Stock market lures smart celebrities

THEY have the money and they know how to splurge. But these celebrities are smart enough not to splurge on material things that could later represent a fragile—and to some extent—broken career.

Personal finance expert Salve Duplito summarizes it best, “We have seen too many celebrities who messed up their financial lives. Of course, these are also powerful lessons to the masses, but who wants to hear horror stories all the time? An inspiring one is equally powerful with a bit more instructional value.”

Actor Richard Yap, comedienne Giselle Sanchez and television host and basketball star Chris Tiu not only have star powers today, they also have good heads on their shoulders as they make sure their future will be financially comfortable. They all have investments in the stock market, a risky but rewarding option—much like the business they are in now.

Tiu and ‘blue-chip stocks’

“I’ve been investing in the stock market since I was in college, around 10 years already… I do not closely monitor individual stocks but just the general market since I have medium- to long-term horizon anyway and I invest mostly in blue-chip stocks. I receive daily reports but I just go through it briefly to get a general idea of individual companies and the entire market,” said Tiu, who also has investments in other capital-heavy businesses such as Happy Lemon and Eric Kayser Philippines.

He did not disclose how much money he put aside for investment in stocks. “Let’s say around 5 percent of my entire investment portfolio goes to the local stock exchange and another 5 percent in US markets. The rest would be in real estate, bonds and businesses.”

From hosting to investing Sanchez, who appears in a lifestyle show over at CNN Philippines, said she got the idea of investing in stocks from her hosting duties.

She said she met Eusebio “Yosi” Tanco and Vivian Yuchengco during a Christmas party she hosted for stockbrokers in the 1990s and the two invited her to invest in stocks.

“Seeing the stature of everyone there, I was inspired by their financial freedom, so I invested a little of my money through a stock brokerage firm. I was afraid to be ‘bullish’ because they said stocks were only for those who had extra money to lose. Now, I wish I invested more.”

She said she started with P25,000, which she bet on stocks offered by the Ayala Group and SM.

“I did invest in one stock where my P100,000 investment earned P1,000,000 after one year! Thank you (BEL) Belle Resources! But this stock has reached its peak already,” Sanchez said.

She said she used the money to build a new house for her parents who lost their home to Supertyphoon “Ondoy” (international name: Ketsana) in 2009.

And it seemed Sanchez has become comfortable playing stocks despite the uncertainties that come with investing in the market.

During a birthday celebration for Autonomous Region of Muslim Mindanao (ARMM) Gov. Mujiv Hataman, she had to thank one of the guests for making sure she earned big. She told a flustered President Aquino, “Isa kayo sa pinakamagaling nating presidente. Ang laki ng kinita ko sa stock market! (You’re one of the best presidents we’ve ever had. I made a lot of money from the stock market).”

Yap, who rose to fame playing rich characters in ABS-CBN shows such as “Sir Chief” in the popular series “Be Careful With My Heart,” said he had long been attached to the stock market.

Yap in the stock market

RICHARD Yap

“I have a few investments in the stock market because I used to work [at] the Philippine Stock Exchange when I was younger. I was on the trading floor, when they were still in Binondo. That was in 1989 [via] Citisecurities,” Yap said on the sidelines of a Manulife event in September.

Yap was active on the trading floor for only four months, which would already be enough to gain some valuable insights into investing.

As some of his loyal followers would already know, the actor had to make both ends meet for his family after turning his back on time-honored traditions. A Chinese by blood, Yap married a Filipina and was forced to live independently.

“We also do everything we can to make smart decisions with regard to the different aspects of our family life especially when it comes to financial matters,” he said in a separate Manulife press release.

But it’s not all roses and fast cash for these already brimming coffers-rich celebrities. Like the entertainment business they are in, their investment in stocks is already a big gamble.

Handling losses

Tiu recalled losing big time in 2008.

“My friends and I lumped together some funds in 2008 and we got hit bad when the Wall Street crisis happened and we saw our portfolio lose like 50 percent in practically a week. That was our hard earned money and savings right after college. We just left it and closed our eyes. When we checked again two or three years later, our fund had doubled already from its original value. Good thing we weren’t so emotionally involved and we didn’t sell off when everyone was panicking,” he said.

