unlocking reits guidebook. investing yourself

Content Page
Disclaimer ..................................................................................................................................
Introduction ...............................................................................................................................
Part 1 – Know Yourself ..............................................................................................................
Step 1: Invest in Yourself – You are your biggest Asset ...........................................
1.Money .............................................................................................................
2.Knowledge ......................................................................................................
3.Environment ...................................................................................................
4.Action ..............................................................................................................
Step 2: Invest in What You Know ................................................................................
1.Circle of Competence ....................................................................................
2.Expand Your Circle of Competence .............................................................
Part 2 – Know Your Strategy .....................................................................................................
Step 3: Get High Value at Low Price ...........................................................................
1.Screeners ........................................................................................................
2.Intrinsic Value .................................................................................................
3.Steps to Identify Good Value Stocks ............................................................
Step 4: Invest in Good Management ..........................................................................
Step 5: Low cost index funds – Sensible for everyone .............................................
1.What are Index Funds? .................................................................................
2.The Details ......................................................................................................
3.When to invest? ..............................................................................................
Part 3 – Put into Action .............................................................................................................
Step 6: Time ..................................................................................................................
1.The Power of Compounding ........................................................................
2.The Good & Bad times ..................................................................................
3.The Emotion ...................................................................................................
Step 7: Keep the Long-Term Mind-set ......................................................................
1.The Portfolio ...................................................................................................
2.The Exit Strategy ............................................................................................
Closing ........................................................................................................................................
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01
© 2018 Mind Kinesis Investments Pte Ltd

Disclaimer
This book is, for all intents and purposes, an educational guide on
selected investment strategies. Under no circumstances will the author,
Alice Chew, and/or related parties, such as Mind Kinesis Investments, be
responsible for monetary gains and/or losses experienced by people
applying the methods discussed in this book. Readers are responsible
for managing their own money, and held solely responsible for gains
and/or losses incurred from following the advice laid out in this book.
Again, this book is for purposes of education only.

Introduction
First, you need to address three simple questions.
(i) Do you know what you want in life?
(ii) Have you started working towards your dreams?
(iii) What have you done so far?
Few people have answers for the first two questions and fewer still for
the third. If you do not have answers, how do you hope to fulfil your
dreams?
Author’s Note:
I seek financial freedom.
I know that investing holds the key to my dreams. However, I did not
know how or where to start investing. And there are enough horror
stories of people who speculated and relied on “tips”. Some spoke of
“value investing” as the key to financial freedom.
I attended more than ten free introduction classes on value investing.
None held promise that value investing would help achieve my dream.
Then, I attended Cayden Chang’s Value Investing Programme—VIP—and
never looked back! The brutal truth from Cayden, a self-made
millionaire: There is no get-rich-quick shortcut to financial freedom.
In this book, I freely share the many lessons and rules from Cayden’s
Value Investing Programme.
The first rule to achieving your goal of financial freedom:
Rule #1: Never Lose Money.

04
Part 1 –
Know
Yourself
"You are your own worst
enemy."
– Lisa Kleypas

Step 1:
Invest in Yourself –
You are your biggest
asset
How do you invest in yourself?
To pick stocks, you do not need to be a
qualified accountant; a CFA (Certified
Financial Analyst); or an investment
banker.
All you need is Cayden’s Value Investing
Programme (VIP), a 4-day course.
The course condenses age old secrets of
legendary billionaire and foremost value
investing guru, Warren Buffett, who is
also the wealthiest investor in the world.
Value investing is more about you and
how much you are willing to invest in
yourself to kick start this journey.
Warren Buffett used value investing
techniques to build his fabulous wealth.
How did he accomplish this, and what
were his secrets? This book will teach
you.
You need this knowledge and to secure
it, you need to invest in yourself.
Knowledge accumulation starts now,
and here are the four keys to success:
05

