Taming the Money Sharks: 8 Super-Easy Stock Investment Maxims

221 Pages·2013·3.032 MB·English

by  Philip Shu-Ying Cheng

Additional Praise for Taming
the Money Sharks
“For those investors who want to profi t from the
investment markets like professionals, this book is
the key to success in eight simple steps. You will
fi nd Professor Cheng’s investment language in
sync with our daily lives—complex theories are
replaced with real-life examples and interactive
illustrations pinpoint the fundamental knowledge
we all need to know to accumulate and protect
our wealth.”
—Patrick K.S. Wong, Former General
Manager, Jardine Fleming Taiwan
Investment Management Ltd;
Investment Director, Jardine Fleming
Unit Trusts Ltd Hong Kong; President,
Polaris Investment Trust, Taiwan
“Mr. Cheng has written a highly readable guide
for individual stock market investors who wish
to develop an organized approach to creating and
managing their portfolios. He uses real-life exam-
ples to eff ectively illustrat e investing pitfalls and
principles, while presenting tools and techniques
that are valuable to the discipline needed for
success in this activity. Rooted in common sense
and conservative principles, his investing frame-
work will best serve individuals who are willing to
make a serious commitment of time and energy
to research, trade execution, and ongoing portfolio
management activities.”
—Richard Mellon, Retired
Financial Manager
Taming the
Money Sharks
Taming
the Money
Sharks
8 Super-Easy Stock
Investment Maxims
Philip Shu-Ying Cheng
Copyright © 2013 by John Wiley & Sons Singapore Pte. Ltd.
Published by John Wiley & Sons Singapore Pte. Ltd.
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ISBN 978–1–118–55042–7 (Paperback)
ISBN 978–1–118–55045–8 (ePDF)
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Typeset in 11/13 pt. BemboStd by MPS Limited, Chennai, India.
Printed in Singapore by COS Printer Pte. Ltd.
10 9 8 7 6 5 4 3 2 1
This book is dedicated to all the individual investors
who have lost money in the stock market. Many of
them shared their experiences with me and enabled
me to defi ne the focus of this book. I urge my readers
to maintain the proper frame of mind and to form
good investing habits in order to survive and prosper
despite the presence of the money sharks.
Contents
Acknowledgments xiii
Preface xv
Author’s Disclaimer xix
Chapter 1 Stop the Bleeding
Should You Continue to Invest by Striking
While the Iron Is Hot? 1
A. Chasing a Hot Stock 3
B. Chasing a Hot Trend 8
C. Maxim No. 1: Don’t Rush into Buying,
and Avoid Further Bleeding 11
ix
Taming the Money Shark. Edited by Philip Shu-Ying Cheng
Copyright © 2013 by John Wiley & Sons Singapore Pte. Ltd.
ISBN: 978-1-118-78479-2
x taming the money sharks
Chapter 2 Select an Industry to Increase
Probability of Profi table
Investments
Apply Expertise from Work or Personal Interest 19
A. Basic Knowledge 20
B. Choosing an Industry to Invest In 25
C. Industry Characteristics 41
D. Maxim No. 2: Profi t from One Chosen
Industry or a Selected Few Industries 44
Chapter 3 Wise Use of Information
Resources
Should You Follow Hot Tips? 49
A. Listen to a Friend or Relative 50
B. Listen to a Stock Guru 54
C. Listen to a Stock Analyst 56
D. Listen to an Investment Advisor 59
E. Listen to a Large Investor
(Possible Shark) 61
F. Maxim No. 3: Reference External
Inputs but Stay Focused 65
Chapter 4 Decide on Company Values
and Buy–Sell Prices
Should You Trust a Company with
Your Money? 73
A. Relevant Company Historical Facts 74
B. Most Basic Financials 84
xi
C. Five Key Indicators 86
D. Don’t Be Blind to a Company’s
Personality 98
E. Deciding on Buy–Sell Prices 100
F. Maxim No. 4: Trust but Verify 103
Chapter 5 Simple and Eff ective Portfolio
Strategies
Do You Want a Windfall Profi t or
a Systematic Win? 111
A. Portfolio Planning Guidelines 112
B. Core versus Satellite Portfolio 115
C. Portfolio Risk Management 122
D. Maxim No. 5: Manage and Accept
Portfolio Risks 132
Chapter 6 Capitalize on Policy Directions
Are Policies Your Friends? 145
A. Are Policies Fair? 146
B. Policy Directions 147
C. Maxim No. 6: Profi t from Policies
and Trends 153
Chapter 7 Loving an Investment or
Loving to Make Money
Falling in Love 157
A. Is “Love” Forever? 158
B. All-or-Nothing Thinking 160
xii taming the money sharks
C. Love a Person? Invest for Love? 162
D. Maxim No. 7: Emotions and
Investment Don’t Mix 166
Chapter 8 Fully Enjoy Your Profi ts
from Stocks
Rich and Healthy or Rich with Pain 171
A. Manage Your Investment Lifestyle
and Health Simultaneously 172
B. Swap Poor Health for Big Money 173
C. Investment Emotions That Are
Detrimental to Our Health 175
D. Investment Flowchart 179
E. Maxim No. 8: Maintain Health
and Wealth 180
Appendix A: Basic Technical Analysis 183
Appendix B: Deciding on Buy Prices 189
Appendix C: Deciding on Sell Prices 195
Appendix D: Strategy for Investing
in High-Dividend
(HD) Stocks 201
About the Author 207
Index 209