THETURTLE ALWAYS WINS How to Make Millions in the Stock Market BO SANCHEZ TABLE OF CONTENTS Foreword Introduction: Befriending the Alien with a Simple Story Chapter 1: Plant in the Spring or Beg in the Fall Chapter 2: You Can be Rich Chapter 3: The Race Chapter 4: How People Get into the Stock Market Chapter 5: The Four Animals in the Stock Market Chapter 6: Follow the Turtle Epilogue: Will You Act Now? Appendix: SAM Is the Name of Our Turtle About the Author In this book… you'll learn what I believe to be the best, simplest and safest - strategies of multiplying your money in the world. FOREWORD There are very few individuals in this world who are open-minded enough to absorb knowledge and information and then simplify it in a way that others can understand. This is the special gift of Bo and, after years of reading his books on financial literacy and attending his Truly Rich Club financial coaching sessions, I'm convinced that his Strategic Averaging Method (SAM), as outlined in this book is the ultimate investment answer for those who are interested to invest in the stock market but are afraid to take the first steps. I am a firm believer that with the necessary guidance and proper education, anyone, regardless of age and experience, can learn to invest successfully. And I am confident that you will find that wisdom within the pages of this book. I have the deepest respect for Bo as he continues with his mission of sharing the secrets to financial freedom with the Filipino public and I can only hope that you will heed and benefit greatly from his words. God bless you on your journey to become truly rich. Edward K. Lee Founder and Chairman of the Board Citiseconline INTRODUCTION BEFRIENDING THE ALIEN WITH A SIMPLE STORY Question: Is the stock market like an alien monster to you? And do you think that the stock market is for billionaires only and not for regular human beings like yourself? You're not alone. A lot of people think this way. In think book, I'd like to dispel all that confusion by telling you a simple story. In fact, it's a child story you've already heard. Except that I added a few characters and tell it with a twist. (Because I have a twisted mind.) The story is about a race between a squirrel, a rabbit, a slot and a turtle. When it comes to investing your money, I want you to be like a turtle. Because in the race I'm about to describe, a turtle always wins. Two years ago, I shocked the world by writing my book, My Maid Invests in the Stock Market and Why You Should, Too. (Overnight, that book became #3 in the Top 10 Bestselling Books in the biggest bookstore chain in the country.) All of a sudden, people realized that anyone can be rich through the stock market. In this book that you're holding now, you'll learn what I believe to be the best, simplest - and safest - strategy of multiplying your money in the world. Are you ready to change your financial life forever? Turn the page. May your dreams come true, Bo Sanchez P.S. For more guidance on how to invest in the stock market, I created the TrulyRichClub. If you visit www.TrulyRichClub.com, you can download my ebook, My Maid Invests in the Stock Market and Why You Should, Too, for free. You'll also receive my Truly Rich eLetter for free. But should you join my TrulyRichClub, you'll receive a truckload of materials to help you grow in your financial and spiritual life. Every two weeks, I send out my Stocks Update eReport which tells you what stocks I'm buying and selling, plus a lot more. If you want to gain financial abundance, go to www.TrulyRichClub.com now. Wealth is not built in days; wealth is built in decades. CHAPTER 1 PLANT IN THE SPRING OR BEG IN THE FALL Do you want to prosper? Then take this powerful message to heart: Plant in the spring or beg in the fall. It was Jim Rohn who said those wise words and I’ve never forgotten them. Friend, life is always a choice. God doesn’t force His plan of abundance on you. You have to say yes to that plan of abundance if you want it. Are you saying yes today? Let me tell you the story of two lolas (grandmothers The Story of Lola Penny I have a friend who retired seven years ago. Let’s call her Lola Penny. Actually, her real name was Lola Penang. She took a vacation in America, when she came back, she was now called Lola Penny. Lola Penny is a widow with 4 children and 6 grandkids. For 38 years, Penny worked as an accountant, crunching the numbers for her company. Because she was such a good accountant, she was promoted many times and became the manager of the entire department. And she was earning