1.
Money
You are your own CFO.
“How well do you know money?” translates to “how well do you know your own
financials?”
"Spend what you have after saving, not save what you have after
spending."
– Warren Buffett
Most people focus on enjoyment, instant gratification, rather than planning for the
future.
Many people falsely believe that investing requires a large amount of capital.
Unfortunately, these people already lost the race before it started.
The truth is, you can start investing with as little as S$500!
There are two components to value investing: Time & Money. Start early, even with
only a small amount of money, and watch your investment grow exponentially!
Here are two quick and simple steps to estimate your monthly net worth and
manage it from there onwards:
(i) Income – Savings = Net Expenses
a. Income = your salary
b. Savings = At least 10% of gross (Recommended)
(ii) Save first, spend what is left.
Do not spend first and save the balance. The monthly savings becomes your capital.
Remember: Success does not come without sacrifice!
06

2.
Knowledge
Nobody can start something without knowledge. If you want to do it right, learn it right.
You cannot do what you do not know.
You need to understand value investing. For example, one of Warren Buffett’s most
famous quotes speaks of price and value. Do you know the difference?
“Price is what you pay, value is what you get”.
– Warren Buffett
Invest the time, invest in yourself. Build up knowledge required to achieve your dream.
3.
07
3.
“Be fearful when others are greedy and
greedy when others are fearful”.
– Warren Buffett
Environment
Be aware of the environment affecting the business in
which you invested. Familiarize yourself with the
industry as a whole, including but not limited to
competition, new technologies and government
regulations.

4.
Action
After equipping yourself with knowledge and necessary capital, kick-start your actions!
No one becomes successful by merely reading but doing nothing. Warren Buﬀett reads
extensively and applies that knowledge, and so should you.
If you wish to grow a $10,000 investment into $72 million and need a supportive and
systematic approach, Warren Buﬀett style, learn from the Cayden Chang community.
Take massive action right away. No gimmicks. No hidden costs. Join his Free Value
Investing Masterclass. Click this link: www.valueinvestingprogramme.com.
Where there is a will, there is a way.”
- Old English Proverb
08

1.
Circle of Competence
Your Circle of Competence (CoC) refers to the subjects you are familiar with—your areas
of expertise—with regards to business.
It is natural to know more about subjects that interest you. Your CoC often revolves
around topics you are passionate about. Therefore, it stands to reason that each person
possesses unique CoCs.
For example, a person interested in skin care would be quite knowledgeable regarding
the top skincare companies. In this case, companies selling beauty products would likely
be in their CoC.
09
Step 2:
Attend the Value Investing Programme (VIP) to
pick stocks. Participate in a “trade-show” and
discover your Circle of Competence (CoC). Work
in teams, research, and select companies. The
hands-on process of researching, decision
making, and presenting, will provide the skills to
build your portfolio.
Past participants of the VIP point to one huge
takeaway: reading is key to ensuring what you
think you know is what you really know!
Invest in What You Know

No.
a)
b)
c)
d)
e)
f)
g)
Reason for question
These help with comparisons,
background research, and due
diligence on the companies.
Use this to test your knowledge and
awareness of the cosmetic industry.
These are good indicators of a
company’s ability to raise prices, and
provide in-depth information
regarding the business.
The distribution networks reveal the
areas and sectors the individual
companies cover.
This is an eﬀective assessment of an
average customer’s views regarding
the company’s & industry’s products.
This helps assess the competitiveness
of the players.
The buzz regarding the company /
industry helps with qualitative
assessments.
How would you know if an industry is within your CoC? Here are some questions:
Question
Name at least three companies in
your preferred industry.
How well do you know their
products?
What is their price range? Are their
products value for money? What is
their product positioning?
What are their distribution
channels?
Do you use these products? What
are your thoughts and perceptions
regarding the products?
What are the latest technologies
used by this industry?
Are people around you talking
about this company / industry?
10

