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Money, Method, Mind Ebook

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0% found this document useful (0 votes)
1K views41 pages

Money, Method, Mind Ebook

Uploaded by

jiuchengnie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1

Disclaimer
This report by Adam Khoo, Adam Khoo Learning Technologies Group Pte Ltd and
Piranha Ltd. is in no way a solicitation or offer to sell securities or investment
advisory services. Adam Khoo, Adam Khoo Learning Technologies Group Pte Ltd
and Piranha Ltd. is not intended to be a source for professional advice. Participants
should always seek the advice of an appropriately qualified professional before
making any investment decisions.

Information throughout this report and accompanying materials, whether stock


quotes, charts, articles, or any other statement or statements regarding market or
other financial information, is obtained from sources which we, and our suppliers
believe reliable, but we do not warrant or guarantee the timeliness or accuracy of
this information.

Nothing in this report and accompanying course materials should be interpreted


to state or imply that past results are an indication of future performance. Neither
we nor our information providers shall be liable for any errors or inaccuracies,
regardless of cause.

This E-book and accompanying course materials may include forward-looking


statements. All statements other than statements of historical fact are forward­
looking statements (including words such as "believe", "estimate", "anticipate",
"may", "will", "should" and "expect").

Although we believe that the expectations reflected in such forward-looking


statements are reasonable, we can give no assurance that such expectations will
prove to be correct. Various factors could cause actual results or performance to
differ materially from those discussed in such forward- looking statements.

Historical performance is not indicative of future results. The investment return will
fluctuate with market conditions. Performance is not indicative of any specific
investment or future results. Views regarding the economy, securities markets or
other specialized areas, like all predictors of future events, cannot be guaranteed
to be accurate and may result in economic loss to the investor.

Investment in securities, including exchange traded funds (ETFs), and Contract for
Differences (CFDs) involves the risk of loss. There are no warranties, expressed or
implied, as to accuracy, completeness, or results obtained from any information
presented in the report and its accompanying course material.

© 2014 – 2024 Piranha Pte Ltd. All rights reserved.


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About Adam Khoo


Adam Khoo is an award-winning financial
educator, professional investor & trader,
and national best-selling author. A self­
made millionaire by the age of 26, he is the
founder of the Piranha Profits® online
trading school.

Adam is one of the most-watched financial


mentors on YouTube, clocking over 50
million+ views on his investment & trading
videos. In 2024, he received the coveted
YouTube Gold Creator Award for reaching
more than l million subscribers on his
channel.

With 30 years of market experience, Adam owns 2 portfolios totalling USD


75 million. Over the last 2 decades, he has beaten the market consistently
with his signature Value Momentum Investing™ strategy.

Adam famously called the bottom of the 2009 and 2020 bear markets,
allowing his students to buy into massively undervalued companies just
before the rebound. In 2023, Adam showcased his acumen for spotting
profitable plays by scoring an astounding 756% returns on NVIDIA and a solid
77% return on META.

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Chapter 2:
How to Really Make Money from Stocks
"Do I 'buy and hold' or do I cut my losses when stock markets plunge?"
"Can I really time the market or is it just wishful thinking?"
"Is it worth listening to recommendations by investment experts?"
"How do I know if a stock has the potential to rise over time?"
"Why does a stock fall in price even when the company does well?"

Nobody can blame investors for being thoroughly confused nowadays at what to
do with their investments. It seems that every time you read the news, you get
contradictory advice and opinions from even the experts.

Many 'how to invest' books and seminars confuse people even further as they
preach very different investment strategies. Some educators teach you to buy
cheap stocks and hold them for the long term. They advocate buying more stocks
and averaging down should the price start to fall even more.

Other experts expound the 'buy high and sell even higher' approach of
momentum trend trading. They advocate cutting losses once the price falls to a
certain level and to sell for quick profits if the stock price continues to run up.

Many people I talk to find that no matter what approach they adopt, they never
seem to be able to make consistent profits from their investments. They may score
a nice profit once in a while, only to find themselves losing it all back to the market
eventually. Even when they invest their money with professionally-managed funds,
they find their investments going nowhere or worse, struggling to break even. In
their frustration, many of these people resign themselves to earning a measly 7% -
3% interest from bank deposits.

