Investment in Stocks

Posts Tagged ‘Value Investing’

In my book, “Winning the Money Game”, i shared a story about a friend named ‘Fred’ (not real name). He was asking me how to start managing his finances and how to invest.

This type of question usually will get me on fire, because i was excited about this topic. I began firing off a series of tips and personal experiences to which most he merely answered, “I already know that.”

Whenever, he gave me the answer, “I already know that”, i will quickly jump to something which i think he doesn’t already know. To my surprise, Fred is a very knowledgble dude and “knows”, most of the things already.

So in the end, I asked him, “Fred, your knowledge is probably as good as mine, what is your experience in investing so far?” He paused at my question and confidently answered, “Well, investing is just too risky, i have not started and will not start until i get enough knowledge.”

Are you a “Fred”? Waiting to accumulate enough knowledge before you are willing to risk your dear hard-earned money? Don’t get me wrong! I do not wish for anyone to risk their cash, but let me share this, to Not Invest, is a sure way of losing your cash through this pesky guy called Inflation!

But Fred feels that he doesn’t have enough knowledge to move on? He is waiting until he gets to complete his thesis and gets his PHd before he is willing to invets a single cent… But we know that the the best investors aren’t Professors, they are Practitioners!

The best investors, invests!

Let me share with you the other end of the spectrum. Those people who acquire enough knowledge just to get them into big trouble. I was one of them. I started by attending a trading course and then threw my entire savings in. Guess what? I lost huge bucks! OUCH!

I am thankful that our authorities are regconizing this problem and are aiming to educate investors before they get themselves into trouble.

Now, let me share my concern…

In this new rule, investors are requried to fill in a form to declare how experience they are before being allowed to trade financial deriatives. If you trade more than 6 trades, you are good to go. If you have less than 6 trades before, you are required to complete an online education session followed by a quiz.

Out of curiosity, i attempted the online education session and the quiz. I think that tremendous effort was put into the design, but alas, the skills taught are very very basic. In fact, i would classify them as non-tertiary skills (in other words, just textbook theories that cannot be applied). If taken out of context, it can be misleading as well.

Nevertheless, i applaud the authorities for taking action to emphasize the need to proper financial education before investing your cash.

Who then should we learn from?

When i was in NTU choosing what subject to major in, i asked my friend for advise. I wanted to do ‘Marketing’ as a major but he challenged me asking, “Does it mean that you will be a better marketer after you major in marketing? If we both set up a business, does it mean you will have more sales than mine?”

That made me ponder… If i want to be a good marketer, who then should i learn from?

Probably Steve Jobs, Donald Trump or Bill Gates rather than Marketing Professors.

Does that mean academics is not useful? Not at all, because they provide basics and are studies of people who had gone the path. My point is that we should further seek knowledge from those who produce fruits.

A book, a seminar very often give the illusion of getting you more knowledgeable or educated, but you know that you really know when you do it and produce results.

Seek practical knowledge, seek it from the right source (people who already produced knowledge)

Come to our free workshop and learn how every single one of us produce consistent results via Value Investing.

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah

Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffett Way
http://www.investment-in-stocks.com,

Dear Friends

This is Part 2 of a series of articles that I will be writing. In case you have missed out Part 1, please read the article at http://www.investment-in-stocks.com/financial-intelligence/passive-income-101-part-1-how-you-too-can-be-financially-free before you continue to read.

Done reading the above article?

That’s great.

How should you get started now. I will provide some simple steps as a guide for you based on my personal experience:

Step 1: Which area of investment interests are you passionate about (Eg. Stocks, etc.). This interest will sustain you in a long run since we are investing long term.

Step 2: Are your investment interests able to generate more Return of Investment (ROI) than the inflation in your country? If not, search for another investment vehicle.

Step 3: Are you educated in your investment interest to a level that you are willing to put your hard-earned savings into it and you can sleep peacefully at night without worrying? If not, get the knowledge first. You may register for a FREE ‘How to Achieve Financial Freedom Using Only 15 Mins Per Month’ Workshop at http://www.investment-in-stocks.com/free-investing-workshop.

On this article, our focus will be in investing in Stocks or Shares to help you achieve your financial freedom.

Before I start, I am going to assume that you are a new in this area. As such, I am going to use very simple terms. Get ready!

In simple terms, a holder of stocks (a shareholder) is an owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have claim to 10% of the company’s assets. This leads to our Secret #2.

