A Guide Towards

Becoming an
Independent and
Intelligent Investor.
Also Included: My Bullish Trading Guide
By: Carlo Mercado
PinoyStockMarket
Disclaimer

This eBook is for your information only, and does not recommend any buy and sell
of stocks securities.

Invest at your own risk. The author will not be liable to any losses incurred by the
investor, in any case that this guide was proven inaccurate.

Some links are affiliates, which means I will earn a commission if ever you will sign
up. I will never give you an affiliate link not unless I fully recommend it, and have
tried it for great success.

I treat my readers with utmost importance, and I will never trade our virtual
relationships for a tiny commission.

Opinions are subject to change without prior notice.

Why is it important to know how to create your own
investment plan?
Before we get into the Bullish Trading Guide (I saved it in the last part), let’s take a
look on why is it very important to be an independent investor. After you digest
this, you can probably drop my Trading Guide and just create your own.

• You’ll be able to save money.

Mentors don’t give information for free. Your consistent demand of
information is what’s keeping them employed. And most of the time, they’re
not cheap! If you can do it on your own, you can just invest the money in
the stock market.

A Truly Rich Club subscription is worth 500php PER MONTH (6,000php/yr)

for Philippines residents. I don’t know about you, but 6,000/yr is an
expensive amount for me!

• You will be prepared for the worse.

For those who are subscribed to the Truly Rich Club, what would you do if Bo
Sanchez would undergo a crisis that will suddenly make him stop sending his
monthly Stock Updates?

Or let’s just say that your mentors would increase their subscription fees.
What if you can no longer afford their services?

These things can happen. And if they did, what would you do?

• You will make the most out of your time.

If you’re too busy and a conservative investor, perhaps trading is not for
you. If you can’t handle the pressure of not monitoring your stocks, then the
buy-hold strategy is not for you. Better use cost-average. The point here is
to create a strategy that will suit your lifestyle and risk tolerance.

• You avoid being fooled.

If your stock mentors have a million dollar resume, does not mean that
whatever information they give you is legit! Of course there are still sincere
mentors out there.

What keeps illegal recruiters employed?

Why are illegitimate MLM still in business?

Money make fools out of those who are un-informed and misinformed!
 There’s a saying in the stock market, “Too much of a lie, becomes the truth!”

• You can earn money.

This is the coolest part. In the stock market, information is the most
powerful tool you can ever have! People are willing to pay for it.
Why? Because reliable information will make you rich! Think about why more
than 500,000 people are willing to pay for the Truly Rich Club.

They pay for the information that will eventually make them millionaires.
If you can analyze and interpret information, you can save the hassle and
the money that you will pay for the subscription.

PinoyStockMarket may not be earning (yet), but it’s growing because I give
stock information for free!

• You can help others.

The money part is the coolest, but this is the best part – at least for me!
There will always be somebody that will ask for your help.
Become an independent investor.
Now that you already know the benefits of being an independent investor, I will
now give you an idea how I did it:

1. Hire the services of the BEST stock broker!

This is the very very very first step!
Not good. Not better. Hire only the BEST!
If in case your mentors decide to stop giving you recommendations, your
broker will save the day!
Therefore, your broker must be able to provide you with highly reliable and
FREE information (be it technical or fundamental).

But that does not stop there. He/she must also take the liberty of educating
you! That’s his/her purpose! If he/she can’t educate you, find someone else
that will.

2. Make mistakes.
In other words – lose money. Losing money is part of the stock market.
I’ve lost 20% (at most) of my initial capital in the process. Even the best
mentors out there will still, at one point, recommend you to sell at a loss!

Don’t be afraid to lose money! Everyone in the stock market will lose money,
but not everyone will gain it! Learn from it instead. Your fear of losing money
will only keep mentors employed.

3. Hire the services of a mentor.

This part is optional. If you’ve learned from steps 1&2, then good for you.
Unfortunately and ironically, I signed up to the Truly Rich Club. Upto this
writing, I’m still a member.
But.. but.. BUT I only did it so that I’ll be able to learn, not to depend on
them.

Today, I’m happy to report that I’m no longer following their list of SAM
stocks, neither their recommendations.
Once I learn their bear market strategy, them it’s time to call it quits.
Do what I did – Hire them, learn from them, then unsubscribe!

4. Break the rules!

Trading and investment strategies are “bounded” by rules. Fortunately,
breaking rules gave me great success!
 Here are some of the rules that I don’t follow:
o Diversification.

“Rule #2: Buy as many as 10 companies – owning an equal amount each month.” –
Bo Sanchez | My Maids Invest In The Stock Market.

Trading on my own would require me to monitor my stocks very

closely. If I diversify too much, I would only be able to do half-assed
research on each company.

“Diversification is protection against ignorance!” – Warren Buffett

o Invest like Bo Sanchez’s turtle.

“Invest Small Amounts every month, for 20yrs or more.” – Bo Sanchez | My Maids
Invest In The Stock Market.