Is There a Way to Really Win the Stock Market Game?

The fact is that there are people who make huge amounts of money from the
markets, year after year. These are the professional and semi-professional
investors/traders who are able to grow their investments anywhere from 75% to
750% annually.

While these successful investors do have losing investments (everybody does), the
fact is that over time, they consistently make much more than what they lose from
the inevitable mistakes they make. So, how do they do what they do? What really
works in the market and what doesn't? How much of it is luck? Can these skills be
learnt by anyone?

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This topic is something I have passionately studied and practiced for over 2
decades, ever since I started investing with my mother's stock brokerage account
at the age ofl8 years old. I am not only proud to say that I have made a nice fortune
as a semiprofessional investor (and now, a professional one) but I am even more
proud to say that I have made every conceivable mistake that can be made in world
of investing. It is the mistakes I have made in the past as well as my ability to
continually fine-tune my strategy that has allowed me to discover the profitable
investing techniques that I employ today.

These Successful Investing Techniques Can Be Learnt by Anyone!

The great thing is that these winning investment methods can be learnt and
applied successfully by anyone, regardless of your past experience and
background. Through Whale Investor™, I have had the privilege of training
investment analysts, financial advisors, bankers as well as individuals like
engineers, teachers, homemakers and students who started with zero financial
knowledge.

Here are some of the experiences my students have had after learning these
strategies.

-- - -
-
,;;

. - -.-..
$--

---
<i!)-

Finally Adam, after losing so much since September, taking ¢ ···


your VMI course 21 NOi/ember was the best thing I have
ever done, \ii racowria !!!Y. aiiil ticl I would like to appreciate this team for a great community
and most importantly, I feel I am on track and disciplined. I and consistent strategy. Exciting times ahead.
don't buy for the sake of buying,I don't feel FOMO anymore,
I got the patience to wait for the stock to drop to support
levels which I barely had the patience to do so previously.

MOSTAFA JOHN REINEL


SINGAPORE PHILIPPINES

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When I first met many of my students, they had absolutely zero knowledge of how
to invest. Some of them even tried their "luck" by speculating (treating the stock
market like a casino) and lost money as a result.

Thankfully, after learning the right strategies, they have made back previous losses
and are now creating a sustainable new source of income through their
investments. If these ordinary people, with little or no experience can become
successful investors, so can you!

Introducing the 3Ms of Successful Investing

In this book, you are going to learn the three key principles of successful investing:
'Method', 'Money' and 'Mindset'.

Profitable investing begins with having a winning 'Method' that will give you an
edge over the market. While no method can guarantee a profit 700% of the time, I
will show you winning methods that ensure that your investments succeed
majority of the time.

Youare going to learn a set of rules that will tell you exactly WHAT stocks to buy,
WHEN to buy and WHEN to sell. You will learn that knowing WHEN to buy and sell
a stock is even more important that knowing just WHAT to buy. Many people end
up buying the right stock, but at the wrong time. As a result, they see the stock
decline further downwards in disbelief. You are going to learn how to read the
emotions of the market and enter only at the time when the stock is ready to make
explosive gains upwards.

WINNING METHOD
1. WHAT to buy
2. WHEN to buy
3. WHEN to sell

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Chapter 3:
Winning Method
To consistently profit from the stock market, you need to have a winning Method
or strategy that will give you an edge over the market.

If you were to randomly buy stocks just because you got a "hot tip" or a "gut feel",
your chances of being profitable will be 50% at best. Since a stock either goes up
or down, you only have a 50/50 chance of being right.

Of course, with some luck, you could still make money. However, money that is
made from a lucky streak never ever lasts. Eventually, luck will run out and you will
end up losing everything and much more. This is why people who gamble at
casinos or try their luck at the stock market will end up losing everything.

When you have a strategy that gives you an edge over the market, you can
confidently be right 70% - 80% of the time. Remember that no matter how great
your strategy is, you can never be right 700% of the time. This is because there are
many factors in the world of investing that are out of our control. (For example, a
sudden economic crisis can cause stock prices to fall temporarily.)

