Gus Cosio says so

Ideas on the Philippine Stock Market

ABF

12:21 am  Tuesday  25 January 2011

Last week, I was in an event of an insurance company where I was one of the speakers.  My talk was on some boring topic like the investment outlook.  The speaker who came before me was such an excellent speaker that I picked up so much from him.  The funny thing was what struck me the most from his talk was something that he admitted to have picked up from another motivational speaker – Anthony Pangilinan.

He shared three letters which stated three different but related advice.  The letters were ABF and they stood for: 1) Accept the Brutal Facts;  2) Anticipate Better Future;  3)  Act with Bold Faith.  When I looked at my portfolio after the close of today’s trading session – which incidentally is around 5% under water – I remembered these pieces of advice.  They are really very appropriate in my current situation.

What are the brutal facts?  It is that free markets are unforgiving.  The race goes to the swift.  The fittest are those who survive.  In short, the brutal fact is you will lose your shirt if you gamble.  The word to the wise then is “do not gamble; invest!” An investor is one who can work with time and can accept that in an investment, one can lose money.  Ask any entrepreneur.  I have good friend who is now filthy rich from his chain of food shops.  He had been bankrupt twice in his adult life before he saw his business finally thrive.  Now he is a peso billionaire.  That is a bitter truth about investing – you can lose all or part of your money.  The good thing about the stock market is that if you do not trade on margin, you cannot lose everything.  The other truth is – if you can work with time using sound money management and judgment, you can make all of your money back and more.

Which brings me to the next piece of advice which is to anticipate a better future.  We are no cock-eyed pollianas here.  We are investors who investigate the facts and do proper research.  That give us the foundation to look to the future because that is what stock investing all about – the future.  Do we think that Warren Buffet made all those investments because he was worried about the present?  He was forward looking all the time.  He looked at business and economic potential and not merely at stock prices.  He did not even care if stock prices went down.  He was interested in how the company would eventually grow, and that did not happen overnight.  If you cannot look into the future and see things unfold, you’ll be quite unsuccessful in most of what you do.

Finally, to act with bold faith; this is something that is not pure instinct.  When you have faith, it is having confident assurance that you know you are doing the right thing.  You cannot be gambling and doing the right thing.  Even faith in God requires that you at least know what the word of God says.  Otherwise, it is mere superstition.  What I am saying is to have bold faith you must look at the right data and analyze them in a methodical and proper way.  Bold faith is when you are standing on a sure foundation.  You have done your homework, studied the fundamentals, and interpret what the market is telling you.

I remember a golfer of old – Lee Trevino, a winner of many a PGA tournament.  He said in an interview after winning one of the majors that he won because he got very lucky with his putting.  Then he went on to say that the more he practiced, the luckier he got.  I think people can really be lucky in the stock market.  You can make a killing once, but lose it on the next bet.  However, if you hone your investing skills by developing the proper thinking and temperament, you could be like the worlds most successful investors in your own league.

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January 25, 2011 - Posted by | Uncategorized

28 Comments »

  1. sir gus! you’re still up this time of the day!

    sir what’s your take po on VLL?
    it went down to as low as 2.57 but went up back to 2.74, 5 cents lower than the previous close.

    thanks po and God bless!

    Comment by rickyyahoo.com | January 25, 2011 | Reply

  2. Sir, I am noobie at investing in the market at 41. I do hope to learn the ropes and not loose too much while learning. Thanks for the inspirational article that made me look to MY fundamentals. This is when amdise rather adverse market conditions that I apply entrepreneurial skills, logic and common sense and look forward alway just like you and Buffet. I do hope I learn more from people like you sir and make it big enough to retire….

    Comment by Martin | January 25, 2011 | Reply

  3. Sir, this is very inspiring. Thank you.

    Comment by Aika | January 25, 2011 | Reply

  4. Sir Gus,

    Wow..It’s amazing you gave me more confident to be a true investor in this kind of market situation.. ANyway what is your advice for URC and ORE? Thanks..

    Comment by ronaldo | January 25, 2011 | Reply

    • I would go for ORE first. I’ll wait for URC to get cheaper because higher agri-commodity prices might squeeze URC margins.

      Comment by Gus Cosio | January 25, 2011 | Reply

  5. your message is both reassuring and informative as always.

    sir what do you think is the immediate support for MBT. tnks

    Comment by clay | January 25, 2011 | Reply

  6. I always believe that in order to be able to survive tough times like this, we have to be investors and not merely traders. We have to be patient and do our homework as well. Thank you Sir Gus for always being an inspiration. 🙂

    Comment by Shan | January 25, 2011 | Reply

  7. Hi Sir Gus,

    Thanks for this inspiring article. It truly made me think of the reason why I’m caught up in this whole stock market scenario at 23. Let me just say I’m really getting excited to hear from you more in person in First Metro’s Seminar on Feb 2!
    -rey!

