Project Freedom (4): Understanding of the States of Market Trend and Rotational Trading Concept

Attached are a few charts aim to demonstrate the importance of understanding the State of Market Trend and the Rotational Trading Concept which could help one to handle his personal finance.

POINT I: Understanding of the States of Market Trend.

Fig 1.  ^STI Daily Chart (2 years)  (Click on the chart to Zoom in)

The above chart show a daily chart for ^STI from Apr 2010 to Apr 2012.  This particular period is selected to show that money put in the market (so call buy and hold investment) can ended up with zero percent return over years.

In the price chart, there are algorithms built-in to draw the trendlines (also act as dynamic support and resistance lines).  When the bar change color, it signal a possibility of change in trend. 

In the lowest pane, it is an indicator desgined specifically to measure the Vibrational Energy of the stock:

If the Energy is High and moving upwards, it signals a state of UPTREND MARKET.

If the Energy is High and moving downwards, it signals a state of DOWNTREND MARKET.

If the Energy is Low, it signal a state of SIDE WAY MARKET.

It also display the number of bars in the respective state of trend and its percentage over the period.  For example:

Over the two years period, when breakdown into percentage...
The UPTREND is      : 31.39%;
The DOWNTEND is : 18.05%;
The SIDE WAY is     : 50.56%.

Fig.2 ^STI Daily Chart (1997 Jan - 2012 Apr)

So, one may think that two years of data could be too short to make the point.  How about longer period of data? 

So, with the longer term of data, it show that the result is similar with the previous finding. And, lead to some basic understanding of the market trends structure...

Conclusions from Point I:
1) The Speed of UPTREND is SLOWER and DOWNTREND is FASTER.
2) BUY AND HOLD strategy is NOT WORKING in todays market.
3) One must be able to ride on the Trend in order to make profits from the market.

POINT II: Understanding of the Sector Rotational Trading Concept.

As the previous point illustrate that money put in one market/Stock/Fund are really productive about 30% of the time in UPTREND, 20% in DOWNTREND, and wasting time 50% of the time.
So, if one were to only LONG the market, does that mean 70% of the time he must wait???
Not true if he understand the concept of Sector Rational Trading.


Fig 3. State of Trends in S&P500(SPY)
and its 9 sectors(XLB,XLE,XLF,XLI,XLK,XLP,XLV,XLU,XLY) (Apr 2010 to Apr 2012)

See... 
The money in the market are of fix amount.  When the stock market is moving up strongly, people would pull money out of bond market and put into stocks and cause bond market to fall, and vice versa.  Similarly, the professionals would not put their funds in equal distribution into all sectors, they would pull the money out from the weak sectors to put them into the strong sectors.  And the sectors Relative Strength would keep changing over time.  In the picture, you can see the TREND is Out Of Phase from one another.

With the same token, one can then zoom into the individual stocks, in the strongest sector, to ride on the trend with the few strongest stocks

By the way, you may be interested to zoom into the chart and see the respective percentage of trends in various sectors.


Conclusions from Piont II:
1)  It illustrates a VERY IMPORTANT POINT that is IN CONTRADICTION with one of the popluar myth in the investment industry -->  That is DIVERSIFICATION the money into many sectors in equal portions as to reduce RISK.  As sectors trend pretty much follows the market (after all they are the components that create the market).

2)  In order to maximize the profit from the market and reduce risk.  One must always rotate money into the strongest few sectors when there is a trend.

---------------------------------------------------------------------------------------------------------------------
I found a picture on the web and it is Very True. 

There are certain risks in life one can simply choose to avoid it, such as if one don't know how to swim and he choose not to go near the sea... He may miss some fun for that but find more fun somewhere else.

On the other hand, there are some risks one cannot avoid, such as financial crisis... Then, the only logical answer in dealing with it is to master it.  And,

if it is necessary...  Then, it doesn't matter how much time it may take.
Whether it may require 3 years, 6 years, 10 years or more,

something learnt is something gained. 

Time is ticking anyway regardless whatever nice phrases one may come out with. Such as:
"Only IF I have the time..."