The Three Keys to a Winning Method

A winning method of investing should consist of three key components: Knowing


a) what to buy, b) when to buy and c) when to sell. Let us go through all three in
detail.

a) What to Buy? Buy Only Stocks of Fundamentally Good Companies

As a winning investor, you need to have a set of rules to guide you on exactly what
stocks to buy.

When you buy a share of stock, you are actually buying a share of a public listed
company. You become a part owner (albeit a very small one) of a business.

We only want to invest in shares of very good businesses. Using fundamental


analysis, we need to learn how to study the financial reports of companies to
determine which are the most profitable and valuable ones.

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b) When to Buy?

It is not good enough to know which companies' stocks to buy. You need to also
know exactly WHEN to make your investment. I know many people who invest in
great stocks. Unfortunately, they buy it at the wrong time and see their
investments go down in value for a long time before it starts recovering. Knowing
WHEN to buy is even more important than knowing just WHAT to buy.

Buy When the Price Is below the Intrinsic Value

So, WHEN is it a good time to invest? Well, you should only buy a stock when its
price is below its intrinsic value. This means that the stock is selling at a price below
what it is actually worth.

I use an intrinsic value calculator to determine the true value of a stock, based on
the company's cash flow from operations, growth rate, total debt and cash
holdings. The intrinsic value of a stock will also give you an indication of where the
share price can potentially reach in the short term.

For example, I made an investment in Google (GOOGL) on Jan 2012, a stock that
hasdelivered consistent growth in revenue and net income. Although it seemed
pricey at $575, it was actually way below its intrinsic value of $1,065. The intrinsic
value of GOOGL gave me the confidence that I could potentially double my
investment when GOOGL reaches its true value.

KEY IN THE VALUES IN THE WHITE BOXES

1/f.i:RIBM vr Cn!lh Flow•


Bi¥ ¥»
Google P\I of 10 314.745.3 mllllons
GOOGL Jntrlnsh: Va11.1e before e11ah/debi $-tlS:1:..44

M·MifflN,tifriihH USO$ 20,000.00 millions, 1""5 Debt por Share $24,83

Total Debt (Sllcrt Term 4- LT Debt) USO$ 8,121.00 millions Plos (4-) Clish p.,, Sh..,., $127.5&
Cuh nnd ShortTernn Inv...tmenb USO$ 41,722,00 millions Finni Intrln•lc V,ilu" Per Shor" $1,065.18
t&S,H;.;,.;:15#5,161 1a.000Jo

i§Gri-1 i·H:1¥1:NHi 15-00% Cun-end; Year

l'MIB,1\t P.Mh&ii,1- Dl untR.ata

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Walt Disney (DIS) Breakout

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a. WHAT to Buy
Buy only fundamentally strong companies that have consistently increasing sales
revenue and net income. These great companies should also have high future
growth potential.

b. WHEN to Buy
Knowing WHAT to buy is not as important as knowing WHEN to buy it. Untrained
investors make the mistake of investing in a good company at the wrong time (i.e.
during a downtrend). As a result, they see the value of their stocks going lower and
lower and get their money stuck for years before seeing any returns.

This is why we should only buy a stock when it is on an uptrend. On an uptrend,


there is a higher probability that the price will move upwards, generating profits
for you. We determine an uptrend by ensuring that the S0SMA has crossed above
the lS0DMA and the two moving averages are sloping up.

c. WHEN to Sell
The most important part of your investing method should be following the rules of
WHEN to sell. This rule ensures that you minimize your losses when you are wrong
and maximize your profits when you are right.

Winning investors strictly follow their sell rules without compromise. They
understand that if they do not sell at the right time, mistakes can turn into huge
losses and potential winning investments can turn into losing ones.

Two investors who buy the same stock at the same time can get very different
results depending on WHEN they sell.

You can consider hitting the sell button when...

• The business is no longer great.. Fundamentals & Economic moat


deteriorating permanently
• You made a mistake in your initial analysis of the business
• The stock price is grossly overvalued

These are just some valid reasons to sell.

Here are some examples of INVALID reasons to sell...

l. Thinking that the stock price is' too high' or high unrealised percentage gains
2. Bad Macroeconomic or Geopolitical News
3. Selling in panic during a correction or bear market

If you consistently follow the 3W rules: WHAT to buy, WHEN to buy and WHEN to
sell, you will be able to achieve a high probability of success.