very well. But Penny told me that even if she was earning very well, she was living from paycheck to paycheck. This brings me to a very important principle: Income does not equal wealth. It’s not how much you earn that makes you wealthy. It’s how much you invest from what you earn that makes you wealthy. Yes, she saved some money. But like most Filipinos, she saved only for the big expenses: She saved to buy a house. She saved to pay for the schooling of the kids. She even saved for the wedding of the kids. But she failed to save for the biggest expense of all: retirement. Like many, she totally depended on the retirement package from her company. When she retired seven years ago, Penny got P3 million. For the first year, it was heaven on earth. Every Sunday, she brought her grandchildren to the mall to buy them toys. And when her children needed money, they’d run to her. “Mommy, can we borrow money to repair our car?” “Mommy, we lack P20,000 for Junior’s tuition fee. Can you help?” “Mommy, your apo (grandson) will compete in a swimming competition in Singapore. Can you pay for his plane fare?” But very quickly, her money ran out. After 7 years in retirement, Lola Penny was penniless. This Isn’t Just A Story; This Is Harsh Reality Today, Lola Penny totally depends on her four children to give her money. But she knows that they have financial problems of their own. One time, she overheard her daughter arguing with her kuya (older brother) on the phone. What she heard tore her heart. With anger in her voice, her daughter said, “Kuya, it’s your turn to give money to Mommy! I’m the one who takes care of her at home! I’m the one spending for her food everyday! And I’m the one buying her medicines. Last week, I spent P3000 for her meds! My husband is already complaining why we always don’t have money!” When Lola Penny heard her daughter complaining, she began to cry. The painful words she heard that day were like many knives stabbing her chest. Lola Penny felt she was just a burden to her children. And she wanted to die right there. Here’s the irony: All her life, as an accountant, Penny was very good at managing the money of her company—but she never managed her own money. This is not just a story. This is harsh reality: According to surveys, 98% of people aged 65 and above are just like Lola Penny. They depend on their kids, or they depend on their tiny pension, or they depend on charitable institutions, or they have to keep working—or they have nothing to eat. Only 2% of people aged 65 and above are financially free. Like Lola Pilar. The Story Of Lola Pilar You can retire in two ways. You can retire like Lola Penny or you can retire like Lola Pilar. Penny is a pseudonym. That’s not her real name. But Lola Pilar is no pseudonym. Pilar is my mother. She is 85-years old. Today, I give my mother a nice monthly allowance. I do it not because she needs it, but because I need it. I need to show my love to her. But in reality, my mother doesn’t need my money. Let me tell you why. Many moons ago, my mother worked in a small music store as a Cashier. Her salary was P120 a month. After working for 19 long years, she received a separation pay: A whopping P2000! She invested that P2000 in the Stock Market. The year was 1966. And whenever she had extra money, she’d invest in very well known companies. My parents bought the stocks of giant companies of their time: San Miguel, Ayala, etc. My father retired at the age of 65. He passed away at 88. For those 23 years, my parents sold a portion of their stocks–little by little—for their big expenses. After Dad passed away, Mom announced, “I’m selling all my stocks.” I was surprised that she still had P1 Million from that last sale—even if they were already withdrawing their cash from there little by little. I asked her, “Did you sell everything?” Mom said, “Yes, I did. Well, I left the crumbs…” Crumbs? “What crumbs?” I asked. She explained, “Oh, I left the very little investments scattered in various companies. They’re very tiny. Nothing much.” That conversation took place three years ago. Just two months ago, I told her, “Mom, you’re 85. You better sell whatever you have left in the Stock Market. Yes, I know they’re crumbs. But just collect them anyway.” She agreed. She called up her stockbroker and said, “Can you sell all the tiny stocks I have left?” She was expecting P10,000. At most, P20,000. But she got the shock of her life. The stockbroker told her, “Mrs. Sanchez, your stocks are worth P1.2 Million.” Mom turned to me and said, “Bo, I’m rich!” I told her, “Mom, you’ve always