If you answered “YES” to at least four of the questions—this industry is within your CoC.
Here is an example for the fast food industry and some sample responses:
Answer
Burger King, MacDonald’s,
Subway, Wendy’s & Carl’s Junior.
I eat fast food once a week, and
am familiar with the products.
Most of the choices are value for
money. Not the cheapest food,
but not the most expensive
either.
I do not know their channels.
I eat fast food once a week. I think
it is not healthy, but good for
ﬁlling a need or for a quick bite.
Fast food companies are into
mobile phones via apps. Some
use automated order machines.
Not that often, but outlets are
common places for meet ups.
Question
Name at least three companies
in your preferred industry.
How well do you know their
products?
What is their price range? Are
their products value for money?
What is their product
positioning?
What are their distribution
channels?
Do you use these products?
What are your thoughts and
perceptions regarding the
products?
What are the latest technologies
used by this industry?
Are people around you talking
about this company / industry?
No.
a)
b)
c)
d)
e)
f)
g)
Know?
Since the respondent knows the answers to the majority of these questions, the fast
food industry is within the person’s CoC.
11

2.
Expand Your Circle of Competence
How do you expand your CoC?
One method is to start with your core CoC, say, using the example given above: skin care
products.
The current trend is for companies to distribute skin care products via e-commerce platforms.
Therefore, a skin care company with a good e-commerce platform can access a wider customer
base and improve sales. They can reduce the number of stores and lower operating costs.
As you research, your knowledge on e-commerce expands and eventually it too becomes part of
your CoC.
Reading is a wonderful way to gain knowledge and expand your horizons. During his early days in
the investment world, Warren Buffett read up to 1,000 pages a day. Now, he reads 500 pages
every day. He built up his knowledge, applied it, and grew his wealth. It might interest you to know
that most successful entrepreneurs are voracious readers. They read every day.
A famous Chinese saying: “You will find a golden house in every book you read.”
Nevertheless, too much information can sometimes be a problem.
Here is another piece of wisdom from Warren Buffett: “Avoid overly complex companies.”
12
Sticking to what you understand and know best is vital
for making investment decisions. Focus on your Circle of
Competence.
Never invest in an idea you can’t illustrate
with a crayon.”
- Peter Lynch

13
Know Your
Strategy
Part 2 –

Step 3:
Get High Value at
Low Price
After identifying your CoC, search for
good value stocks that fall within your
area of competence.
Generally, you only invest in good
companies at low prices.
“Price is what you pay, Value
is what you get.”
– Warren Buﬀett
There are two steps to determine
whether a stock is good value:
(i) Use Screeners—they ﬁlter out bad
companies and emphasize good
companies.
(ii) Find the Intrinsic Value—the intrinsic
value reveals the worth of a stock;
whether it is overpriced or is a value buy.
14

1.
Screeners
Screeners are an important tool in the value investors’ toolbox.
What is a screener?
A screener consists of a list of criteria to identify good companies. It filters out the rest.
What criteria should you use?
There are many different approaches to determine criteria. Cayden’s Value Investing
Program (VIP) has a bank of pre-selected criteria which automatically lists potential
investments.
Where can you find screeners?
There are many resources available, but some of the easiest to access and use are on
the internet. Here are two examples:
(i) www.finviz.com
(ii) www.sgx.com
2.
Intrinsic Value
Next, determine the intrinsic value (IV).
There are several methods and the VIA calculator, developed by Mind Kinesis for the
Value Investing Programme, is one convenient means. The calculator works by analysing
a stock’s past financial performance and estimating its long-term potential.
15

3.
Steps to Identify Good Value Stocks
These are the steps:
(i) Use the screeners to longlist good companies (those that fulfil the criteria).
(ii) Select the companies that fit your Circle of Competence (CoC).
(iii) Check the VIA calculator for worst and best case scenarios to determine the
stock’s intrinsic value (IV). Focus on stocks whose current market price is below the
IV before starting due diligence.
(iiii) Pass the stock through the VIA funnel.
(v) Analyse the economic moats. This is crucial as it highlights the competitive
advantages of a business.
(vi) List the moats. The moats should be wide and institutionalized and not limited
to individuals.
Remember, you are seeking companies that are cheap and good.
Remember, you are seeking companies that are cheap and good.
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“It is far better to buy a wonderful
company at a fair price than a fair
company at a wonderful price.”
– Warren Buffett
2
VIA – Value Investing Academy
Economic moat – a business' ability to maintain competitive
advantages over its competitors in order to protect its long-
term profits and market share from competing firms.