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Note: Investing in dividend stocks purely based on high dividend yield without
considering other factors is highly risky

2. Large cap predictables (Products/services you use regularly)

These are large Companies that have wide economic moats & predictable earnings
and cash flow from operations. Their services or products will never go obsolete
and tends to be defensive in nature.

Example: Colgate, Proctor & Gamble

3. Large Cap Growth

These are large cap companies that still have high growth potential (> 20 to 25%)
and tend to be technology related companies or are in secular growth industries
like software or cybersecurity.

They can also be categorized to have wide or narrow economic moat.

Examples: Microsoft, Adobe

4. Speculative Growth Stocks

These are new Growth Companies that have the potential to become large wide
moat stocks that will dominate their industry. They may currently have only a
narrow economic moat.

These are higher risk investments as they will not yet pass many of the VMI
Valuation Method but have the potential to Sx to lOx over the next 3 years.

You should take a smaller position in such stocks (l/2 to l/3 of your usual allocation)
and may cut losses at 25% below purchase price or when stock turns into a
downtrend.

5. Deep Cyclical Stocks

These are companies that arein Capital intensive industries, highly sensitive to the
economic cycle and are unable to respond to demand changes quickly.

You should only buy these stocks when they are near the bottom of their cycles
and sell to take profits when they are at the top of their cycles.
Example: Banks, Industrial

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6. Deep Value Stocks

These are stocks selling for less than the net cash on their balance sheets. If you
buy these stocks, you basically get the business for free.

When you invest in deep value stocks, don't expect the company to recover
immediately. Because a deep value stock is usually in a difficult situation, it may
take time for the company to recover and for the share price to rise.

Some criteria to consider includes debt and cash flow (positive) etc...

7. Turnaround Stocks

These are great businesses that have been hit by temporary bad news (lawsuit,
boycott, scandals, mismanagement, recession etc ...)

Stock prices can sell at 40% to 50% below their intrinsic value. Patience is required
for these stocks to recover and "turnaround". You should only go for "wide moat"
industry leaders in this category

8. Index, Sector and Industry ETFs

There are numerous ways to invest in Index, sector and industry ETFs.

The most common methods to investing in ETFs is to buy and hold market Index,
sector ETFs or to do market index, sector ETFs trend following.

Examples of ETFs include SPY, QQQ, XLF, XLK, GLD, ROBO

Finally, whether you should add shares to a particular stock to your portfolio will
depend on...

7. Is this a fundamentally good business according to the VMI 7-step formula?


2. Is the stock fundamentally undervalued and has it retraced to a support
level?
3. What type of stock is this? Does this FIT into my planned portfolio allocation?
4. Do I already have a full allocation for this stock in my portfolio?

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Chapter 5:
Winning Mindset

As you can see, by following a winning method and money management rules,you
can start to grow your money by investing in the markets. You too can achieve
financial freedom like many other successful professional investors.

But if it is this simple, why doesn't everyone quit their job, pull all their money from
their savings account and start trading to get rich? The reason is that although the
strategy to get rich investing is simple, it is not easy! Although you may know all
my investing rules, you may still not be able to achieve the same results that I can.
This is because the final 'M' that makes all the difference is the Mind.

You must have a strong mind to manage your emotions when it comes to
investing. Money is a very emotional issue for many people and more often than
not, the emotions of investing your money tend to make you counterproductive.
This is why I focus so much on training my students (at Whale Investor™) to
develop the winning mindset of top investors. Without this winning mindset, you
will still not be able to achieve consistent profits even if you know the most effective
strategies.

Why Is Mindset So Essential?

Like I said, although the method and money rules are simple to understand, they
are not easy to follow in reality. This is because you need tremendous discipline to
work hard and follow the rules. If you do not have the mental discipline, emotions
like laziness, pride, fear and greed will cause you to deviate from the rules and end
up with losses instead.

A great metaphor I can give you is that of dieting to lose weight. Only 70% of people
who enroll for a weight-loss program actually lose weight. This is because the
majority of people do not have the emotional disciple to stick to the prescribed diet
and required hours of exercise.