been rich. You just think you’re poor.” Forty-five years ago, my mother planted P2000 in the stock market. And through the years, she planted little seeds of P50, P100, and P200 in giant companies. Because she planted in the spring, today, she isn’t begging in the fall. In her whole life, my mother never received a huge amount of money. She never inherited money. She never won the Lotto. She only built her wealth slowly. Remember this truth I heard from David Bach: Wealth is not built in days; Wealth is built in decades. There are two ways of retiring in life: Are you going to be a Lola Penny or a Lola Pilar? God places the two roads before you. Penny Poverty or Pilar Prosperity? You choose. God Says, “Plan Ahead!” People today are living longer. If you live until 90, will you have enough money for your needs? Or will you be depending on your kids? God Is Saying, “Plan Ahead.” Remember: No one plans to fail. We just fail to make a plan. Jesus said, “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, saying, ‘This person began to build and wasn’t able to finish.’" (Luke 14:28-30) Today, think about the “tower” of your financial life. God invites us to be like the ant. The Bible says, Go to the ant, sluggard; consider her ways and be wise; who, having no guide, overseer, or ruler, provides her food in the summer and gathers her food in the harvest. (Proverbs 6:6-8) In other words? The ant plants in the spring. So it won’t beg in the fall. Plan To Be A Donor, Not A Donee! Anawim is our home for the abandoned elderly. I built it some 15 years ago. I know it’s a beautiful place. It’s so beautiful, some people tell me, “Bo, when I grow old, I dream of living there.” No, I don’t want you to live there. That place is for the poorest of the poor. Old people who failed to plant in the spring and are now begging in the fall. Don’t dream of being an Anawim resident. Dream of being an Anawim donor. How? The secret is in the next passage… Don’t Borrow; Start Lending Everytime I talk on finances, I ask the audience, “How many of you have debts?” The response is shocking. It was as if I asked, “How many of you are human?" Almost everyone has debts. And Filipinos love the fact that they can borrow. One woman told me, “I’m borrowing money from the SSS.” I asked, “Why?” She said, “Sayang if I won’t borrow.” (It would be waste.) Huh? I don’t get it. The Good Book says, "For the LORD your God will bless you as He has promised you, and you will lend to many nations, but you will not borrow… (Deuteronomy 15:6) Do you see what I see in that verse? It says that there are two signs that God is blessing you: One, when you stop borrowing. Two, when you start lending. Friend, stop borrowing. (Note: It’s OK to borrow for business; it’s not OK to borrow for your living expenses.) Instead, start lending. To whom will you lend? Ninety-nine percent of Filipinos “lend” to banks. How? You deposit your savings there. But that’s not a good choice. The problem with banks is that they pay you a tiny interest of less than one percent a year. I suggest you “lend” your money to others who can give you a higher return. For example? Giant companies. You can do that through the Stock Market or Mutual Funds. If you really like banks, then don’t deposit your money in the bank itself. Instead, buy shares of the bank. Be an owner. How? Buy the stocks of Metrobank, Banco de Oro, Bank of the Philippine Islands…. Over a 20-year period, your returns will be much bigger! The Universe Loves To Multiply From my limited scientific knowledge, a cat produces another cat, a dog produces another dog, and a penguin produces another penguin. That’s just how God’s universe works. I’ll be very worried if a cat produces a dog. If that happens, the end of the world is near. The Bible says everything "reproduces according to its kind" (Genesis 1:11). In fact, this line appears six times in the first chapter of Genesis. And you see it throughout the Bible. When the widow of Zarapath gave Elijah her oil and flour, what did she get? More oil and flour. Not clothes. Not wood. But oil and flour. When Jesus fed the multitudes, He did it by— surprise, surprise—multiplying five loaves and two fishes. He didn’t turn stone into bread. He didn’t turn stone into gold, and then bought bread. He turned bread into more bread. Jesus—the Son of the Living God—needed bread to reproduce more bread. Why? Because this is a principle that operates the entire universe. Everything reproduces according to its kind. If you want to prosper, you need to learn how to multiply the little money that you