Warren Buffett only invests in companies that have
good management.
Good leaders and management bring out the best in a business. When management
continuously acts in shareholders’ best interests, the value of the business rises.
How do you identify good management? Here are some questions to help evaluate
management competency:
(i) Does a company and/or its executives have a history of fraud?
A leopard cannot change its spots. If it happened once, the tendency for recurrence is
high.
(ii) Are there key person risks?
Check the disclosure statements for conflicts of interest between the company’s key
persons and suppliers:
a) Are the conflicts of interest mitigated? (If yes, good indicator)
b) Do the conflicts of interest cover a large part of the company’s portfolio? (If yes,
bad indicator)
(iii) What would happen if the CEO or founder leaves the company?
If their involvement is crucial to business performance, the stock’s price will be
sensitive to changes in top management. Are you comfortable with person-centric
price movements? You need to factor this risk into your investment decision.
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Invest in Good Management
Step 4:
“The true measure of the value of any
business leader and manager is
performance.”
– Brian Tracy

However, apart from directly evaluating the company’s management,
look out for tell-tale signs. Some examples follow:
Positive signs (Good management):
(i) History of positive dividend growth and buybacks (both actions return
capital to investors).
(ii) Management team enjoys excellent reputation.
(iii) Earnings per share increase over a long term (preferably an unbroken uptrend).
Warning signs (Bad management):
(i) History of declining dividends, coupled with lack of reinvestments Example: no capex
spending.
(ii) Management team suffers poor reputation.
(iii) Earnings per share decrease over a long term (ignore intermittent upticks).
(iiii) High incidence of customer complaints. Using SMRT as an example: General
dissatisfaction and perception among the public that management is ineffective in solving
problems.
The goal is to invest in good companies. However, there will always be doubts, emotions, and
even greed. As an investor, you need to address these private challenges.
Assuming, perhaps moved by media chatter and on impulse, you bought a stock. A few months
later, the share price stumbles and goes into a down trend. Do you sell and cut your losses, or
hold and hope for the best?
Author’s Note:
I experienced a similar situation and panicked. Wrecked by emotion, I wanted to sell the stock and cut
my losses.
Fortunately, I controlled my impulses and messaged Cayden. Though sick and working late, he patiently
answered questions and helped clear my doubts. First and foremost, he advised me to keep calm. Then,
he asked me to decide what I really wanted to do with the stock.
After his advice, I recalculated the stock’s intrinsic value. Compared to the prevailing stock price, the
intrinsic value looked reasonable. I decided to hold the stock.
What did I learn from this episode?
Do not waste time monitoring the share price. Instead, focus on news related to the company and the
industry. With good prospects (such as a wide moat), the share price will eventually increase, even if it
encounters short term fluctuations. Always remember: Mr. Market constantly suffers mood swings, and
most investors get emotional. Do not be one of them!
18

19
Step 5:
Low cost index
funds – Sensible for
everyone
Author’s Note:
Before attending Cayden’s VIP, I had
never heard of index funds. The hype:
invest in index funds and beat 80% of
hedge fund managers; and, start
investing as soon as possible. Really?
Index funds sounded very similar to
internet scams!
I was wary of index funds because I
knew so little of them. After attending
Cayden’s course, I realized the potency
of these strategies—thanks to the magic
of long term investing.