Once, I received a newsletter from Truly Rich Club with this subject:
“Don’t buy then hold.” But I tell you, there was a time when I gained
133% in just one year with the buy-hold strategy!

I fully invested ALL my capital!

I only paid the commission twice (when I bought and sold) in the
process, compared to 12 times when you buy every month, for 1yr.

If you know that something will make you gain more than the SAM
strategy, why not go for it?

I could go on with all the rules that I break, but I know you already get the
idea, right?

5. Accept change, and capitalize!

Just a few years ago, PSI has been in a conservative bull market. In 2012,
PSI has been in a raging bull! And in a few years (God only knows when),
we’ll be in a bear market again.

View these changes as opportunities! That’s where the money is!

Summary:

With everything that I said, here are the main points that you should bear in mind:

• Information is money power! Do everything you can to have it!

• Learn from losing money.
• And do NOT depend on the masters, learn from them instead.
Bonus: My Bullish Trading Guide

Before anything else, During a bull market, it’s not hard to earn money. You can
just invest them in, sleep it off, then watch it grow over time.

But having a trading guide can capitalize on the short to medium term earnings in a
bull market.

There are only 3 things you need to know:

• The current price

• The target price
• And buy-below-price

The target price must be provided by your stock broker.

The buy-below-price, you can set on your own depending on the upside that you
want. In my case, my buy-below-price is 85% of the target price, so that I’ll have
an upside of 15%.

Mathematically:

Target_price x 0.85 = buy_below_price

Here’s how it works:

Buy if the current price is less than buy-below-price.

Sell if current price hits (or go very near) the target price.

Hold if current price is between target and buy-below-price.

SAM, is that you?

For truly rich club members, you may notice that is similar (if not the same) as the
SAM strategy. Yes, you’re correct! But there are also differences:

First off, SAM and I follow a different buy-below-price. Mine is lower than SAM’s.

Second, I follow a different set of giant companies. I’ll explain further in a bit.

Lastly, and most importantly, I don’t follow their rules (as mentioned earlier).
Giants are not created equal.
I mentioned earlier that I follow a different set of companies. Also, I don’t spread
my capital evenly, and I don’t diversify too much!

Here’s how I do it:

Group 1
Stock Buy below price Target Price
Giant 1 x x
Giant 2 x x
Giant 3 x x
Giant 4 x x
Giant 5 x x

I only stick to 5 companies.

Why are they my favorites? Because they’re the giants among giants! They require
less work (monitoring) on my part. These are the giants who just breezed the bear
markets like a hot knife cut through butter!

They are also the giants that are not much affected by changes. Example: They’re
not affected by sin tax laws. These are also companies that will still earn lots of
money even if they don’t spend too much capital! And if worst comes to worst and
they don’t earn a single penny, their assets are more than enough to pay their
debt.

These companies are good for all short, medium, long and very long-term
investors!

As long as the current price from this group is below my buy-below-price, I stick
with these companies. If I cannot buy all 5 anymore, that’s the only time I’ll
consider the “other” giants.

How did the Truly Rich Club come up with its target price?
This only applies to COL Financial members. The target price is the Fair Value (FV)
Estimate in the Fundamental Research Guide.
Now that you know how to get the target price, you can now compute for your buy-
below-price.

How did I come up with my buy-below-price (BBP)?

When I subscribed to Truly Rich Club, I did not wait to receive the most recent
stock update. Instead, I quickly went to the archive and downloaded one. Here’s
what I found out:

Try getting the ratio of the BBP to its target price.

Stock Buy Below Price Target Price Ratio

AGI 17.96 20.65 86.97%
AP 33.22 38.2 86.96%
FPH 99.74 114.7 86.96%
JGS 37.39 43 86.95%
MBT 104.35 120 86.96%
MER 283.48 326 86.96%
MPI 5.08 6.35 80.00%
What have you noticed? The ratio is constant (just don’t mind MPI. I never liked it
anyway). That’s when I realized that BPP is subjective – you can set it on your own,
depending on your level of greed!

And my level of greed is an 85% ratio. I have a friend who’s greedier than me – he
wants 80%. How about you? What’s your level of greed?

Now, you have a target price and BBP. The only thing left is what stocks to buy.

On diversification.

Imagine this: You just opened your stock account, and you probably only have
5,000 to start with. Because you only have a small amount, it will be wise if you
spend it in just one company. So what do you do? Pick the best of best giant out
there.

If you already know who’s the best, what difference does it make if you have 25K
or 100K or 1M?

Note: I invest on 4 companies only. Rarely do I have 5 or 6 in my portfolio. The key

word there is “wide”.

“Wide diversification is protection

against ignorance!” – Warren Buffett

Why would you invest in other companies, if you know you can earn more with the
other?! Again, the key here is information.

Be intelligent investors!
Bill gates did it with one company. Warrean Buffett did it with just 5!! You only
have to make a few right decisions to be rich! (taken from The Tao of Warren
Buffett).
What’s next?
Intelligent investors only need two things to be rich: The right information, and the
right companies.

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