Successful investing is not that much different from successful dieting. This is why
less than 70% of investors actually get rich, even after they have learnt the right
strategies. The reason why so many of the students I mentor get rich is because I
emphasize so much more on the mindset and the managing of emotions, than on
merely the technical strategies.

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Greed and Fear

With the ease of access to information these days, it has made life easier for
investors to do their research easily. At the same time, the trouble is that many
investors are also easily affected by news and media speculating where the
market's heading next.

Well, if you follow me long enough, you'd know by now the one thing I always tell
my students and people who watch my videos on YouTube... "Watch the news for
entertainment purposes only..."

You see, your investing decisions should be based solely on your own research and
pre-determined gameplan.

If you'd buy or sell based on what the news and media outlets are saying, you'll end
up broke 100% of the time!

Remember...

l. Do not blindly follow the recommendations of analysts.


2. Never Listen to the Advice of Analysts.
3. Always trust your own research

Discipline

You must be stay disciplined in your investing journey to make sure you're on the
winning side.

l. You only buy and sell based on your pre-determined investing plan and rules
(i.e Fundemental & technical rules)
2. Never buy and sell based on emotion, opinions of others and news headlines
3. Never buy from a "Fear of Missing Out (FOMO)' and NEVER sell in 'Panic'

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A Lesson on Discipline from Warren Buffett


SPY SPDR S&P 500 290.83 1,71 0.59%
D: 09/02/1998 0:71.56 H:72.95 L:70.82 C:70.98 R:2.13 Y:

130

120

110
105
100
95
90
85
80
75
70
65
-60

55

50

45
• Buffett avoids overvalued, loss making technology stocks
40
• Buffett is down 23% in 1999 Versus +18% Gain in the S&P 50
• Ridiculed for sticking to his investment rules 35

• After the bubble bursts, Buffett gained 80% over the next two
years while the NASDAQ lost 72% and S&P500 lost 28%. 30

Buy slowly & sell even slower

In investing, activity does not equate to performance. Buying and selling frequently
will not bring you success; on the contrary, you'd likely end up missing out on
potential returns.

As I always tell my students, 'Time in the markets is way better than timing the
markets".

What I do is exercise patience in both buying and selling stocks in my portfolio. If


there is no great business to buy at a good buy-level, then I'd rather do nothing
and wait patiently. It's vital to understand and remember that investing is not a
sprint, it is a marathon... and prices will always retrace and in most cases, you'd
always get another opportunity to buy a great company at a good discount.

Never Attempt to 'Predict' the Market

The market cannot be predicted and any attempt to do so will only lead to bad
performance. 'Predictive Mindset' causes us to not follow our pre-determined rules,
which will eventually lead to bad-decision making and sabotaging your profits.

Remember, our job is not to predict the short-term direction of the stock market
but to invest in businesses that would collectively grow under all economic
conditions.

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So, there you have it! The 3'M's of successful investing - Method, Money and Mind.
Master these keys to success and you will soon reap the huge rewards of this
exciting journey of investing!

© 2014 – 2024 Piranha Pte Ltd. All rights reserved.


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I hope this e-book has given you a good introduction to the world of investing and you now know
what it takes to build your wealth in the stock market.

Indeed, anyone who is committed to learn, practice and master these skills can build a new
source of income for themselves and build their wealth much faster than the average person.

I have had the privilege of mentoring thousands of students around the world to become semi-
professional and professional investors. Many of them started with zero knowledge and very little
capital and yet have achieved massive profits in the last few years. I am convinced that if they
can do it, so can you.

The ideas and strategies in this book will get you started but do understand that they are only the
tip of the iceberg. The ideas here represent less than 10% of what I teach in Beat The Market
2024.

If you're dedicated to mastering the art of investing and trading, I invite you to join me and the
other mentors at our upcoming Beat The Market 2024 live event. Discover off-the-radar stock
picks and cash-efficient trading strategies designed to potentially deliver market-beating ROI,
even in today's overpriced market. Don't miss this opportunity to elevate your financial game!

I wish you all the very best in achieving your financial goals and look forward to seeing you in
Beat The Market 2024 live event. If you have any questions, you can drop my team an email at
[email protected].

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