Money, Method, Mind Ebook
Money, Method, Mind Ebook
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.
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.
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.
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.
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?
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.
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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!
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
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.)
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.
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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.
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.
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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.
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.
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.
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.
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.
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.
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
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
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.
Finally, whether you should add shares to a particular stock to your portfolio will
depend on...
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.
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.
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...
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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• Buffett avoids overvalued, loss making technology stocks
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• 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
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".
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.
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].