1.
What are Index Funds?
Before we answer that, we need to know
what an index is.
An index is a group of selected stocks
that tracks a stock market’s performance
as a whole. One of the most common
indices is the Standard & Poor’s 500,
known as the S&P 500. The index covers
500 large companies representing a
broad cross section of American
industry.
Now that you know what an index is,
what is an index fund?
An index fund, sometimes called an ETF
—exchange traded fund—is a stock with
a price that shadows the index. Hence, if
you buy an S&P 500 index fund, when
the S&P 500 goes up, so will the price.
And over the last 10 years, the S&P 500
has beaten 80% of fund managers. Yes,
really—and it’s not an internet scam!
ETFs are a viable investing option for all
investors.
Here are some of the advantages and
disadvantages of ETFs:
20

Pros
Low cost: Vanguard 500 ETF (VOO)
expense ratio only 0.05%.
No minimum requirement: STI allows
you to start with an investment of
$100 monthly.
Low risk and lower volatility: As ETFs
follow a group of stocks, the price will
not drop much even if one stock’s
price drops.
Low maintenance: After setting up the
trading accounts (with Dollardex and/
or POSB) you can let them run
automatically.
Cons
Not all index funds are cheap. Beware if you
decide not to follow VIP’s approach to adopt
VOO and STI.
Because we are not investing directly in the
company’s stock, there is a loss of
connection between corporate profits and
the return that the investor receives.
Lower potential gains. As ETFs follow a group
of stocks, the price will not increase
drastically even if one stock’s price surges.
2.
The Details
Due to their simplicity and promising long term returns, index funds are suitable for everyone and
should form part of your portfolio.
The amount of funds allocated to an ETF in a portfolio depends on your risk profile.
A risk profile determines the chances you are willing to take as an investor. Higher risks normally
accompany higher gains. However, not everybody will accept high risks.
To determine your risk profile, refer to VIP’s “Type of Investor” tab in the VIA calculator (provided
by Mind Kinesis). There is a brief guide to identify your personal risk profile.
Here is an example of a portfolio split for a moderate risk investor.
21

Figure 1 – Moderate risk investor
As the chart suggests, 23% of the capital goes to index funds. This creates a low
cost, low risk but promising long term return. To add some growth momentum to
the portfolio, 47% of capital is invested in stocks. Finally, cash at 30% provides
liquidity to exploit unforeseen opportunities presented by the market.
Here is a proﬁle of an investor who is less risk averse (i.e. more willing to take risks).
Figure 2 – Higher Risk investor
Investors with a higher risk appetite might place more money in (comparatively
riskier) stocks instead of ETF. However, potentially higher returns accompany the
potential for greater losses.
Note: 25% backup cash allocation recommended, subject to your risk appetite.
Ultimately, your risk proﬁle determines the portfolio split. When planning your
portfolio, be aware that what works for someone else may not work for you.
22

3.
When to invest?
Start as early as possible. The longer
the time frame, the greater the power
of compounding. Step 6 covers
compounding.
Here is a list of ﬁve highly
recommended index funds:
(i) VTSMX – Vanguard total stock
market index
(ii) FSTMX – Fidelity version
(iii) VFINX – Vanguard 500 Index Fund
Investor Shares
(iiii) VOO – Vanguard 500 Index Fund
(v) STI – Straits Times Index
For beginners in value investing, VOO
and STI are ideal for their low cost and
simplicity.
For United States based ETF, such as
VOO, please use Dollardex, and for
Singapore based ETF, such as STI, use
POSB to setup and trade.
The Value Investing Programme notes
provide step-by-step guides to setup
both accounts. You can also locate the
guides in the VIA Facebook (a closed
group). Look at “File” session, ﬁles
labelled as “Auto Pilot using Dollardex”
and “ETF STI POSB Steps”.
23

24
Put into Action
Part 3 –

25
Step 6:
“Time is Money.”
– Benjamin Franklin
When young people attend his 4-
day Value Investing Programme
(VIP), Cayden usually gets excited
for them, because youth means
time and time is the magic behind
compounding interest.
Time