Tiu would not call himself a risk-taker, however. He admitted to knowing the stock market, enough to adopt a relaxed stance.

On Aug. 24, when all hell broke lose at the local stock market and abroad, Tiu did not panic.

CHRIS Tiu

“I think everyone’s portfolio lost value during that day, fortunately, I’ve already sold a portion of my shares before this happened,” he said. He said he had learned a lot from the past.

“I like to sleep well at night so I carefully allocate my resources. When I was younger, I’ve tried ‘playing’ with ‘basura’ stocks or risky stocks that could possibly give you quick and high returns. But I got burned already, so I’ve learned from the past and just invest in the blue chips and other stocks that I really believe in—those that have a good business model, environment and management team,” he said.

Long-term investments

Both Yap and Sanchez also believe in the power of blue chips, the relatively safe investment when it comes to stocks.

“Well, blue chips are a sure thing. If you want to invest long term, you invest in blue chips. But if you want to earn a fast buck, invest in the IPOs (initial public offerings) and the other smaller stocks,” Yap said.

Sanchez also said she was in a safe position during that fateful Black Monday, when most of the gains from the start of the year were easily wiped off because of concerns in China.

GISELLE Sanchez

“I have not really lost big since I invest in blue chip stocks, which are the safest. Also, I’m not the panicky type. When my stocks go down, I just stay still because I know it will go up again,” she said.

She also believed in the power of stock brokers. “When my broker tells me to sell already, I listen.”

First Grade Finance Inc. managing director Astro del Castillo has celebrity accounts in his portfolio. Due to non-disclosure agreements, he would not reveal who his clients are but only described them as smart celebrities who can cough up investments worth “not less than six digits.”

He said these celebrities themselves sought him out and asked for his advice.

He said his only condition was for them to learn even a bit of the market by attending or listening to his “inspirational” talks.

“You would be surprised, most of them, if not all of them, understand that investing is important because they know that the limelight will not shine forever,” he said.

He said some were initially scared because of a lurking-from-behind big brother by the name of Bureau of Internal Revenue. In practice, capital tax gains are already deducted when one withdraws money from a fund manager.

Del Castillo believes these celebrities are risk-takers, but in a positive way. “Some of them have not finished college and found investing in stocks as a shorter route to wealth.”

Tiu also said, “It gives you the opportunity to be a shareholder in a company that you believe in without having to spend time working or managing it. In other words, you let the management and its employees work for you.”

Duplito advised celebrities considering investing in stocks to have a risk management strategy that would complement their short and unstable show biz careers.

“Since celebrities’ line of work is inherently risky, their investments need to be safer than most… By ‘safe’ and ‘risky’ however, I refer not to stocks [as risky] or bonds [as relatively safer] as many would assume. To me, risk is a function of knowledge. Anything is risky if you don’t understand it,” she said.

“A celebrity who does not have the aptitude nor the willingness to read an annual report in my book should not invest in stocks directly,” she said.

She said these business-adept celebrities should choose 10 stocks “that they truly understand so that if they wake up one morning with a tanking market, they can still do their craft and not be bothered.”

Starting small

But what of the disparate wage earnings between a celebrity and an ordinary company employee? How can Filipinos be inspired by their “idols”?

Del Castillo said that if Filipinos could buy the products their idols were endorsing, they could also set aside some for investments.

Start small, Sanchez suggested. “Anybody who has an extra P1,000 from his salary should invest.”

She said the cash gifts she gave her children were eventually invested in stocks. “I have raised their four figure investments to five figures. What’s important is, as much as possible, try not to touch it until your broker tells you so. He knows better than you do. Bank interests and long term placements make your money sleep. Time is money and if you’re wise with your money you can enjoy the fruits it gives you.”

Duplito added, “Celebrities are in a unique position to inspire more Filipinos to be responsible with their income. They have the star power that allows them to influence decisions and lifestyle. The more they can show that living only a lifestyle you can sustain is the best thing and that preparing for the future by investing carefully and regularly really works, the more chances Filipinos have of adopting the same.”