With the current state of economy, which is full of potential for turbulences such as:
* Debts in certain countries in EuroZone building up,
* Energy Crisis due to Peak Oil,
* Over Population on earth,
* Aging of the Babyboomer in USA (in fact it is a worldwide problem, and more serious would be in China for its one child policy), and
* Increase in trend on Unethical issues exposed from corporation executives (worldwide)... etc.
I cautious myself not to be negative, but logically, it can only predict more financial crisis in local and global scale to continue happen in the near future...

So.  It is my simple idea that when more people willing to learn about it, then it would make market manipulation task more difficult for the minority and BALANCE IT.  Let's make it so! :-)

Bless You

KH Tang


A more throughout explaination on Sector Roation -> Back to Basics & The Galaxy Chart.

Philippines Mutual Funds Performance - 1st Quarter 2012

YEAR-TO-DATE PERFORMANCE OF MUTUAL FUNDS IN THE PHILIPPINES

As of the 1st Quarter of 2012 (January to March 2012)

EQUITY FUNDS (primarily invested in Peso equity securities)

1. Philam Strategic Growth Fund – 21.34%

2. Philippine Stock Index Fund – 18.64%

3. Philequity Fund – 17.13%

4. First Metro Save and Learn Equity Fund – 16.62%

5. Sun Life Prosperity Phil. Equity Fund – 15.76%

6. ATRKE Equity Opportunity Fund – 15.65%

7. Philequity PSE Index Fund – 14.44%

8. United Fund – 6.66%

FOREIGN CURRENCY-DENOMINATED EQUITY FUND

* ATR KimEng AsiaPlus Recovery Fund - 7.51%

BALANCED FUNDS (primarily invested in Peso debt and equity securities)

1. ALFM Growth Fund – 24.13%

2. Bahay Pari Solidaritas Fund – 23.39%

3. GSIS Mutual Fund – 20.20%

4. Philam Fund – 19.93%

5. NCM Mutual Fund of the Phils. – 17.80%

6. First Metro Save and Learn Balanced Fund – 16.08%

7. ATRKE Philippine Balanced Fund – 12.24%

8. Sun Life Prosperity Balanced Fund – 12.09%

9. Optima Balanced Fund – 11.62%

FOREIGN CURRENCY-DENOMINATED BALANCED FUNDS

1. PAMI Asia Balanced Fund 7.98%

2. Sun Life Prosperity Dollar Advantage Fund 4.06%

3. Cocolife Dollar Fund Builder 2.91%

4. Paradigm Global Growth Fund 2.20%

BOND FUNDS (primarily invested in Peso debt securities)

1. Cocolife Fixed Income Fund – 3.51%

2. First Metro Save and Learn Fixed Income Fund – 2.30%

3. Ekklesia Mutual Fund – 1.62%

4. ALFM Peso Bond Fund – 1.32%

5. Prudentialife Fixed Income Fund – 1.26%

6. Sun Life Prosperity GS Fund – 0.89%

7. Sun Life Prosperity Bond Fund – 0.84%

8. Philequity Peso Bond Fund – 0.77%

9. Philam Bond Fund – 0.55%

10. Grepalife Bond Fund – (0.45%)

FOREIGN CURRENCY-DENOMINATED BOND FUNDS

1. ALFM Euro Bond Fund – 2.80%

2. Philequity Dollar Income Fund – 2.48%

3. Sun Life Prosperity Dollar Abundance Fund – 2.34%

4. ALFM Dollar Bond Fund – 2.31%

5. Philam Dollar Bond Fund – 2.08%

6. Grepalife Dollar Bond Fund – 1.42%

7. ATR KimEng Total Return Bond Fund – 1.24%

8. PAMI Global Bond Fund – 0.37%

9. Grepalife Fixed Income Fund – 0.25%

10. MAA Privilege Dollar Fixed Income Fund – (0.53%)

11. MAA Privilege Euro Fixed Income Fund – (1.35%)

MONEY MARKET FUNDS (primarily invested in short-term Peso securities)

1. Philam Managed Income Fund – 0.76%

2. First Metro Save and Learn Money Market Fund – 0.56%

3. ALFM Money Market Fund – 0.51%

4. ATRKE Alpha Opportunity Fund – 0.19%

5. Sun Life Prosperity Money Market Fund – 0.13%

* Figures in (xxx) denote a loss. All data are from the Philippine Investment Fund Association (PIFA).

