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Sunday, December 5, 2010

the 7 and 2 tenets of value investing according to Adam Khoo

Adam Khoo, in his book "secrets of millionaire investors", teaches how to identify great companies (the 7 tenets) and when to buy them (the 2 tenets). He incorporates both Technical Analysis and Fundamental Analysis in his approach toward stocks.

Honestly this isn't strictly his approach as I've read another book that states basically the same thing

I'll put the 9 tenets up here for easy reference for future use
Criteria for Value Investing
1.) History of Consistently increasing sales, earnings and cash flow
2.) Good competitive advantage (good thing i studies Economics at A levels)
3.) Future growth drivers
4.) Long term debt < 3x per annum profits
5.) ROE above average
6.) Low capital expenditure reqd. to maintain current operations
7.) Senior management staff are holding, buying the stock

When to Buy:
1.) Undervalued
Px less than intrinsic value
2.) Stock price in consolidation phase/ uptrend

I used to think that A levels were a waste of time...that we studied things that were not useful in reality, like differentiation, organic chem, quantum physics (urgh) and economics...but since I started my investing journey, i've realised the importance of ALOT of what A level econs taught us... Perfect Competition, Oligopoly, monopolistic competition , demand and supply etc...

anyways, i will be posting on some companies i'm currently interested in soon, when i have the time. Currently interesting in Singapore Medical Group, NOL.

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