SAM or Strategic Averaging Method, What do you think of it?

January 31, 2013 | By Fitz | Filed in: Investing.

 

Hi, this past few weeks, I’ve been reading a lot about investing in stock market. And I see my self as an investor rather than a trader. For investors, they use this COST AVERAGING METHOD, wherein you buy a stocks of a good quality company in a fixed amount at regular intervals over a long period of time. You do this regardless of the situation of the market. When the price is high you buy less shares, when the price is low then you buy more shares. Then when you reach the target years, you may now sell your stocks at a higher price.

HOWEVER, I’ve stumbled when I came across this group who claims there’s a more powerful method to use if you are an investor. They called it as SAM or Strategic Averaging Method. This is a cross breed system between cost averaging and value investing. This is being used by Truly Rich Club members of Bo Sanchez. The difference is that SAM has a maximum buying price of stocks or something like a price ceiling for every stocks chosen.  When your stocks have reached the maximum buying price you have to stop buying to realize the desired profit. Unlike Cost Averaging that has a favorite holding period of forever, SAM adopts a strategy of selling the stocks when it hit the price that they think is the maximum price that a stock should have. 

Has anyone of you tried it? Is it really effective? Should I choose SAM over Cost Averaging?

I would greatly appreciate your ideas regarding on this. 🙂

P.S

Hi Sir Fitz, I’d personally want to ask you this through email also, however since you suggested to use ASK community instead so I’m posting it here. I’f you have some time i’ll be happy to hear your inputs regarding this.

 

Thanks!




Tags: ,

7 Responses to “SAM or Strategic Averaging Method, What do you think of it?”

  1. Fitz says:

    Hi CJ, I’ll answer this question first before the previous one you posted.

    In my opinion, Strategic Averaging is a great way to earn from the stock market. In most cases, this will give you more profit than simple cost averaging.

    However, SAM requires you to know basic fundamental and technical analysis so you can discover which companies will give you the best returns.

    Members of the Truly Rich Club (TRC), don’t need to analyze companies because Bo Sanchez simply gives them the list, which by the way, actually comes from stock market analysts in COL Financial (Citiseconline).

    Sounds like a good deal to become a member of TRC, right?

    Well, it is actually, but before you sign up, you have to consider that you’ll need to pay a monthly fee to be a member of TRC. So study your finances and see if the monthly fee you’ll pay can be covered by the potential returns you’ll get from doing SAM.

    TRC also offers affiliate income, so if you think you can invite others to join TRC, then that can help in covering your costs for being a member.

    Now, back to Strategic Averaging Method…

    As I’ve said, SAM requires market analysis and timing – the ability to spot a company whose share prices are low, to determine if it will fundamentally go up in the next few months / years, and to know the target price at which you’ll sell for optimum profits.

    If you can’t do that by yourself, or you can’t afford to be a member of TRC, then I suggest you do cost averaging for now and simply focus on learning about the stock market.

    For what’s it’s worth, if you go to the COL Research Tab, you’ll actually see stock recommendations there. You can access that freely if you have an account with COL Financial.

    A “do-it-yourself” SAM strategy would be to find a company that COL recommends to BUY in BOTH their fundamental and technical reports. Then cost average that company until the target price is met (which COL also provides in the fundamental report).

    I hope this was able to answer your concern about SAM. Thanks for your question.

  2. CJ says:

    Hi Sir Fitz,

    Thanks for answering my question! 🙂

    So it means that SAM is much effective over simple cost averaging in a way that it could maximize your profit right? However as you said, it requires basic fundamental and technical analysis so you can discover which companies will give you the best returns.

    As I also understand, I can actually do my own SAM, since once I have an account with COL, they will provide their recommended stocks and the target price. This is also the same stock update given by Bo Sanchez to his members right? If that’s the case then there’s no need for me to sign up with TRC if I’m only after with their stock update.

  3. Burn Gutierrez says:

    @CJ, There are times when COL’s advice is different from those given by Bo to TRC members. Although the target prices remain the same. For example, Meralco (MER) is now above its BUY BELOW price in COL guide but Bo has recommended TRC members to continue buying.

  4. Warson Buen says:

    Im a TRC member and and in short statement: SAM works excellently! There are insiders in TRC that gives credible recommendation on what stocks to buy, at this buy below amount and gives you on time signal to sell.

  5. Olan Reyes says:

    Hi!

    Im also a TRC member since 2010, never knew about stock investing before and I would say that SAM isn’t perfect, though in my own experience, it really works. I’ve bought 5 recommended stocks, regardless of it’s price, placing the same amount monthly. One of my stocks I’ve sold earned 25% after year, the other 47% after a few months, and there is one posted almost 65% earning, (which unfortunately, I missed to sell) There are also stocks that you need to sell at a loss. So for me, SAM works because there are guide/advice to follow from experts and you do it on-line, which is really convenient. Thanks and God Bless!

  6. amiewennie says:

    Hi, good day!

    What is the difference between EIP bought shares (thru Citisec) and regular shares (thru Colfinancial) is there any impact on earnings and on trading? I am sorry, I am a neophyte investor and trying to learn more. Thank you for your support. Ms. Amz.

  7. Adrian Sun says:

    Hi Sir Fitz,

    I’m investing regularly in stock market for almost 2 years now and currently using peso-cost averaging. Now I would like to try using SAM method. What do you suggest the best thing to all the current stocks that I own before transitioning to SAM? Thank you.

Leave a Reply

Your email address will not be published. Required fields are marked *