Disclaimer: Although the rate of return is a good measure of performance, other things such as the fund’s consistency of return and exposure to risks must also be considered. Note that past performance of a fund is not and cannot be a guarantee of future returns.

Debt Settlement Scams Companies – Try Hard to Avoid Them

Those who have decided to go for debt settlement or debt consolidation must take some proactive measures to avoid scams. These scams are unethical practices done by the fraud debt settlement companies to squeeze money out of the mentally distraught debtors. Debt settlement companies are dime a dozen in the market. Some of them do business in fair way but for the rest; it is making money by hook or by crook. So the chance is not slimmer that the debtors will be vulnerable to the deceptive practices of the dishonest debt settlement organizations. 

These companies take advantage of the ignorance of the ordinary persons regarding debt settlement. As these debt settlement scams are increasing at a shocking pace, so you are advised to be doubly alert while selecting a company. Some debt settlement companies cry hoarse to claim themselves as non-profit entities but it often turns out to be misleading, so check into entire matter to find out the truth. 

There two most popular and practiced options for debt problems – debt consolidation and debt settlement. People go for either of them just because their financial condition has got into a mess and they need some immediate relief. If you are experiencing the same, then you must wholeheartedly try to find out a good riddance and should not fritter away money by making haste and ending up selecting a fraud debt settlement company. You are already in heaps of problems, so instead of hurrying up take time and follow advice of the experts to locate a reliable company for debt settlement. 

A debt settlement company plays the key role in solving your debt problems. Remember that debt settlement is an expensive and time-consuming process. If handled by a trustworthy and experienced company, it will not take much of time to solve your issues. At first, you need to undergo registration process and once it is done, the company takes full responsibility to handle your problems on your behalf. There is no fixed rate for debt settlement process and it varies from one company to another. 

What this debt settlement company does at first is checking your current financial status. Depending on its analysis and findings, it negotiates with your creditors. These companies try their best to reduce your debts to a comfortable amount that you can easily afford.  A good debt settlement company can successfully make reduction in your payment by 40-60%. The most authentic firms efficiently deal with your problems whereas the debt settlement scams companies make fake promise and handle your case in such a way that it leads to a complete financial chaos. 

It is true that even the most genuine companies are in the market to make money and earn profit but they do it on the strength of their honest service while the scam companies prey on the hapless debtors and have no intention to better your financial state.

Target Singapore Stock Portfolio

My target Singapore stock portfolio will consist of:

STI ETF

Singpost

Starhub/Singtel
SMRT

ST Engineering

Boustead

Ascendas Reit
OCBC/DBS/UOB
Keppel Corp

8 Secrets of the Truly Rich by Bo Sanchez (part 2)

8 Secrets of the Truly Rich

By Bo Sanchez

Truly Rich Club

Part 2: As for continuation of 8 secrets of truly rich, let us do some recap from part 1. The 3 out of 8 secrets are: Be totally responsible for your success, Enlarge your psychological wallet, and Get rid of crazy religious beliefs. 1-3 secrets deals about the right mindset of being truly rich. 4 - 8 secrets deals about the way how to become rich. 

4. Be Completely Committed to Your Dreams 

As for the 4th secrets, Bo starts this chapter by defining three levels of desire: Wish, Want, and Commitment.

When we WISH we just hope for something to happen but actually do nothing to fulfill that wish. Usually, nothing happens at this level.

When we WANT something, we put in a little action to fulfill that want. Unfortunately, the passion won't last long and we give up and abandon the goal after a while. 