SECRET #2 – Stocks are businesses, NOT numbers in the stock charts

Most investors or people who claimed that they are investors looked at share prices every day, every week or every month thinking that they are monitoring the stocks. May I ask you: “If you are buying a business, do you want the business to make money or lose money?” The answer is obviously YES.

However, how many people out there who are buying/selling stocks truly knows what are they buying? Is the company that they are buying making money? Unsure? Then you are speculating.

If you are just looking at the fluctuation of the share price every day, then you are speculating.

Do you dare to put your entire savings into that company and you are able to sleep peacefully at night? You can’t? Then you are speculating!!

REMEMBER! In order to protect your hard-earned savings, you MUST see stocks/shares as a business and NOT just numbers fluctuating on the chart which leads us to SECRET #3…….

SECRET #3 – Invest, DON’t Speculate

So what is REALLY the difference between Investing VS Speculation. An INVESTING attitude is that you invest in an asset and you look at the returns that the asset is giving you. Eg. If you invest in a Coca Cola, you want to know how much money is this company bringing you, versus looking at the price regularly without knowing about the asset, that’s pure SPECULATION.

So which one works better, Investing OR Speculation? Look at the most recent Forbes Richest List at http://www.forbes.com/wealth/billionaires/list where it list down the current Billionaires. Focus on the TOP 10 and ask yourself this question: “Are there any investor or speculator in the TOP 10?” The answer is YES, there is an investor by the name of Warren Buffett but no speculators. If the Wall Street speculators are really that spectacular, why aren’t they in the Forbes List? We can infer one thing – an INVESTMENT attitude works, simply because results tell the truth.

By the way, Warren Buffett started investment in stocks as young as 11 years old and he is now 81 years old. 70 years of solid investment wisdom with a current networth of US$50 Billion. So is he just lucky for the past 70 years or is he skillful? If he is really that skillful, how did he do it?

In the next few part of this series, I will share with you how he does it. A SNEAK PREVIEW is available at www.facebook.com/valueinvestingacademy. “Like” us and get 2 Investment EBooks and Our Exclusive Interview with Mary Buffett.

Do come and join us for our free workshop show you how turn this time into the chance of a life time to be wealthy and financially free!

Click HERE to book a Free Investing Workshop.

Cayden Chang
Founder & Director, Mind Kinesis Management International
BSc(Hons), MSc
Lifelong Learner Award 2008 Honouree
Co-author, “Do You Have What It Takes To Be BOSS?”
Join our Fan Page on Facebook at www.facebook.com/valueinvestingacademy
www.nlpinsingapore.com

In this post, I would like to share an idea, a philiosophy which I have been thinking about recently which is on top on Value Investing Criteria which can serve as a way to start finding businesses to evaluate.

When we purchase a share of a company, we become a part owner of the business, therefore, shouldn’t we invest in businesses in which we support the “cause”.

Let me give you an example, (i will becareful of what i write so i do not direct at any specific companies.)
I will never support a company whose main business encourages people to gamble. I am not saying that it is not a profitable company, but rather, i will never want to be a owner of that company. I will also not invest into a company producing tobacco or cigar.

I realise by saying this i may turn some people off, but the truth is that I do not support the activities of these people. I do not agree to their mission or vision.

There are some companies that i find pretty neutral, like transportation, publishing etc. I do not particularly love them, but i do not disagree with them.

At first glance, it may seem that this post is pure philiosohical, but let me share why i do not think it is.

In Value Investing, we only buy businesses we understand. The key word I would like to share here is to “understand”.

Can you truly understand someone you don’t like? Well, i guess it works both ways. You may hate an enemy so much that you spend time stalking the person to find out more about his/her weaknesses to destroy him/her, but i find this foolish.

Instead, find someone you love and spend your entire life understanding more and more about the person. You will find yourself in love most of the time since you invest your resource in love.

Bringing this into investing, you should find a couple of industry you love and have passion for. An industry you love to do more research and reading on. You love to follow the news and you love to twit and facebook about it. If you already have an industry in mind, my friend, you may already have found an industry which can make you very rich.

In the book, Acres of Diamond, a man sold his house and went searching for diamonds in a faraway land. The irony is that weeks after he sold his house, the new owner looked into the river beside the house and found some shiny objects – Yes! They were diamonds.

Perhaps you already have diamonds in your mind which you specific love for certain industries and companies.