have. In 1966, Mom invested her separation pay of P2000. Forty-five years later, that P2000 became millions of pesos. (By the way, 1966 was really a good year for Mom. Not only did she receive P2000, she also gave birth to her favorite son. Ahem.) Learn to multiply the little money that you have and you will prosper! If you retire poor, it's not God's fault. God is giving you a choice today. Will you plant in the spring or beg in the fall? Why bother becoming rich if I can't take others along with me? CHAPTER 2 YOU CAN BE RICH I'm the crazy guy who taught my maids to invest in the stock market. For those who didn't read my first book on the stock market, let me give you a little recap. It all started when, every other week, I'd meet my three maids and my driver for a small prayer meeting at home. After praying and sharing, we'd end up talking about their personal lives. And that included their finances. Seeing their inability to save anything, I taught them a very simple "5 Envelope Plan." One of those envelopes was their "retirement fund." I also taught them how to invest. I told them that whatever went into that envelope each month should go to the stock market. Today, they're very happy with their investments. Here's an update… One of my helpers has P132,532 and the other one has P210,049 in the stock market. I told my maid, "If you keep this up, you'll reach your first million in seven years." I'm excited for that day. I have a rather selfish reason: so I can be one of the very few people on this planet who can brag, "My maids are millionaires." My Driver is Catching Up My maids have been investing for two years now. But my driver just started a few months ago. He gave a lot of excuses. That he's got a lot of expenses. That he's married. And has four little kids. That his wife is a full-time housewife so the entire family depends on his salary of P12,000 a month. That wasn't all. He explained that his extended family and his wife's extended family - and a whole caboodle of neighbors - depended on his generosity during emergencies. Which happened every time they moved. Or breathed. In other words, his P12,000 was feeding an entire village. So how can he save and invest with all these expenses? I didn't force him. Instead, I let time convince him. Every other week, when we had our small prayer meeting at home, my maids would talk about their investments. And they'd share how God was blessing them. One day, after one of my maids said her investments had already reached P100,000, that caught his attention. Finally. And he told us, "I'll start investing, too. How do I start?" Sometimes it takes pain to move some people to change. Hearing one of my maids say she had P100,000 was very painful for my driver. Because if he started when she started, he, too, would have P100,000. But at that time, he had nothing. Today, he's a changed man. Each month, he sets aside P2,000 to P3,000 of his salary for his stock market investments. And for the first time in his life, he has hope. He knows that he, too, will be a millionaire one day. I'm very happy for him. Today, he has P30,867 in the stock market. And he's deliriously happy. I know what you're thinking. "Gosh, that's so tiny." For you and for me, perhaps. But to him, that's the biggest amount he's ever held in his hands in his entire human existence. My driver lives in the slums. So in his neighborhood, he already feels like a millionaire. By the way, he still helps relatives and neighbors in need. But I taught him to set aside a fixed amount for his "alms fund" (one of the five envelopes.) Once it runs out, I encouraged him to tell the person asking for help, "Right now, I don’t have any money to help you. But next month, perhaps I'll have some money again." Obviously, no one asks him, "But don’t you have money in the stock market?" No one knows about it. (Shhhhh. Don't tell anyone.) I Taught My Employees to Invest, Too I run a number of non-profit organizations and for-profit businesses. Two years ago, I talked to my 100 plus employees. From janitors to managers. I love talking to them because I don't see them often. You see, I'm a lazy boss. I don't visit my office often. More importantly, I have a fantastic team of leaders in the office that don’t need me there. So I get out of their way as much as I can. Obviously, my staff was wondering why the Chairman of the Board was meeting them. I took the microphone and announce, "I'm here to make sure that when you retire, you retire as multi-millionaires." You should have seen their faces. Some were probably thinking if