The third level is COMMITMENT. When we are committed, we start to believe what we say and we work hard toward achieving that dream for the long run. If we want to be rich, we have to be COMMITTED. 

Also in this 4th secrets, Bo defines three types of living: Moviegoer, Actor, and Actor-Scriptwriter.

Moviegoers watch the movies of their lives, admiring some parts and criticizing other parts but beside from that, they don't do anything else. 

Actors are those that don't only watch the movie of their lives but also can control a big part of their lives. They enjoy some level of control but they are limited in such things as deciding the ending of the movie.

Actor-Scriptwriters are those that don't only watch, don't only act, but actually create the entire movie from their minds. They determine what they want to do and how the movie will end. You have the power to create the life you want. Be the scriptwriter of your life. 

The book suggested on by committing to our goals and dreams, it is important to do the following: 

Write down your Dreams!
Read your Dreams Everyday!
Apply the Power of Focus.
Apply the Power of Attraction. 

Bo explain that by writing our dreams we open ourselves to life's river of abundance. Be as specific as we can get. And when we read what we wrote daily, we multiply the power of that river tenfold. 

If we're doing this every day, don't be surprised at how money-making opportunities will open up before us. Actually, they're already there, waiting for us to discover them. The universe adjusting to our expectations. 

5. Raise your Financial I.Q 

The 5th secrets. Financial Ignorance is Expensive 

Some people think that buying books and attending seminars about personal finance are a waste of time and money. But what those people don't know is that being financially ignorant is actually more expensive. You may be an expert in your current profession but knowing How money works is a totally different field of expertise.

From these 5th secrets, Bo suggested and explain. 

A. Avoid Bad Debt Like Bad Bacteria 

Bo suggests the following crucial actions you need to make if you are buried under a lot of debt. 

*Declare your Freedom Day 

Set a target date when you want to be debt-free and call if your Freedom Day. Read, think, and pray about it daily. Focus on your freedom and not on all your debts. 

*Create New Ways of Pleasure 

Examine your lifestyle and cut back on your expenses. Find new and simple ways of joy, and pleasure. Preferably, find substitutes that are free or much more less expensive but that can provide the same level of pleasure or even more. 

*Schedule Your Steps to Freedom 

Schedule your debt payments. Start paying off high-interest loans first. Try looking for loans with lower interests, where you can transfer your current high-interest loans. 

*Don't Borrow When You Can't Afford it - Period! 

As Bo says, "Don't borrow to buy consumer goods ever again. If you don't have money right now to buy it, then don't buy it." If you can't discipline yourself to use credit cards then get rid of them. 

*Negotiate with Your Creditors 

Banks and other lending institutions are ran by human beings after all. Meet with them regularly and assure them that you'll pay. Negotiate with them. Ask them if they can lower the interest rate. Don't back down simply because they say it's policy. Everything is negotiable. 

B. Protect Our self Adequately

Most of us are under-insured. Some don't even have insurance at all. We need to protect ourselves so that our families who live and depend behind us will have sort of an "income replacement" when we die. Bo suggest that insure ourselves equivalent to 10 times our family's annual expenses. (Example: if your family spends Php. 100,000 a year, you will need a Php. 1 million insurance) This way your family can have more than enough time to look for a new income source. Better yet, they can be financially wise and invest the entire amount in a fund that earns 10% a year.

This way, the Php. 1 million will earn Php. 100,000 a year which is the same amount your family was spending while you were alive. This way, they're provided for the rest of their lives! 

C. Build Your Retirement Fund Now 

Dying young can be a problem and it would be important to protect your family through insurance. However, living too long can also be a problem. In a survey on people above 65 years old, around 40% have to keep on working to survive, around 30% depend on their relatives to survive, around 8% depend on charitable institutions, and only 2% are financially independent. In order to protect yourself from living too long, you need to build your Retirement Fund now. 

Here's how to Build your Retirement Fund. 

