1: UNDERSTAND THE OVERALL BUSINESS WELL:

*So as to have a good guage of the price of the stock. There are many noises out in the
market, so need to know your stuff well in order to sift out the noises.

Part 1: 80% OF THE RESEARCH IS UNDERSTANDING THE COMPANY’S SALES AND FORECASTING ITS REVENUE!

*SALES - COST = PROFITS

From my experience, markets are a lot more forgiving if cost is not managed well rather
than sales not growing at all.
Most stocks traders look at sales figures (80-90% of the time?), so good Sales usually
translate to higher demand, higher stock prices.

1. Understand why sales can increase or decrease:

Eg, if companies are expanding into different countries, have new product
lines/inventions, we can predict that sales figures will go up.
Eg. During Pandemic, during lockdown or defauly Work-from-Home, we can predict that
more ppl will buy groceries from supermarket (Only place they can go, more cooking at
home), so we can predict that supermarket sales figures will go up.
Eg. If companies laying off staff, we can predict sales figures going down.

2. Understand where is competition coming from?

Eg. MooMoo, Tiger Brokers, iFast, TD Ameritrade, are competitors in stock broking.
More competition can force price competition among companies to lower their
fees.
Eg. SGX, although is the only exchange in SG, is not without competitors, becos
traders can trade in other countries’ exchange – eg. NYSE, NASDAQ, HK, London
etc. Just like fruit juice biz, being the only one in the Hawker doesn’t mean its
without competition, becos we still need to compete with other drinks stall, as
patrons ultimately usually have only 1 drink a meal.
Sales figures will change due to all these competitions.

Summary, to understand a business properly. It is always good to start from your Circle of
Competence (Insider in the industry, eg. Due to your field of work, you know medical
companies better, who is who, which technology and whose products is doing well etc).

PART 2: MAKE YOUR LIFE EASY BY LOOKING AT SIMPLER BUSINESSES TO OWN

*When researching for stocks outside your circle of competence/your industry for eg. It is
better to start from simple business which are easier to understand in depth.
Eg. Comfort Delgro – deals with many diff transport business – taxis, buses,
rental/leasing(taxis), Driving Centres etc.
While SBS Transit, Viacom – More simple and direct. Does Bus transport; Cars
inspection.
Such businesses are more straight forward and easier to understand.
 Compared to another conglomerate – eg. Jardine Matherson – does HK Land, Dairy
Farm, Hotels, Telco, Motors, etc, so many different Business Segments, in different
countries even – so it is very difficult to understand/analyse properly.

To really deep dive into research, you can search official data (eg. Retail sales by
industry), using official sources like https://www.singstat.gov.sg/

2 : What to look out for when understanding the business

Recommended tools
- Company's investor relations for quarterly presentations
- Company's annual reports
- Sginvestors.io to find analyst reports
- Tiger brokers analysis tools
- FSMOne analysis tools

3 : What to look our for when reading results presented.

*Almost all presentations will have rosy points presented to you.

You'd never see "SORRY WE MADE BAD INVESTMENT DECISIONS"
Be skeptical about what you see*

Based on companies annual reports/earnings report etc. See how they present,
Why Year on Year comparison, how about this quarter vs previous quarter comparison, is
there a drop? Decern if it’s a seasonal business, or if nearly every quarter should be
comparable?

4 : Understand good value using Price Earnings Growth (PEG) ratio

*LOOK OUT FOR EARNINGS GROWTH & LOW PE DOES NOT AUTOMATICALLY MEAN CHEAP!

COMMON METRICS USED to analyse companies:

a. RNAV(Revalued Net Asset Value) – best used for property developers (City
Development, Capital Land, HK Land etc).
b. P/B Value (Price-to-Book) – best used for banks
c. NAV(Net Asset Value) – Best used for REITS
d. PE Ratio (Price-to-Earnings) – for growth companies yet to turn profit (use Price-
Sales ratio)
e. PEG – Price-Earnings/Growth Ratio – Growth is something that is valued now, as its
difficult to project 10, 20yrs (where usually PE ratio is used to project that long to
earn back the money). So nowsdays investors like to access using PEG
*Seems abit weird for the PEG calculations above, might be wrong..

*in low interest rate environment, money is easy to loan – Growth companies just need to
borrow much money for operations and boost up its Sales. When investors see Sales up (i.e.
Price-Sales ratio lower), it signals a uy for the stock.
BUT, when i/r resumes, market will rewards companies truly earning profits more (PE Ratio
lower), as they really make money for the company, and its stocks will restand the test of
time.

5 : Understanding the POWER of PE expansion! (Price-Earnings Expansion)

PE Expansion - Stock’s price gone up by a much faster rate than Earnings per Share

REASON #1: Popularity

In the short term stock market is a voting machine. 
3M had dividend growth and was handsomely rewarded in 2014-2017

REASON #2: Industry tailwinds (trend – eg. Technology)

Sheng Siong's PE ratio also expanded with covid-19 circumstance in mar2020.
Microsoft PE ratio expanded because it is now viewed as a cloud computing infrastructure
player

6 : What causes a stock to rise RAPIDLY? (What causes a stock to become a multi-bagger)
 1. Stock Price (month-to-month)
2. EPS also based on month-to-month basis (TTM-Trailing Twelve Months)
3. PE Ratio also compared based on Month-to-month basis

*From 2014 ($41) to current 2021 ($330), a multi bagger increase.

