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ISBN 978-981-07-3589-0

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h e A u t h o r:
About t
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Adam was also nominated for the Spirit of Enterprise in 2010. Spirit of Enterprise
promotes and advances the entrepreneurial spirit in Singapore by honouring local
entrepreneurs of small and medium-sized businesses. Out of 140,000 SMEs in
Singapore, the top 100 are nominated for this honour annually.
Adam is also the author of the national bestseller Lucky Bastard!, which hit the
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lifestyle morning show and it attracts a nationwide audience of over two million
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iii
 Collaborative Partners:

8 Investment is a training and private investment firm

that specialises in value investing.
onte nts:
Their flagship investment course, Millionaire Investor Table of C
................. 1
Program, is based on the value investing philosophies
and techniques of some of the world’s greatest
g?....
investors like Warren Buffett, Peter Lynch, Sir John What is Investin
... 11
Templeton and Benjamin Graham.

Invest ing?..................
What is Value
Since 2008, Millionaire Investor Program has built
a network of over 1,400 investors and has been

....... 21
featured on The Straits Times, The Sunday Times,
My Paper, Smart Investor, Shares Investment, 958FM ness..............
and 938LIVE. You can visit www.MillionaireInvestor. The Right Busi
com for more investing tips, stories and podcasts.
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1
agement.......
The Right Man

bers............ ......... 37
The Right Num

e...... ............... 57
The Right Pric
.. 9
gem ent................... 6
Portfolio Mana
9
n.. ................... 7
8 Ste p K ick-start Action Pla
You r

iv v
What is
Investing?
 What is
Investing?
Investing simply means putting your
money to work for you. It is one of the
Net Worth
US$44
Warren
best ways to get wealthy and continually
grow your wealth.
billion Buffett
A true investor thoroughly analyses
Investing is not gambling. Gambling is any investment and only invests
betting on an uncertain outcome hoping when there is strong likelihood of
you might win money. In the long run, you making profit. In the long run, an
almost always lose. investor can get very rich.

Gamblers lose Investing is not a get-rich-quick scheme.

US$6 billion a year at True investors focus on building their
Las Vegas casinos wealth over the long-term.

n
billio
US$6

2 3
http://www.pbs.org/wgbh/pages/frontline/shows/gamble/etc/facts.html
 Investing and
Albert Einstein
the Power of
Compounding called
compound
Compounding is interest earning interest

interest on interest and so on. the most

powerful
If you invest $1,000 today at 25% annual interest, in one year you
will have $1,250 ($1,000x1.25). You made $250 extra. force in
the

universe.
If you reinvest your interest, in your second year you will have
$1,562.50 ($1,250x1.25).

Because you reinvested your interest, instead of making just $250,

you made $312.50 extra in your second year. If you invest just $20,000 today and grow it at 25% per annum, after

In your third year, you will have $1,953.12 – an extra $390.62.

20 years you will have $1,734,723.
In your fourth year, you will have $2,441.4 – an extra $488.28. The earlier you start investing, the more the power of
In your fifth year, you will have $3,051.75 – an extra $610.35. compounding will work in your favour.

This increase every year is the power of If you invest the same $20,000 and grow it at 25% per
compounding. $3051.75
for 30 years, you will have $16,155,871!
$2441.40
$610.35

$16,155,871
$488.28

$
$1953.12
$390.62

$1562.50
$312.50

$1250
$250

$1000
$1,734,723

$20k

Year 10 Year 20 Year 30

Today Year 1 Year 2 Year 3 Year 4 Year 5
4 5
Why You
!
Inflation eats up the value of your money. If you do
not invest, you become poorer over time.

Must Invest $100,000

-38.6%

Value of
Working a job means you’re trading time for Your Money
money: if you want more money, you have
to work more hours. But there’s a limit to
$61,400
how many hours you can work a day.
10 Years
Investing allows you to compound your
At a 5% inflation rate, you lose 38.6% of wealth in just
money and grow your wealth exponentially –
ten years time.
without you having to work more hours.
Unless you want to work forever, you need your investments to
fund your living expenses when you retire.

Life expectancy is also increasing, which means you need even

more money to support a longer life.
Investing gives you
passive income. Your Life Expectancy for Industrial Countries
1950-2010
money works for you

Life Expectancy at Birth (Years)

24/7 whether you are
working, sleeping or
relaxing on a holiday.

6 http://www.earth-policy.org/data_highlights/2011/highlights21 7
 Stocks are historically one of the best ways to grow
Types of your wealth over the long-term.

Investments Virtually every person on the Forbes Billionaires list is there because
they own a large amount of stock in private and public corporations.

There are many

1 2 Bill Gates
Microsoft
US$61 billion

different types of 3
investment vehicles. Carlos Slim Helu
Grupo Carso SAB
US$69 billion
Warren Buffett

10
Berkshire Hathaway
US$44 billion

STOCKS Karl Albrecht

Aldi
US$25.4 billion 4
REAL
ESTATE PRECIOUS
9 Bernard Arnault
LVMH
MUTUAL METALS US$41 billion
FUNDS Li Ka-shing
Cheung Kong Holdings
ETFs COMMODITIES US$25.5 billion

5
BONDS

8
REITs

6 Amancio Ortega
Inditex Group

7
US$37.5 billion
Stefan Persson
H&M
US$26 billion
Larry Ellison
Eike Batista Oracle
EBX Group US$36 billion
US$30 billion
8 9
What is Value
Investing?
 What is Value
Investing?
Value investing is the philosophy of buying shares of
great companies at prices below their intrinsic
value.

