Michael Liew's Blog

A young boy from Britain, Declan Galbraith, sings beautifully for the song - Tell Me Why.



A young little, who is 6 years old, Connie Talbot sings very beautifully in "Britain's Got Talents". I even cry when I hear her singing.



A mobile phone salesman, Paul Potts, in Britain's Got Talents, singing Opera. So touch and enthusiastic!

I have just read finished Dr John Mak's "Strategies for the Intelligent Investor". I have picked a few parts and summarize which I personally feel that it is very important.

Please note: Everything I have written at here at pick from John Mak's book. For those who want to study investing. Please read the original book instead of just reading what I have written here. This blog is only use for sharing. Thanks!

"The Intelligent Investor thrives in the stock market due to two big reasons: others' follies, and our discipline."- Warren Buffett

1. The Power of Compounding
If we have $10,000, and we invest this money in great company which can bring us 24 percents annual income. After 11 years, we would have $100,000, after another 11 years, we would have $1,000,000. And another 11 years, we would have $10,000,000. This, is the power of compounding! No matter Albert Einstein, the greatest scientist in the twentieth century said that, "The most powerful force in the universe is compound interest."

2. To Finish First, First You Must Finish
(Rule No:1, Never Lose Money; Rule No:2, Never Forget Rule No:1)

Rule No:1, Never Lose Money - To invest, first have to inflation-proof before rising our assets' value. Intelligent investors never believe the rumours, gossips or other things that would cause them to take their money out of their pockets, no matter the one who tell them are their parents, husband, wife, best friends, brothers, sisters, or those who are white collars in great positions in big companies or whoever they know or don't know! Intelligent investors only invest in a great company that they understand and have great earning powers.

Rule No:2, Never Forget Rule No:1 - Rule no:1 is so important that everyone of intelligent investor would never forget. Even they know someone who earned in a market that they never know. They would still be happy, because - at least they never lose any money. And this will never happen to them if they always remember rule no:1 - Never Lose Money.

3. Bet Seldom, But Bet Big
There are only three kinds of people want other people to keep betting continuously. They are
a) Speculators
b) Securities Exchange
c) The Public Companies

a) Speculators - Speculators are those who bought the stocks and then they put the rumours in the market to lure more people to come and buy the stocks they have already bought. They left the market once the people come and buy their stocks.

b) Securities Exchange - There is a Stock Research Department in Securities Exchange which there is only one purpose - in increase the quantity of transaction of stock market. The more transaction means they can have more "service charge".

c) The Public Companies - The owner or management of the public companies has always has the first hand information of their companies. They can know how is deal going on, when is the deal is going to confirm, when the product they order is going to come in etc. And they asked someone they believe to "earn money" in the other way. These kind of companies are not the companies that intelligent investors should invest!

Intelligent investors only pick the companies they feel great (or at least good) before they put their hard-earn-money into the company and they have a mindset that when they invest in a company. They'll never sell their ownerships(stocks) for at least 10 years. Because, the power of compounding!

4. Intelligent Investors Never Sell Their Ownerships (Unless...)
As stated above, intelligent investors never sell their ownerships (stocks) for at least 10 years. But if the companies they invest are overvalued and at the same time they find a great company which is undervalued, they would/may sell the company which is overvalued and invest the company which is undervalued.

5. Intelligent Investors Never Predict The Market (But...)
Neither anyone in the world would know what could happen in the future nor anyone could predict what will happen to the stock market. Every prices of products/commodities are set by supply-and-demand (as long as there is no third party involve in the market, e.g. government). As long as the supply is more than demand, the price go down. And vice-versa, as simple as that. Theorically, the prices of the stock market are also set up by supply-and-demand. The main point is that, we could never know what is in other people's mind! The prices of stock market are set by thousands and thousands of people. When most of them want to buy, the price go up; when most of them want to sell, the price go down. We, as a human, cannot know what is in one person's mind. How could we able to know thousands and thousands of people's mind? Intelligent investors know that they can never make it, so they would never predict the market.

But the intelligent investors would sell their ownerships(stocks) in the "right timing". What is mean by "right timing"? The companies that intelligent investors invested are already overvalued and at the same time they found a great company which is undervalued. They would/may sell the company which is overvalued and invest the company which is undervalued. This is calls the "right timing". Even Warren Buffett has the experience by the time he sold the ownerships(stocks) of a company, the prices of the stocks (which he felt is overvalued) still moving up; or by the time he bought the ownerships(stocks) of a company, the prices of the stocks (which he felt is undervalued) still going down.

Even this happened to intelligent investors, they will never care about it, because The First Rule Is Not To Lose.

Conclusion
1. Investing is Simple, but Simple Doesn't Means is Easy. The Most Important Characteristic is Self-Discipline.

2. Everyone Can Be Rich if They Know How to Invest in a Correct Way.