Book review; investment

With an average of $4.3 trillion exchanged daily, the forex market is considered to be the largest market in the world. Given the sheer size of this market, it would be foolish to ignore the impact of forex, never mind whether you are finance or business professionals who are not currently involved in forex trading.

Always remember that capital flows into a country first before it flows into any financial assets. This is the reason why some local listed companies declared their earnings in foreign currencies in their annual reports instead of Singapore dollars. The exchange rates can have significant impact on the business impact and this is something that investors and business owners can ill afford to ignore.

Being a value investor, I buy shares of growth stocks at a price below or near it’s intrinsic value. Even though I am not a trader, I believe it is important to keep an open mind and understand the insights and strategies of traders. This is because  whether you like it or not, there will always be speculators and traders in the markets. Their behaviors and actions will invariably affect market performances and impact the way you make money in the markets.

In The Little Book of Market Wizards: Lesson from the Greatest Traders by Jack Schwager, I realized that there are many relevant investment principles that are useful for investors and wealth builders. For example, to be a successful trader, you need to manage your ego and develop a set of trading methodology that best suits your character. The important thing to note is that losing money is part of process and you can never win all the times. This principle is applicable to investing as well. Most traders and investors lose money in the stock market because they try to avoid losing money. On the other hand, professional traders who become rich from stock market understand that they have to take losses in order to win the game.

As an investment advisor to high net worth individuals, Wai-Yee Chen has spent years watching her clients make investment decisions—some good decisions and some not-so-good decisions. Though confronted by the same market variables, those clients often make very different choices with very different results. Here, Chen argues that it’s usually not the data that affects investor decision-making as much as the way investors themselves think.

Many people spend their life working for active income. They are either ignorant or skeptical about stock investments. Even those who have invested their money, more often, entered into less effective methodology of making money in the stock market. They go for quick money gains and end up losing their net worth by speculating in the market. However, according to authors Victor Chng and Rusmin Ang, the odds can have a better likelihood if one knows what sustainable methodology to use.

In their newly revised book, Value Investing in Growth Companies: How to Spot High Growth Businesses and Generate 40% to 400% Investment Returns, Chng and Ang explore a unique way of analyzing companies using value investing strategies. This unique and simple methodology, called the “Jigsaw Puzzle model,” is broken down into four segments, namely Business, Management, Numbers and Valuation. The authors introduce this concept for building an accurate picture of a company before deciding whether or not to invest. It also forms the basis for investors and traders who want to generate multiple returns in the area of small and fast growing companies to achieve the wealth and financial independence they want and deserve.

The strategies discussed in this book are designed to create a relatively stress-free method of creating a secondary source of income.

Investment wisdom
Nobody can claim to beat the stock market consistently but it is important that you learned from your investment mistakes. Three investment wisdom gained from Irving Kahn, one of Benjamin Graham’s disciples, is that in order to succeed in picking the winning stocks, you need to have patience, discipline and skepticism.