    Comment by rey | January 25, 2011 | Reply

  8. very inspiring indeed!

    at the end of the storm, sunshine will break through an overcast dark clouds of gloom and will look more wonderful than ever before, same goes with stocks!

    have a nice day, sir gus 🙂

    Comment by haribon2007 | January 25, 2011 | Reply

    • did i saw rays of sunshine peeking through the clouds?

      Comment by 100K_Pinoy_Fund | January 25, 2011 | Reply

  9. Sir Gus, saw you in ANC last night, great insights on the market, 10-15% for the PSE this year you say? I sure hope so… I also heard u saying that mining may lead the way this time, can u give us a list? or should we just look at the mining index and take it from there? as always good health to u always sir Gus.

    Comment by migs-ron | January 25, 2011 | Reply

    • If you refer to the previous posts, top picks for mining would be NIKL, ORE, PX and AT, which have good fundamentals. ORE is more of speculative since they have yet to deliver the goods, if I understood the previous posts well. 😀

      Comment by Kristin | January 25, 2011 | Reply

      • Yes Kristin,
        ORE is very speculative.

        Comment by Gus Cosio | January 25, 2011

  10. I lost all my (paper) gains in 2009. Back to the old drawing board =)

    Comment by Alvin | January 25, 2011 | Reply

  11. Thank you for that one. I guess when the market is down, that is when one relizes what kind of investor he is. Because all the nuances of fear and faith are present.

    Comment by Weena | January 25, 2011 | Reply

  12. sir gus, one of your best posts.. congrats and thanks for that 🙂

    Comment by cliffhanger | January 25, 2011 | Reply

  13. Wow, very motivating and enlightening read Sir Gus. Thanks 🙂

    Comment by KennyV | January 25, 2011 | Reply

  14. I like the Anticipate Better Future today.lolz

    Comment by marketbeginner | January 25, 2011 | Reply

    • ABF today. Absolute Buying Frenzy.

      Comment by obilesil | January 25, 2011 | Reply

      • Aba Basta Fortune…lolz grab agad.. buy buy buy..lolz

        Comment by marketbeginner | January 25, 2011

  15. DMC just jumped 6% the day after I sell it. It just had to be the day after.. :grumble2x:

    And also JGS just jumped 9.5%. I was thinking of doubling my portfolio but held on because I was thinking this could go down even further.. And today, such a large jump. I Wonder whats up.

    Comment by jasper | January 25, 2011 | Reply

    • hopefully not a dead cat bounce. cheers.

      Comment by obilesil | January 25, 2011 | Reply

    • jasper,

      It is the mystery of our business..that makes a stock move higher and sometimes lower in an unpredictable pattern. so, invest with a business perspective approach regardless of market gyration.

      Comment by richard | January 25, 2011 | Reply

  16. One of the things that I have learned from this deep correction is to differentiate gambling and investing. Investing means there should be a deep study of the stocks that you want to buy, be in the fundamental or technical(trends) side. In gambling, you may win once but at the end your losses will be even more than your winnings. Remember, not all the time you are lucky, one day will come that everything(winnings) will be wiped out because you relied much on the rumors/hype. PRACTICE THE ABF’S when you buy stocks.

    Comment by Claire | January 25, 2011 | Reply

  17. I saw Mr. Gus at ANC last night, it was a neat interview!

    Comment by Tan | January 25, 2011 | Reply

  18. Sir Cosio,

    If you were to buy 3 stocks right now, what will it be? Thank you Sir.

    Comment by SurePlayer | January 25, 2011 | Reply

  19. “Those [money managers] who have been buying are looking for the greater fool to take them out, and the greater fool has always been the little guy,” says Charles Biderman, TrimTabs’ chief executive. “But maybe the little guy doesn’t have the money this time to play the greater fool.” from http://online.wsj.com/article/SB10001424052748704115404576096060508814434.html

    Comment by jovy | January 25, 2011 | Reply

  20. The brutal facts that we learned from the previous days can help us determine the future that we’ll have…that is if we learn to study and time our moves prudently. Not very easy to do though. It takes a dash of patience and a barrelful of faith to squash those shifty nerves.

    Comment by weena | January 25, 2011 | Reply


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