1. Automatically save 20% of your monthly income. 

2. Invest as Early as You can. The earlier you save, the more you'll have in the future. (The power of compounding interest) 

3. Don't Put Your Retirement Fund in the Bank. 

Instead, Bo suggest that we must become Investors and put our long-term retirement funds in mutual funds, bond funds, equity funds and stocks. Although these instruments present more risk, money put in these instruments for the long-term have produced far greater yields compared to regular bank deposits. 

6. Ride Something to Wealth 

In the 6th secrets. Bo encourages us to ride as many vehicles to wealth as we can. We can choose to ride bicycles, cars, or even airplanes to wealth! 

By riding vehicles to wealth, Bo emphasized the importance of having multiple income streams. It doesn't matter how small the income stream is as long as there is an inflow of cash. Another point he stressed was the importance of profit over wages. Profit, of course, is achieved by running your own business as oppose to receiving wages as an employee. 

Bo used the analogy to going from one place to another to illustrate the importance of riding vehicles to wealth. Let's say you want to get from site A to site B, one can either walk, ride a bicycle, ride a car, or ride an airplane to reach site B. 

The difference is on how fast each vehicles will get you to your destination. Definitely walking will take you the longest time to reach site B while riding an airplane will most likely get you there faster. 

Walking to reach our goal equates to leaving our money in regular savings accounts and time deposits. Although our money earns interest, it'll take years before the earnings become meaningful. On the other hand, Bo's riding a bicycle by investing his money in Investment funds. Investment funds can either be UITFs, Mutual Funds, and Stocks. By investing our savings in this Investment funds, we can potentially earn more and reach our goal faster as like riding a bicycle. 

Faster than riding a bicycle is to ride a car to wealth. Bo Sanchez compares riding a car to starting your own business which can help us to gain wealth much faster compares on riding a bicycle. He wrote that 74% of millionaires in the world are entrepreneurs. He suggest use your core gift with passion and earning from it. In order to figure out what your core gift is, try answering this questions: "What do you enjoy doing?" and "Where are you good at?" 

If you are passionate about your business, then the chances of succeeding are much higher than when you just feel obliged to enter to it because you think it's a good opportunity. 

When your business or investment becomes big then it would be like riding a plane to wealth! The bigger your money or investment are, the faster to achieve your dreams! The more money you have, the more money you can use to generate income, the faster it is to become wealthy. 

Although it took 10 years or more to achieve first million, the second million can come in a couple of years or even faster depending on how aggressive you are. 

7. Have a Bias For Action 

From the 7th secrets. Bo shared that while we are taught to aim before we fire, he used "Ready ... Fire! Aim ...(And fire again ... Aim ... fire again..nth)" on his every projects. Bo, of course, doesn't encourage recklessness. That is why the first step is "Ready." He just wants to discourage what most of us are likely to end up doing - that is to keep on aiming but never do fire. 

As one of the Truly Rich Principles, Bo wrote "For pioneers, perfectionism is never a good strategy." We must allow ourselves to fail. And when we do, we must then learn to forgive ourselves and bring ourselves to act again. 

Lastly, in whatever we do, we must learn how to hustle! To hustle means "to believe that there's a solution to almost any problem - take it upon yourself to find it!" -Bo Sanchez- 

8. Win in All Areas 

The 8th secrets. Bo encourage everyone to have a balanced life. Believing in the power of our beliefs to define our reality, he admonish that everyone must need to win in the 7 major areas of life. He mentioned that everyone needs to ...

1. Strengthen Relationships 

2. Grow in Emotional Maturity 

3. Use Our Core Gifts 

4. Get Physically Healthy 

5. Gain Wisdom 

6. Build Money 

7. Nourish Our Spiritual Life 

In the succeeding sections Bo describe a few things he has learned in his own life that when applied in our own lives will help us achieve success in all major areas. For one, he says that we must follow our inner compass and do everything with passion. It would also help if we learn to define success our own way and not define it through how others see success. He preaches that we must give our best in everything that we do. 

We must learn to compete with ourselves and stop comparing our achievements with others. And most importantly, that our harvest will depend on how much we give - "The more, you give, the more you receive."

Every time I open this book I learn something new. This is one of the reasons why I've decided to share this. I hope you learned also a few things from this post. Happy Investing...

