Monday, May 30, 2016

Key Points from Adam Khoo's Profit from the Asian Recovery: How to Profit from the Asian Boom Over the Next Decade (2010-2020)

Recently I attended Adam Khoo's free 3 hours Wealth Academy workshop, surprised he's giving away free physical book Profit from the Asian Recovery: How to Profit from the Asian Boom Over the Next Decade (2010-2020).

I've always enjoyed immensely Adam Khoo's talks & videos, he's even posted actual stock tips when he bought Oil through ETFs in oil companies & oil futures on Youtube. I did a small trade, took a small profit before oil went into a strong uptrend (without me).

Nonetheless I hope this post will provide you with some yardsticks for your next investments ;)
*The following is adapted with my own notes, thus do refer to his original book for explanation as reference

7 Screens in Buying Great Companies at Huge Discounts

  1. Consistently Increasing Sales, Profit & Cashflow
  2. Sustainable Competitive Advantage (Economic Moat)
    • High ROE, Net Profit Margin etc.
  3. High Growth Prospects
  4. Conservative Debt
    • Debt/Equity Ratio ~ below 50%
  5. High Return on Equity ~ 15%+
  6. Management Holding / Buying the Stock
  7. Stock Price is Below Intrinsic Value
  8. *Stock is in uptrend (moving average is rising)
    • Added this as the best fundamentals company can still get cheaper, thus its important to buy when its in uptrend!
Screens for Selecting REITS
  1. High Current Dividend Yield (>5%)
  2. History of Consistent Growth in AFFO & Dividends (5-10years)
    • AFFO, Adjusted Funds from Operation
      • Formula: Net Income + Depreciation - gain/loss from sale of property - capital expenditure
  3. High Expected AFFO & Dividend Growth
    • Growth forecase 5%+ with hold/buy analyst ratings
  4. Low Gearing Ratio (less than 40%)
  5. Undervalued REIT stock price
    • below NAV
    • Intrinsic Value via Discounted Cashflow
When to Sell
  1. Price above Intrinsic Value + Reverse into Downtrend (price drop below 20, 50 Moving Averages)
  2. Better Investment Opportunity & Return
  3. Price fall as a result of permanent damage to company's reputation and/or Competitive Advantage
Parting note: 
- Personally I find it extremely hard to find companies that matches the above that are undervalued; if you come across, I greatly welcome you to post in comments!
- Intrinsic Value (via EPS & discounted cashflow) can varies greatly, also it requires alot of patience to wait for stock price to fall below (say once every 3-7years market cycle)
- Growth are seldom consistent, even the best companies can have a few blips & some may reach its peaks before growth start to slow; when this happens its important to run as trends are likely to slow or change in view of slowing/reversing growth.

Nevertheless, its important to know what you are buying into; as Warren Buffett / Graham says investments are best treated like a business decision.

Good luck & may the trend be with you! ( * v * )")

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