Possibly due to pivoting its biz from a software company into software computing services
ard 2017-2018 (price increased exponentially in the 2-3 years)

*Good to aim for such multi-bagger stocks that have potential to be multi-bagger in 2-
3years – look for pivoting biz / expansion / technology scaling etc.

*If looking for stocks good to hold longer term, ard 10 years – go for steady growth like ETF,
Funds

*Josh’s Multi Bagger FORMULA*

Earnings growth x PE expansion = PRICE SHOOTS UP!

7 : WHAT Exactly To BUY?

To sieve through what stocks to possibly buy: Two Key Principles

1) Insider buying with their own money – can see in company’s webpage – “Investor
Relations”, *Other sources??

2) Companies that you are familiar with

Why? It helps you estimate growth and forecast industry problems. What are the seasons.
How solid the assumptions made in understanding the business are.
Then, use fundamentals and metrics to shortlist the companies.
Then use technical.. below chapter

8 : When to BUY? A step by step guide!

When to Buy – when proof of growth is seen.

Very hard to buy a stock at its cheapest (cant time the market).

Negative Eg. Straco (owns SG Flyer),

Stock collapsed during covid-19. When news of vaccine developed comes out in end 2020,
the stock immediately raised ard 20% (BUT actually no actual recovery growth recorded).
If we bought then during the hype, the share went sideways and trending down for the next
12mths and on-going.
Negative Eg. WaterDrop (China Mobile Fundraising/Insurance)
Stocks price tanks FOR A LONG TIME since IPO!

Positive Eg. Boustead (SGX:F9D)

Use the tool – “Price & Volume Breakout – 3Months”

Price breakout – stock is being noticed within this 3mth average
Volume Breakout – popularity, and can fuel PE Expansion

Becareful as a lot of meme stocks in there, as meme stocks can shoot out high percentage
for no reasons at all. BUT, if your shortlisted stocks (with fundamentals supported) happens
to be in this list, could mean a good time to take action.

9: What to do after you BUY (Especially if it doesn't turn out well)

Sometimes, after buying the stock, its starts dropping instead of going up or even sideways.
1. Are your assumptions forecast wrong? – relook into your research
 2. Don’t keep averaging down, unless you have strong reasons. (you might have bought
at the top *like WaterDrop)

10: When To Sell!

HOW TO RIDE A POTENTIAL MULTI-BAGGER UP! – (*Josh’s course naming got weird logic).

#1 Let's give a blanket rule first, when the company you own is projected to go into
losses(going to show Operational Losses), you may need to SELL and sell early!
Why? Markets almost never reward company's going into losses with share price
outperformance. The investment universe is huge, the company's in profits will see
popularity vote.

ONLY SELL WHEN EARNINGS ARE DETERIORATING (Fundamentals in the company have
changed).
AND NOT BECAUSE OF MARKET CORRECTION IN SHARE PRICE

*SO need to monitor the earnings of your stocks every Quarter (Very Impt).
*How to determine what is a correction?

To do well in stock investing, you have to sell very jealously.

#2 Stick to winners: Winnings will expand. Markets will bid it up and what you have
becomes more and more valuable.

BONUS MODULE: WHAT DISCIPLINES TO INBUILD INTO YOUR STOCK PORTFOLIO

Golden Rule: Stick to maximum 10 stocks in your portfolio (or less, that you understand
really well)

AVOID ideas such as sell 90% to realise gains, and Only keep the 10% as "rolling chips/ aka
profits only" to see if it can ride as multi-bagger. You should keep Bulk of oyur percentage
to ride the multi-bagger!
Avoid cashing out profits and only keeping the gains there to "run" because that negates
the benefits of identifying a multi-bagger

*Avoid ballooning up your stock portfolio and be very selective in adding in new
names.
Only max 10 stocks, if you discover a new opportunity, let go of 1 of the stock in your 10.
It has to be much better opportunity than the one you letting go.
Stick to 10 and monitor them well.
BONUS MODULE 2: Advanced tips on “when to sell & cut losses”!

HOW YOU ANSWER DEPENDS ON WHETHER MARKET IS IN BULL OR IN A BEAR or

CORRECTION PHASE.
Markets are generally correct.

In BULL Market,
if stock you bought down 10%, you need to question your assumptions. It is true your thesis
may not be wrong but your thesis is also not right (yet).
*Do not Average down. This is where many new investors make mistakes. Do not double
down too quickly. You might be not seeing something the market sees.
Its not about you and market is a collective voting.

Market are seeing something that is not known yet. Operational performance may have
peaked or performance will suffer moving forward.

In BEAR MARKET,
However in a bear market or market correction, when the stock you bought down 10%, it is
a time when market may not be correct. It is when you become more stubborn in your
thesis. You must be willing to look past crisis.
You will make money because you are more patient than most people and you can stomach
losses.