New Reads – Secrets of Millionaire Investors.

This is the book that I found some time to read. relative big and thick book, not briefcase friendly. :P

What got me started was how can I start investing, The safe and sure way if possible. Cause in Singapore, investment is more like a taboo, something meant for the rich and the wealthy to play with and investment through hear say is a no-no.

With bank interest hovering around the 1% mark and inflation near to 3%. I figured its time to find alternative to place my saving that won't shrink over time.

Through reading this book, I got to understand investing in simple terms. Where investing is like buying into a company and owning a part of it, so it’s important for us to know a few things before buying any stock.

1. The sector of the company. (finance, retail, property, etc)
2. The market share of the company.
3. The earning of this company.
4. The value of share price now. Is it over price or under value.

The meaning of compound interest comes into play where the longer we can have our money stay invested. (Money at work) the greater the gain will be.
Using US market as case studies. The theory of buy at a low price, selling at a high get explained in details. (not every stock works that way as it could ready be at the high when we decided to buy.)

But it’s not cheap to invest for long term in companies that are of value fundamentally. Cause all other investors has realize its value and have invested long time ago. Thus good companies are also call blue chips company.

However there are methods and ways in which we can dig for undiscovered gems and wait for them to be the next big thing but the time horizon need for value investing is relative long in term of years before any decent profit comes in.

For many of us like me who desired the way for ‘quick easy bucks’ the book introduced the method of momentum investing where we can identify stock that is ‘hot’ with high volume with lots of money pouring into a particular sector. Take for example Singapore, the ‘Hot sector’ would be Property and Constructions shares, where big jumps in stock price are experience.

But it always brings back to one problem, how much do we start with? A few hundreds, several thousands or? Well, its depends on what stock we intend to buy. A lot of DBS cost around $20,000 where as Genting International cost less then $2000 as of now.

The last method discussed in the book is the use of options for less capital and bigger gain. Reason being, option is a contact to buy a particular stock. (normally a blue chip, large cap stock that expensive to hold) and to sell of the contact after its exceed a certain pricing mark for a profit.

In a Bullish market, a CALL option allows me to buy a stock at $70 for a premium of $2, so only when the stock moves pass for example $72 then I will break ever and make a profit only if it’s exceed $72. If the stock doesn’t move over $72 within a period of time ( around 1 mth – 1 year ). I lose the premium of $2 that I paid.

Likewise in a Bearish market, a PUT option allows me to sell a stock at $50 for a premium of $3, so only when the stock drop pass for example $47 then I will break even and make a profit.

In the stock market, for the buyer to buy a PUT, CALL, there have to be a seller of PUT and CALL. The concept gets a bit gray as I read on for investment idiots like me, but after some checking up and asking around the realization will dawn in~

Overall, this book is like a introduction to investing which I feel is like a pre reading notes to the course taught in Adam Khoo Technologies Group.(www.akltg.com )

*Feel free to drop me a email should you like to know more about the various course.