8 Secrets of the Truly Rich by Bo Sanchez (part 1)

8 Secrets of the Truly Rich

By Bo Sanchez

8 Secrets of The Truly Rich

At last finally. Just completed reading Bo Sanchez book 8 Secrets of The Truly Rich. And of course I want to share here what this book is all about. In this book, Bo believed that we can gain material wealth and can be spiritually abundant at the same time. Another things in this book, he emphasize and encouraged the readers to have a bias for action in order to achieve our dream and be financially free.

Part 1: Below are the 8 Secrets of the truly rich by Bo Sanchez which he mention in his book.

1. Be totally responsible for your success. 

Bo explain and suggest, stop blaming others for what happen in your life. Stop blaming the government, your family or even God for your misfortunes. Blaming others can lead to inaction. Instead of looking at ways to improve your life. You are always just focusing on others fault and not to yourself.

Don't wait for prosperity coming from anyone. If you want prosperity, you have to create it by yourself. Your futures is in your hands. Start now by changing your habits and concentrate on the things what you can do to improve your life. Be totally responsible for your success.

2. Enlarge your psychological wallet

From the book, it says our mind has been conditioned to think, that receiving a lot of money is shameful and is against the will of God. We are uncomfortable to handle our money. When we receive more than what we are usually earned, we try to get rid of these excess amount as soon as possible.

Our parents have made you come to believe that you are poor. Subconsciously, you could be believing that money is bad, that rich people are evil, and that doing business is dirty. Subconsciously, you are avoiding wealth.

And because of these thinking and believing most of us are poor. Our minds has been programmed to resist money. Bo believes that our money problems are actually mind problems and psychologically we don't want to be rich.

How do we overcome this? 

As Bo suggested and advise. You must increase your money comfort zone. You must learn to be comfortable to receive money. One way is to visualize and imagine that we're receiving a lot of money. See yourself earning double of what you're earning now. Get comfortable with that.

Improve your self-image. At the end of the day, who you are doesn't count. It's who you THINK you are that determines your SUCCESS. Align your desires with the results that you want. Contradicting desires create contradicting results.

Rip out your negative family labels. After you've changed your mindset, it's time to enlarge your skills to match the size of your psychological wallet. Read financial books, ask financial mentors, read personal finance blogs, learn how to invest, start your own business, and reap the benefits of earning passive income.

3. Get rid of crazy religious beliefs

The number 3 secrets is get rid of religious beliefs that may be hindering us from accepting money and becoming financially free. More than we know it, our religious beliefs actually contributes in determining our wealth.

As Bo said, "Religious beliefs are so deep, so wedged to your core identity, you follow them even if you're not aware that you're following them."

Question 1. Have you romanticized poverty?

Religion can romanticize poverty. We can be led to think that to be poor is better than to be rich because God favours the poor. We believe that poor people go to heaven and that rich people go to hell. We must not think this way. Instead, Bo suggests that it is indeed true that God loves the poor and favours them but that is because God wants to accompany them in their difficult journey so that they can RISE FROM POVERTY. God doesn't want you to remain poor!

Question 2. Do you believe that the rich won't enter heaven?

God did not say that it's impossible for the rich to enter heaven. God also needs the godly people who will run businesses, give jobs, and bless the world with great services and great products.

Question 3. Do you practice the "I hate myself" Spirituality?

Some people remain poor because they believe they're being punished, they believe that's the will of God. When God sees us in poverty. He weeps. God doesn't want to see us suffer.

Question 4. Have you relied on God too much?

Bo Sanchez believes that "one of the biggest reasons why we don't receive God's blessings is because we rely on Him too much. We surrender to Him what He doesn't want us to surrender: our stewardship." Don't expect God to do the very things He expects YOU to do. Do your part.

Question 5. Do you disguise your laziness as faith?

Most of us wants God to hand us everything on a silver platter, to the extent that we do not exert enough effort to get what we want. Don't confuse faith with your laziness. Faith requires action. God usually uses the sweat, the effort, the tears and the struggle you go through to form your character and give you what you need.