someone spiked my breakfast with shabu. For the whole morning, I taught them how to invest in the stock market. Janitors. Messengers. Clerks. Managers. Everyone. After my talk, it was pretty noisy. Everyone was talking, asking questions, and filing out Citiseconline (renamed COL Financial Group, Inc) application forms. (Note: Citiseconline is our preferred online broker. They have a "missionary" goal of helping "smaller" people learn to invest.) I also instructed my chief accountant to offer the entire staff the option of an automatic salary deduction each month - so they won't forget their monthly investments. This was voluntary of course. But many took the offer. APPENDIX SAM IS THE NAME OF OUR TURTLE By SAM, I mean Strategic Averaging Method. SAM is the investing strategy that we use in my TrulyRichClub. By the way, I didn't invest the Strategic Averaging Method. My mentor did. I just had the privilege of naming it. My Mentor is a billionaire who has done very well. The stock market has been his playground for the past 38 years. What is SAM? SAM is semi-passive investing. SAM is passive investing with a little bit of "cheating" and "timing." SAM uses the Four Rules of Passive Investing but adds a Fifth Rule to make it "semi-passive." I know I covered these Four Rules in my previous book, My Maid Invests in the Stock Market and Why You Should, Too. To refresh your memory, here are the Four Rules of Passive Investing again: Rule 1: Invest monthly for 20 years or more. Buying stocks each month using your small monthly savings. It’s really making the stock market your piggy bank. You do this longterm—for 20 years or more! Rule 2: Invest even when there’s a crisis. Passive investing means disregarding if the prices are up or down, if there’s a tsunami, earthquake, coup d’etat, or recession. You just keep buying month after month after month. Rule 3: Invest only in Giants. Passive investing means buying only established, enduring, "blue chip" companies that we believe will be there for the next 50 years. We don’t dabble in penny stocks. Because we believe in people who buy penny stocks will become penniless. Rule 4: Invest in many Giants. Passive investing means not buying one Giant but a handful of Giants. Why? There’s such a thing as “Black Swan” in the stock market— when an unexpected event happens. We don’t want all our money to be in one company— and tragedy hits that company. In SAM, we'll recommend five to six companies in our list. I repeat: SAM uses all Four Rules. But it adds Rule 5. And Rule 5 is the magic sauce that makes SAM a little bit more profitable than passive investing. The 5th Rule of SAM We buy when the price is beneath our “Buy Below Price.” We sell when the price is near our “Target Price”. This is how we "cheat": we use a little bit of timing. If you're a TrulyRichClub member, you'll receive my Stocks Update eReport. In that twice a month eReport, I provide both the "Target Price" and the "Buy Below Price" for each of our recommended stocks. Why do I like SAM? Here Are Three Big Advantages of SAM 1. Faster Giants For SAM, we’ll narrow down the list to five to six stocks only. Lesser choices mean lesser stress for you! Why narrow down the list to five to six stocks? Because not all Giants are created equal. Some Giants are so gigantic, their growth may be slower. Some Giants are in a mature industry, so the growth will be minimal at best. So we’ll choose the Giants that we believe will rise faster. Obviously, we don’t have a crystal ball with 100 percent accuracy. So we could be wrong in one or two of our selections. But we’re hoping that our right picks will be enough to make your money grow faster. 2. Lower Prices In SAM, you only buy when its price is beneath our “Buy Below Price.” Here’s a secret in making more money in stocks: You make your money when you buy, not just when you sell. What do I mean? If you buy it at a cheaper price, your earnings increase many times more. How does SAM do this? I’ll give you a “Buy Below Price” for each of our recommended stocks. This will prevent you from chasing a rising stock all the way to the top. 3. Secured Profits In SAM, we’ll tell you to sell after a few months—when our recommended stock hits our Target Price. By selling, you lock-in your profits. You take your profits off the table. You take your money from a company that’s already gone up and put it in another company that still has room to go up. This multiplies your earnings nicely. To follow SAM for your investments, you can join my TrulyRichClub. To join, visit www.TrulyRichClub.com now.