YOUR FIRST MILLION $ making it in STOCK

"Your First Million $ making it in stocks" book by Dr. Michael Leong. This book is one of my favorite reads for this year. I do agreed with some of his thoughts and strategies shared in this book which I'm currently practicing for my investments. I extracted some of his key investment strategy and I would strongly recommend you to get a copy of this book to have in depth understanding of the author's investment secret. 

Background:

Dr. Michael Leong is a medical doctor by profession, started his IT career with IBM in 1991. He founded ShareInvestor in 1999. ShareInvestor is a regional financial internet portal that provide online investor relations to listed companies in Singapore. He sold ShareInvestor to Singapore Press Holdings in 2008. This book provided a glimpse how he view the market and how he decide when to buy or sell a stock.  

Summary of key investment strategy: 

1. Preserve capital. Similar to Warren Buffett rule no.1 "Never lose your capital". 
2. Focus on only a few stocks. Do not over diversified. 
3. Identify a tipping point for each stock. 
4. Buy slowly into any stock. Time the market bottom is difficult to do. 
5. Invest for long term. Use the money that you can afford to leave under the pillows for years.

 Selection criteria for stocks:

1. NTA (net tangible assets) are at significant discount to current market price. 
2. Potential to be a multi-bagger. (stock that appreciates in value many folds)
3. Strong cashflow with conservative accounting. 
4. Belong to growth industry and has good competitive advantage.
5. Its products with strong brand name and not commodity. 
6. Strong recurring income.
7. Has credible management team. 

Managing emotion when investing, quote from this book:

"Over the years, I have learnt not to be emotional over any stock, or for that matter, over the market. Some days, you may feel an urge to exit all your positions as the market is toppish, hoping to re-enter later at lower price. If you are right and there truly is a correction, you stand to make quite a bit of money."

"If you are wrong, you stand to be left out of the market. As the days go by and the market bull charges ahead, you will feel a greater urge to re-enter the market at a much higher level than you exited." 

 "For me, I have learnt that the Mr Market always seems to be smarter than I. Whenever, I try to outsmart Mr Market, it easily outsmarts me instead. This is why I do not try to second-guess the market. After all, any correction is usually just a blip and will be overcome if the megatrend is intact." 

Stay safe and trade smartly....... Ciao

-WILLIAM CHENG

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