Question 6. Are you obsessed with the Purely Miraculous?

Sometimes we get too obsessed with receiving miracles in our lives. We tend buy lottery tickets and ask God to let us win. Although God sometimes grant these wishes, it would be too much to ask of this everyday and simply do nothing in exchange.

Question 7. If your favorite phrase "Bahala na" (I live it up to you)?

Religion can cause us to rely on fate too much, leaving everything to God. We must learn to do our parts as well in order to allow God to do his miracles in our lives. God designed us to work and trust - not simply to trust.

Here you go, the first 3 out of 8 secrets of the truly rich. As you notice, the 1-3 secret deals about the right mindset of being truly rich. 4 - 8 secret deals about the way how to become rich which are in part 2 article.

GOD Whisper for April 9, 2012

My GOD Whisper for Today

Truly Rich Club

April 9, 2012

Dear melvin,

 

Don’t bury your gift. If you don’t use it, you’ll lose it. But if you use it, you reproduce it! Don’t be content with just maintaining the special gift that I have given you. Develop it. Expand it. Multiply it. Make it grow!

 

Thinking of you,

God

 

P.S. melvin, go out into the world and share your gift!

10 Stock Selection Criteria by Benjamin Graham

1. An earnings-to-price yield at least twice the AAA bond rate

2. P/E ratio less than 40% of the highest P/E ratio the stock had over the past 5 years

3. Dividend yield of at least 2/3 the AAA bond yield

4. Stock price below 2/3 of tangible book value per share

5. Stock price below 2/3 of Net Current Asset Value (NCAV)

6. Total debt less than book value

7. Current ratio great than 2

8. Total debt less than 2 times Net Current Asset Value (NCAV)

9. Earnings growth of prior 10 years at least at a 7% annual compound rate

10. Stability of growth of earnings in that no more than 2 declines of 5% or more in year end earnings in the prior 10 years are permissible.

WHAT’S YOUR C-TUATION—CRISIS, CHANCE or CHOICE?

WHAT’S YOUR C-TUATION—CRISIS, CHANCE or CHOICE?

By Dean Pax Lapid*

I was recently invited by a big school to be their commencement speaker this 29th April not realizing that it came in conflict with the wedding of a very good friend and member of the Mastermind Circle with Bro Bo. Definitely, I would not miss this milestone event of my dear friend, but at the same time, I want to deliver a message to a batch of graduates in case they want to dive into the world of entrepreneurship. (Thank God, I’m given the opportunity to share this thru the Truly Rich Club newsletter.)

The months of April and May are a time of celebration and evaluation (some meditation) especially for our young high school graduates. There’s a dilemma of ‘CHOICE’ of what to take up in college. If rushed, it’s a battle of ‘CHANCE’ whether one can survive, thrive and eventually land a job related to his or her chosen 4-year course.

Truly Rich Club

Admittedly, these young graduates could fall into a chasm of ‘CRISIS’ in their critical stage of life if not properly guided.

Let me share with you the scenario (60 percent of the time) that I’ve experienced while interviewing incoming freshmen when I was Dean of the Entrepreneurship program at Entrepreneurship School of Asia (ESA) for almost seven years.

Imagine the situation were the parent, the incoming student and myself are in a small conference room doing the preliminary interview. Here’s how the conversation usually transpired:

Dean Pax: Hi Frank, I’m glad that you’ve chosen our school to take up your college degree.

Incoming Student: Yes, Dean. I’m quite okay but at the same time pressured.

Dean Pax: Why is that so? (The incoming student hesitates, so the mother answers.)

Parent-Mom: Well, my husband and I think that this Entrep course will prepare him for his future.

Dean Pax: Ma’am, actually any course can prepare your son for his future for as long as he is serious with his studies and the practical course works. (I then shift back my questioning to the incoming student.)

Frank, I only have two questions for you. The first question is, are you committed to pursue this degree, come what may? (Again the young one hesitates.)