I strongly suggest you read up their Vision and Mission to see if they fall in line with your personal interest.

When you find these potential diamonds, that is when you can start to evaluate them with Value Investing Crtieria.

To learn more, come to our free workshop where we can discuss more about how to start investing in a solid manner to build your wealth.

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah

Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffett Way
http://www.investment-in-stocks.com,

Last weekend, I had a wonderful time with friends on the yatch.

And I was asked to give some investment tips.

The first investment tip i gave was to never accept any investment tips from anyone… blindly.

And then, i shared a G.S.T framework for analyzing investment opportunities.

Below is the video, if you want to join us to learn how to do it live, you can join us at our next free workshop.

Click HERE to book a Free Investing Workshop.

I do hope you learnt something from the video. The key is to really first learn how to invest properly before putting your money to work. To learn to invest properly, join us at our next free workshop.

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah

Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffett Way
http://www.investment-in-stocks.com, http://www.nlpinsingapore.com

An interview with Peter Lim, former remisier king. Source of article is unknown – found in one of the forums.

WHEN the Singapore stock market took a sharp dive lastweek, it wiped out more than $100million of his stock’s value.

But former remisier king Peter Lim did not lose sleep over it.

Why? ‘I’ve been a stock broker for all my life – I’ve seen all the crashes, financial crisis, where really, it’s only a paper loss,’ replied the self-made billionaire.

‘Just make sure you are not jammed with cash flow.’

Mr Lim was referring to his almost 5 per cent investment in Wilmar International which saw its share price move from a high of $3.78 to a low of $2.89 in the space of a month. The share price last closed at $3.

To him, his wealth is less important than his family and philanthropy. His attitude towards money is almost casual. It reflects his philosophy on investing and wealth.

For those who feel they are badly mauled by the current share doldrums, Mr Lim has this piece of wisdom to share: ‘I used to say to my friends, ‘When you are holding stocks, if it goes up, don’t be too happy; when it goes down, don’t be too sad’.

‘Otherwise, how? Your life will also be fluctuating and you’ll die of a heart attack.

‘If you really lose sleep over it, maybe the best way is to keep the money in thebank.’

So what does he lose sleep over?

He replies with a laugh: ‘My kids. Like other parents, I worry about what they’re doing and whether they’ll pass their exams.’

On Thursday, he made his debut in Forbes’ latest rankings as Singapore’s seventh-richest man, with a reported net worth of US$830 million.


DOESN’T MONITOR

Ironically, Mr Lim, who was one of Singapore’s leading stockbrokers and is now a private investor, does not monitor the stock market every day.

He goes through the financial reports of companies; he watches financial news to get a summary of what is happening, but he does not track the daily ups and downs of the stock he owns.

He said: ‘I only check in intervals, depending on the company.

‘If it’s a structured company, then (I check) when the results come out. For the bigger ones, quarterly results; for smaller ones, twice a year. But if it’s a start-up, I’ll check it more regularly.’

Mr Lim made headlines in the late-’80s as a star remisier, in the mid-’90s in his divorce battle and in early 2000 for his involvement in the first instalment of the Raffles Town Club court saga.

Much of his wealth now comes from a single investment: Palm oil.

In the early ’90s, he invested about US$10 million in a start-up Indonesian palm-oil company, Wilmar. Today, his almost-5 per cent stake is worth more than US$700 million.

This is a far cry from his humble beginnings. When he was young, he said, he did not even have his own room in the two-bedroom government flat he shared with 11 others.

He grew up, with three brothers and four sisters, in one of Singapore’s oldest public housing estates, Bukit Ho Swee.

His father was a fishmonger and his mother a housewife and the size of the flat was the equivalent of a three-room HDB flat today, hesaid.

He slept in the living room, or wherever he could find space to lay his mattress down for the night.

On his wealth now, he said: ‘It’s no different from what it was before I had the money. It makes no difference after apoint.

‘Like what they say, you can only talk louder. You can only eat so much and fly so many trips.

‘Money lets you enjoy a lot of things, but I don’t think I’ll die without money.

‘I don’t think I’m eating a lot better than when I was a lot poorer than now. I don’t really go for very special kinds of food. I’m still very local. I like my mee siam, mee rebus and lontong.’

When his father died in the late ’60s, when Mr Lim was 22 years old.

Mr Lim completed his secondary school education in Raffles Institution and was an officer in National Service.

