity

XSLEQ 3.4805 4.6064 32.3488%
Fund

Stocks Update Volume 10, No. 3 • February 2018 Page 3 of 4

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2017 Top Winners of the TrulyRichClub’s Stocks

Note: The percentage returns cannot be compared between the two tables below. The All-Time Winners table does
not take into consideration a cost-averaging method. The percentage return is only from a buy-and-hold strategy. The
2017 table, however, integrates a cost-averaging method throughout the months it was under the Buy-Below.

ESTIMATED
STOCK TIME PRICE ESTIMATED
STOCKS TIME
SYMBOL RECOMMENDED RANGE RETURN
HELD
October 2013 to March
SM Prime Holdings SMPH 29 Months P16.90 to P21.70 27.95%
2016
September 2015 to June P1,270.00 to
GT Capital Holdings GTCAP 2016 9 Months 22.79%
P1,530.00

January 2016 to April

D&L Industries DNL 3 Months P8.10 to 9.15 12.96%
2016

Top Past Winners of TrulyRichClub’s Stocks

ESTIMATED
STOCK TIME PRICE ESTIMATED
STOCKS TIME
SYMBOL RECOMMENDED RANGE RETURN
HELD
June 2011 to February 2012
 Ayala Land ALI 9 Months P15.09 to P21.65 35%
(3rd week)
Bank of The February 2012 to November
BPI 10 Months P68.45 to P91.00 34.29%
Philippine Islands 2012 (4th week)
February 2012 to December
SM Prime Holdings SMPH 10 Months P12.48 to P17.00 27.75%
2012 (1st week)
January 2013 to April 2013
Meralco MER 3 Months P268.00 to P377.00 28.05%

First Phlippine
FPH June 2011 to June 2013 25 Months P63.18 to P95.20 32.92%%
Holdings
JG Summit
JGS February 12 to October 2013 18 Months P25.75 to P43.50 39.96%
Holdings
D&L Industries DNL February 2013 to April 2014 14 Months P6.45 to P10.00 44%
Banco De Oro BDO April 2013 to August 2014 16 Months P89.60 to P93.00 24%%
SM Prime Holdings SMPH October 2013 to March 2016 29 Months P16.90 to P21.70 27.95%

P1,270.00 to
GT Capital Holdings GTCAP September 2015 to June 2016 9 Months 22.79%
P1,530.00

(Disclaimer: Past performance doesn’t guarantee that you’ll have the exact same results in the future. After all, your
earnings depend on the market’s performance.)

Mike Viñas is an investment trainer of COL Financial Group, Inc. He is a Certified Securities Representative.

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