More importantly, is the Entrep course the one that you’d really want to pursue?

(As I was in the process of handing over the blank application form to the incoming student, the mother

replies.)

Parent-Mom: Actually, I want him to follow my husband’s professional career who is a very good mechanical engineer but his Math and Science grades were so-so. Therefore, I took the liberty of enrolling him in the Entrep program.

Dean Pax: (I shifted my hands towards giving the application form to the mother.)

Ma’am, can I also take the liberty of asking you to fill up the application form? We welcome all ages here! (Frank the incoming freshman laughs out loud.)

With due respect to parents, our dreams may not be the dreams and ambitions of our children.

Everything in this world is not ours – we only manage all our possessions, including our loved ones.

Entrepreneurship is not a crisis situation where there’s peer pressure (the barkada wants ‘trending course’) or parent pressure.

Entrepreneurship is also not a game of chance – it is planned and worked thru.

Real entrepreneurs must make the choice of innovating products out of their ideas, giving jobs to others, and building business systems to sustain the young venture.

Message for the Young Graduates

Let me share with all of you the letter I wrote to my eldest son as he was coming into college eight years ago. By the way, I’m so proud and happy that early on in his career, he was able to find his ‘flow’. He’s a very good training officer for retail outlets all over Luzon.

Dearest Franz,

I am writing this letter to you with the hope that the insights here will give you inspiration and challenge to what you will tackle as you get into college.

As a teacher and dean, I always tell students that coming into college and prospering in the next four years is one of the critical milestones in one’s young adult life. College life could either make or break what happens to your professional career. The next four years in college will give you three things:

a. Learning. Some say it is knowledge that you acquire through books and lectures. I believe that these together with the right understanding and the relevant application will give you a more meaningful learning experience that you can carry into your professional life. Respect your teachers and find mentors that can help you refine your current skills and talents.

b. Discipline. Although you have already acquired your study habits from high school, college will hopefully further enhance this. College will expose you to young ladies; you are mature enough and there is nothing wrong with having a girlfriend just as long as she is an inspiration, not a frustration. 

College diversity with all its activities will either enhance or distract you. It is up to you to manage your time and prioritize what is most important – to graduate foremost and be well rounded as well with organization, sports and friends.

c. Leadership. Some of my friends have sent their children to the USA or UK for college. I personally believe that dollar money is better spent for a post-graduate or masters degree. College builds your network that you can connect in the future especially if you plan to prosper a career or business here in the Philippines. In college, you will be tested on how you select your friends and your study groups. The challenge is for you to blend and work with people you have not known, to be able to influence them with the right priorities and, most importantly, being able to gain their respect.

Like any loving parent, my wish for you is to grow up to be a responsible and productive member of society. More importantly, I want you be as successful as I am or even to be better than I am. I am sorry for forcing my aspirations to you earlier on. As we walked through Malcolm Hall at UP last August to take your UPCAT, I realized that you are not me and that you have your own individuality. I fell into the same trap as your lolas did to me (Lola Julia wanted me to be a priest while Lola Nena (my mom) wanted me to be an Air Force pilot). Now I know better – I want you to be good at what you really want.

As your loving father, I will always be around to give you advice and support you in your aspirations and problems. My guidance may not be a panacea to your troubles but at least I will be there in your times of need. Live your life to the best of your God-given abilities. Time is on your side – make use of it well. Work hard first then play hard also (all within moral and legal limits). Most importantly, pray daily for guidance and protection – God knows what is best; you just have to be patient and enduring.

I am very proud of you Franz and I love you always.

PAPA

Let me end this newsletter by sharing with you Psalm 22:20. (I hope that as parents, you will listen and respond to your children as our Father in heaven responds when we’re in crisis):

“But You, O Lord, do not be far from me;

O my Strength, hasten to help me!”

*Dean Pax Lapid is the former Dean of Entrepreneur School of Asia. He is also a Professor of Entrepreneurship at Asian Institute of Management, one of the most prestigious business schools in Asia. He is a prolific entrepreneur, creating one new business a year.