It was then, at the age of 18, that he bought his first lot of shares.

Did he make a killing?

‘In fact, I lost money,’ he laughed.

But not much.

‘I was only paid $385 a month, so I can’t have bought, or lost, very much.’

He then went to Perth to further his studies at the University of Western Australia.

To fund his university education, he said, he worked part-time doing odd jobs as a taxi-driver, cook and waiter.

It was one of these jobs – in the Australian fast-food chain Red Rooster – that opened his eyes to how business was done.

‘I watched how they started, how they grew, and how they scaled up.’

It was also in university where he honed his instincts and skills as an investor.

He graduated with a degree in accounting and finance and stepped out into the working world.

‘My first job was as an accountant. It lasted three months,’ he said with a chuckle.

He did some tax consultancy before he went into stocks, he said.

Mr Lim is in his element when dealing with numbers. ‘It’s something I’m very comfortable with, something I understand.

‘Give me any numbers. I look at (them) and I’m happy. It can be in any industry. You give me the numbers; somehow I can figure it all out.’



——————————————————————————–

His secret to investing is…

WHAT is Peter Lim’s secret to successful investing?

Prospect, he replied.

He looks at sectors.

‘Like if I think solar is good, I go into solar; if I think palm oil is good, then palm oil.

‘Share prices go up because the sector grows. So if I think this sector is going to be good in the next 10 years, then I’ll just invest in it.’

Another key reason for his success, he said, is patience.

Mr Lim, who also acts as a consultant to companies and helps them find multi-million-dollar investors, does not subscribe to buying one day and selling the next to cash in.

His advice to young investors: ‘You have to invest with a longer-term mindset. You buy a good stock, leave it there for 10 years. Come 10 years, this dollar can be many, many multiples.

‘I think the trick is really to think long-term.

‘ You may not have a lot of money, but you have a lot of time.’

‘The minimum length of my investments are five to six years, if not 10 to 12 years.’

He cites the example of his condominium.

He owns an entire 11-storey block at prestigious Ardmore Park, near Orchard Road. He and his wife, with his 85-year-old mother, live in one apartment, while three other maisonettes and the penthouse sits empty.

‘I bought it in 1994 for $13m and I just hold there and wait. With the current property market, it is worth more than $100m.’

Same with Wilmar, which he invested in in the early ’90s. It was then a US$10m investment. Now, his stake is worth some US$700m.

——————————————————————————————————————————————————————–

To learn more on how to invest properly in order to compound your wealth, join us at our next free workshop.

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah

Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffett Way
http://www.investment-in-stocks.com, http://www.nlpinsingapore.com

I would like to share a Singapore Financial Literacy Study done by MAS in 2005.

One of the segment that touched me was when it was found out that 67% of Singapore (based on the studies), does not invest.

Below are the reasons given by the respondents who do not invest. I would really encourage you to see if you have any of these reasons.

Source: http://www.mas.gov.sg/resource/news_room/press_releases/2005/Financial%20Literacy%20Levels%20in%20Singapore,%20Full%20Report.pdf

]If you are also one of the 67%, i have good news and bad news for you.

Lets start with the good news. The good news is that you are in the Majority and that is comfortable to know that you are not alone, isn’t it?

Now, for the bad news. It all starts from this interesting creature called, “Inflation”. This means that every single year, you have to pay for for the same kind of products and service you are getting. And for your info, Inflation rate, last heard is 5.5%.

This means that if you do not have the ability to grow your earning powers buy at least 5.5% every single year, chances are you will not be able to keep your current lifestyle very soon.

Also, if you do not have the ability to grow your savings at at least 5.5% every year, you are getting poorer and poorer.

If you are a single, this news is bad, but if you are having a family or planning to have one… I need you to take a look at the table above again to see if you are holding onto any reason why you are not investing enough?

Your house, transport and children’s education are going to be more expensive. Isn’t it a responsible action to learn how too invest so that you can finance your family’s life?

If you would want to learn how to grow your wealth in a safe, proven method, – proven by Value Investors for more than 80 years since the time of Benjamin Graham and Warren Buffett, we can share with you how we are doing it. Since 2007, using this method alone, i have grown my wealth steadily at a rate of more than 20%  per year.

Do join us for our next free workshop where i share with you exactly how i do it.

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah

Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffett Way
http://www.investment-in-stocks.com, http://www.nlpinsingapore.com