Principal
1,000
1.
The Power of Compounding
Compounding produces more and more rapid increases in earnings. Over time,
compounding accelerates growth.
What is compounding interest? Here is a simple illustration.
Assuming you invest $1,000 at a return of 6% per annum, for 10 years. The last
column shows the earning.
Over ten years, due to compounding interest, the initial $1,000 grows to $1,790.
This is almost 80% growth and assumes no addition to the capital. However, if you saved and
added $1,000 every year for 10 years, the compounded future value balloons to $15,762.49, a
growth of more than 57% over your original capital! Time truly is Money.
Click on the link and check out the Compound Interest Calculator by Moneychimp.
Total $
1,060
Interest
60
Year
1
26
1,060
1,123.60
1,190.02
1,261.48
1,337.17
1,417.40
1,502.44
1,592.59
1,688.15
63.60
67.42
71.46
75.69
80.23
85.04
90.15
95.56
101.29
2
3
4
5
6
7
8
9
10
1,123.60
1,190.02
1,261.48
1,337.17
1,417.40
1,502.44
1,592.59
1,688.15
1,789.44

Always be liquid—that is, hold some ready cash.
Bad things are not obvious when times are good.
During good times, when businesses in your CoC are selling higher than the blue line (intrinsic
value), do the following:
(i) Search for high premium stocks for a Sell PUT option opportunity. There are more than
7,000 companies in the US stock exchange. You might find a good opportunity for selling PUT
options during the good times.
(ii) Follow the Gurus. Use the Gurus’ portfolios that Cayden has uploaded in the Facebook
Closed Group; pick up the stocks that are within your CoC. Start your analysis and due
diligence. Be prepared when the chance comes!
(iii) Read, read, and read. Recall how much Warren Buffett reads every day. Read and explore;
gain the knowledge required; and, apply them to your portfolio.
No one can predict a crisis. Nevertheless, here are some reminders:
(i) The best time to buy into a great company is when it faces temporary troubles, when
emotional investors sell and drive down a company’s stock price. You, as a value investor,
must grab this opportunity.
(ii) Great companies usually survive the crisis. If liquid (i.e. you have cash in hand) take
advantage of the price dip and buy the stock below its intrinsic value.
Sell Put Option - A put option is an option contract giving the owner the right, but not the obligation, to sell a
specified amount of an underlying security at a specified price within a specified time.
27
"Every decade or so, dark clouds will fill the
economic skies and they will briefly rain
gold."
– Warren Buffett
The Good & Bad times
2.

(iii) Use a 3-bullet technique. Split the money set aside for a particular stock
into three parts. This enables you to invest in the company at three different
times, with at least one bullet reserved to buy stocks at crisis sales prices. This
helps to average down your total purchase price and ensures better capital
gain when you sell the stock.
3.
The Emotion
Author’s Note:
I am not the perfect investor. There are times when the stock price continues to rise
after I sold. Even though I made a profit, I will feel sad. This is greed, a very
dangerous emotion.
To save myself from this emotional roller coaster, I regularly remind myself:
Fall into the greed trap, and you put yourself at risk. Welcome greed and bad things
will follow. You will make poor investment decisions; attract scammers to prey on
you; and, more. Make no mistake—you will lose money!
As a value investor, adhere to the step-by-step guide of the VIA funnel; believe in
the power of compounding interest; be patient; and, you will succeed.
Whenever ignorance or greed threatens to overwhelm, remember you are not
alone. You are part of a fantastic community. Talk to the Facebook Closed Group or
contact Cayden. The community is here to support one another. Cayden’s door is
like a temple—it is always open!
DON’T BE GREEDY & THERE ARE NO GET RICH QUICK SCHEMES.
“Be greedy when people are fearful, and fearful when people are
greedy.”
– Warren Buffett
28

