This morning I successfully bought about PhP 4000.00 of Jollibee and Manila Water Company shares via my online broker (Philstocks.ph) using this nifty little book by Bo Sanchez entitled, “My Maid Invests in the Stock Market … And Why You Should, Too!” as a guide. Like other small time traders who have long wanted a structured guide to trading under Philippine conditions, I have long felt that there has been no good local guide for individual traders that bridged the gap beyond brochures on the Philippine Stock Exchange (PSE) and heavy books on high finance written by theoretician professors from the U.P. College of Business Administration.
With Philippine Stock Exchange (PSE) officials lamenting that in a nation with a population of 110 million, there are only 60,000 persons actively trading in this country while in Asian financial markets as diverse as Thailand, Hong Kong and India, even taxi drivers and barbers are financially literate and play the stock market everyday, one is compelled to ask, what went wrong here? Given that out of 132 stock brokerage firms in the Philippines, there are already eight that offer online services, some with a minimum opening balance from zero to PhP 5,000, why does the average Pinoy regard playing the stock market as a white collar version of gambling or jueteng? Given that approximately eight million overseas foreign workers (OFWs) are remitting billions of dollars every year to the Philippines, it's clearly a failure of communication on the part of our financial educators and authorities rather than a lack of capital per se that has let the Philippines stock market languish as one of the under performers in the region and consequently become a victim of “hot money,” where foreign speculators jump in and out of our stock market for fast profits.
Without revealing the innermost secrets of this book (and thus spoiling it for you), “My Maid Invests in the Stock Market … And Why You Should, Too!” makes the point to the reader that even a “maid” or somebody without too much income can put aside even two thousand pesos a month by undertaking simple budgeting and invest them in blue chip companies through online traders recommended by Bo Sanchez. Mr. Sanchez says that if this can be maintained for twenty years, anybody can become a millionaire. All it takes id discipline, he says.
The greatest merit of this book is that it says that in stock trading, technical trading or a reliance on fancy charts and graphs is unnecessary for the average investor and that it is better for them to rely on choosing solid blue chip companies while ignoring the wild swings in their prices. Rather, as U.P. College of Business Administration Professor Roy Banez once pointed out, the Philippine stock market index has consistently averaged about 10% in improved performance a year (the index only comprises the very best companies), despite the EDSA I, II, and III revolutions, the assassination of Benigno “Ninoy” S. Aquino in 1983 and assorted coup-d-etats in the interim.
However, the problem I have with this book is that it effectively says that a “maid” or even the reader should subscribe to Mr. Sanchez's newsletter and enroll with Citiseconline in order to let him pick the stocks for you, and for you to transact with Citiseconline (where they will of course get a fee). One cannot but help think that Mr. Sanchez and Citiseconline have some kind of commercial relationship in pushing fro this particular recommendation.
But despite all its flaws, this book is still an easy read as well as an introduction to stock market trading, with the author even recommending ten stock picks (I agreed with two of them, which is why I made my online purchase today). However, the reader should adopt a cafeteria-style approach and just pick the aspects that work for him. I personally think that if stock market investing education can be simplified, more people will suffer less from total information overload regarding this topic, and consequently more individuals will be willing to research individual companies (this information is free from the PSE website at (http://www.pse.com.ph) make their own choices. My Maid Invests in the Stock Market … And Why You Should, Too! Is definitely a good beginning source book and deserves to be on the shelf of any aspiring small or large stock market investor.
My Maid Invests in the Stock Market … And Why You Should, Too!
National Book Store
(Chanda Shahani is the editor of the Diliman Diary. He has a Master's in Entrepreneurship from the Asian Institute of Management and is a former business reporter for the Philippine STAR).