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Winning the Game of Stocks with Adam Khoo
By: Vance Wong
Articles (74) Profile

Anyone Can Be an Investor and Millionaire

A widely known motivational speaker and best-selling author in Singapore, Adam Khoo shared his investment strategies for both retail and professional investors in his book, Winning the Game of Stocks! published in 2013.

Although Adam is better known for his inspirational workshops, he is also a professional investor and investment advisor for the Wealth Academy FX Growth Fund. One of the key highlights of his book is explaining how one can actually become a millionaire by investing on an average salary.

Essentially, an average salary can never help you achieve financial freedom, unless it is accompanied by proper planning and investing in the right companies successfully. Adam Khoo revealed three major steps that form the philosophy of successful stock investing: “identifying great businesses; investing when the stock price is undervalued and on an uptrend and; selling for profits when the stock price reverses to a downtrend.”

What & When to Buy

In the words of Adam Khoo, a great business “is one that is able to increase its sales and profits consistently over the long term”. On top of that, it must also have a strong competitive moat (sustainable advantage) over its peers in the industry so as to maintain its foothold.

A great business is also one that has the ability to withstand bearish markets or even recessions. Furthermore, one must note that the amount of outstanding debts plays a huge part in the business’s strength as well because it might not be able to withstand “prolonged recessions” as a result.

However, even after identifying great businesses, one does not simply buy their stocks right away; one has to wait for the stock to sell “at a price that is below its intrinsic value”. Adam Khoo explained in his book that a stock’s intrinsic value depends heavily on its “profit-making ability” and not what the market perceives its value to be, because markets can be led by investor sentiments.

He also stated how stock markets can be irrational—great businesses would usually experience a hit on stock prices when bad news such as “lower-than-expected profits” or “panic from wars and disasters”. This is the time where some of the uninformed investors would quickly sell their holdings in a panic, whereas smart investors would grasp the opportunity to enter the market to buy at a huge “discount”.

When to Sell

For every investor, the major concern is perhaps knowing when to sell the stock to secure maximum profits. However, no matter how good a business is, its stock will not appreciate “in a straight line” because “downturns and company problems” might cause a temporary downtrend.

Adam Khoo adopts a rule to sell a stock when it goes five to eight percent below its recent high, also known as a stop-loss. The main idea is to maximise one’s profits by selling at the start of the downtrend and to buy when the trend reverts.

On top of that, the book also teaches readers the importance of keeping a diversified stock portfolio to minimise losses when a particular sector faces downturn.

Adam Khoo has included many interesting and valuable advice that investors can take away to ‘win the game of stocks’, with simple and relatable examples and case studies that can be easily understood even by readers who are new to investment and finances.

Adam is conducting a FREE 3-hour seminar on 2 Sep 2015 (Wed), click on the button below to find out more.

With a Communications background, Vance has the passion to write with a purpose - to provide content supported with substantial evidence to vested readers.

Please click here for more information about this author.

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