In the meantime, your shares will pay you a

dividend while you own them.
As a true investor, you only want to invest in
companies with strong business fundamentals Eventually you can choose to sell your shares for a
– a solid track record, sustainable competitive profit when they become fair or overvalued.
advantage, good growth prospects, a strong
financial position, and a great management team.
INVE
ST
A similar example is paying 1 Intrinsic
A great company with strong business $500,000 for a house that’s Value : $ 1 million
fundamentals is a company with high worth at least $1 million.
intrinsic value. Purchase
price : $ 500,000
In the meantime, you can
lease the house and collect
regular rental income.
Eventually you can choose 2 $ $
track record
competitive advantage
100%
100%
to sell your house for a profit
when someone offers to $$ $ $
buy it for a million dollars or Collect
growth prospects 100% more. rental income
financial position 100%
management team 100% Selling
3 price:
$ 1 million
Profit
$ 500K Purchase
price:
$ 500,000

When you pay fifty cents for every dollar worth

of assets, you know
Intrinsic value refers to how much an you’re making money
asset is truly worth which, quite often,
is different from its market value.
the moment you buy,
not when you sell.
12 13
?
Why? ? ? ??
? Value investors always focus on the intrinsic value of a stock
and never just its price.

With intrinsic value, you’ll never foolishly overpay for any stock

Value
and you’ll always know when a great stock is undervalued –
It is cheaper to be a value investor.
regardless of any wild market fluctuation or price swing.
Because you’re always looking for
undervalued stocks, you always pay

Investing
way less for what an asset is worth
“ Price is what you pay,
value is what you get
”
? ?
– Warren Buffett

Speculators, on the other hand, focus on price and

attempt to predict the market; hoping someone will buy
their stock later at a higher price.

Often times, that doesn’t always work out too well,

does it?
Intrinsic Intrinsic
Value : $30 Value : $30
Some of the richest people in the world are value investors.
POTENTIAL Instead of more risk, more return,
RETURN value investors take on less risk for
$15 POTENTIAL
more return. The lower the price you
RETURN
pay for a stock, the lower your risk
$25
Stock and the greater your potential
price: $15 returns.
RISK
$15 US$1.5 billion
Stock US$44 billion
price: $5 Howard Marks
Warren Buffett
RISK
$5 US$4.6 billion US$1.5 billion
Richard Chandler Charles Brandes

nvestor, wild
value i mark wings
As
a et fluc tic price s
affect you, but tuations and erra rs.
do not create culato
massive havoc and panic for spe US$1 billion
US$1.4 billion
Charlie Munger
Michael F. Price

US$1.4 billion US$1 billion

Kenneth Fisher Mario Gabelli
14 15
 The Mindset
4
Do not time the market – no

of a one can consistently predict

when the market will turn

Value Investor
bullish or bearish

5
Avoid the herd and
Successful value investors…
think contrarian
when investing

1
Never make any

6
investing decision based Do not speculate
on emotions on stock prices and
look to make a
quick buck

7
Focus on making long-term
Practise independent consistent returns and

2
thinking and know they are building lifetime wealth
solely responsible for their
own investing decisions

3
8
Always look to buy
Avoid investing based on shares of great
another’s stock recommendation, companies below their
including friends, family or intrinsic value
investment gurus, without first
doing research themselves

16 17
 ?
Dot.com Technology Bubble: 1994 - 2002

So Why
TRILLIONS

$ 4T

Would Anyone $ 3.7 $

Sell You $ 3T

Fictitious
$ 2.6

Great Stocks
Value $
($ 2.6T peak)
$ 2T
$ 1.5

at Discount Prices
$
$ 0.94
l Trend
Historica
$ 1T $
$ 0.40 $ $ 1.1

$ 6 Years 2 Years
The reason why value investors are able to pick up great stocks at undervalued $0
prices is because the market overreacts to good and bad news. 1990 1995 2005

When the market overreacts to positive news and stock prices skyrocket upwards, Normal
people become greedy and buy more stock hoping to profit further, pushing prices
Formation
even higher. Emergence of Founding of Founding of
Hyperinflation
Dissipation
When the market overreacts to negative news and stock prices take a nosedive,
Source of funds: Sales tax moratorium Overshoot
people become fearful and sell their stocks to cut their losses, causing prices to fall Venture Capital on e-commerce
even more. passed by Congress
Adapted From: Enc Janszen,
(refer to graph on next page) “The Next Bubble: Priming
Selected Contributing Factors the markets for tomorrow’s
big crash” (Harper’s Magazine,
Feb 2008)

Whether the market is bullish or bearish, the long-term fundamentals and intrinsic
value of a great company remain unaffected. And when stock prices fall drastically, this
presents an opportunity for you to pick up stocks of great companies at undervalued So how do you identify a great company with high intrinsic
prices. value that’s prime for investment?
Through these 4 simple steps:
“In the short term, the stock market
is a voting machine. However, in the long term,
the market is a weighing machine.”
- Benjamin Graham
#1
Right
#2
Right
#3
Right
#4
Right Price
Business Management Numbers

18 19