Author’s Note:
I have friends who will not put their money into stocks because they are afraid
to lose money.
My response: Why would you lose money?
You only lose money if you gamble with situations you do not understand or have no
control over. Gambling is luck based, value investing is fact based.
Some people say: Step-by-step value investing is too time consuming! Is there a quicker
way?
My reply: There are no get rich quick schemes. Warren Buffett, the greatest investor, gets
20% returns a year. Anything more is suspicious. Success requires sacrifices!
Put aside your fears, invest in yourself, and use the knowledge gained to understand the
stock market. This knowledge will yield a monthly return of one to two percent. That is
12% to 24% a year. These returns are better than the 7% average returns from insurance
companies.
Over the past six months, my investments yielded a monthly average of 2% returns. If I
can achieve this, why not you?
Believe in yourself:
(i) If you lack youth—you should have the money. With large capital and
compounding effect, you will get there.
(ii) If you are young—you have the time. Starting early will outweigh large
capital because time is the magic ingredient in compounding.
(iii) If you lack money—start with the low cost, low risk ETF investing strategy.
Remember, ETF has constantly outperformed most of the professionally
managed funds in the long run.
Don’t give yourself excuses. Make a huge change and start right now!
29

30
Keep the Long-
Term Mind-set
Step 7:

The Portfolio
1.
Having followed the above six steps, including Steps 2 and 6 which emphasized the
importance of reading, you should have all the information required to establish your
value investing criteria.
Based on your homework and due diligence, you should also have a ready list of stocks
that fit your CoC.
Narrow down the list to businesses that will hold up well during bad times. Utilities are a
good example as they usually survive recessions. Utilities also have a good moat, since
people use utilities in good times and bad.
Diversification is another important factor to build into your portfolio. No single
industry should take up more than 10% of your total portfolio.
Diversification spreads and reduces investment risks. If one industry does badly, stocks
from other industries mitigate with positive returns.
31
There are three key points to consider in stock
picking:
(i) Businesses that will stand the test of time.
(ii) Businesses with durable competitive advantage
(wide moat).
(iii) Businesses from diversified industries.
Do not put all your eggs into one
basket.”
– Warren Buffett

2.
The Exit Strategy
Warren Buffett once said his favourite
holding period is forever.
He meant invest with a long-term
view, because from time to time he
did sell his stocks. One example: IBM.
When is the time to sell? Here are
some guidelines:
(i) Have you made a profit?
(ii) How is the business doing?
(iii) How is the industry doing?
(iiii) How is the moat now—did it
get wider or shrink?
(v) Re-evaluate the intrinsic value
—is the current price below the
blue line?
(vi) Is the stock market offering a
price that you are willing to sell
at?
If the answer is “YES” for question one,
you can sell the stock and realize a
capital gain.
However, if your answer is “NO” for
question one, then take another look
at the stock.
If the business promises growth
(answers to questions two to five are
all positive), then there is no need to
sell. It is a good company and the
share price will rise in the long run.
32

However, if you made a loss (answer to question one is “no”), and any of the answers to
questions two to five are in the negative, be prepared to cut your losses.
Do not be naive and hope for a rebound.
Always remember Rule #1: Never Lose Money.
This also means, when you have lost money—never lose more money.
Recall Warren Buffett’s advice: invest with a long-term view. If you cannot see yourself
owning the business for many years, do not buy; doing so defeats the purpose of value
investing.
Remember, the price of a stock reflects the cash-generating ability of a business over
the long run.
"In the short run, the market is a voting machine; but in the long
run it is a weighing machine."
– Benjamin Graham
33
"RULE#1 – NEVER LOSE MONEY."
– Warren Buffett

Closing
Warren Buffett’s 7-Step Formula provides a
systematic approach to value investing.
Building wealth requires a lot of effort and
time but, in the long run, it is a well worth
venture. Nothing comes free in this world!
Value investing is not a get rich quick
scheme. It also does not require you to be
a genius. Value investing is a dummy-proof
methodology first developed in 1934 by
Benjamin Graham and improved by
Warren Buffett over his long and
successful investment career.
Cayden Chang’s mentorship and
willingness to share his experience will
benefit value investing beginners.
For more guidance, attend Cayden’s Free
Value Investing Masterclass.
Click on this link:
www.valueinvestingprogramme.com
Or, if you are already a graduate of his
course, return as a volunteer coach and
learn as you help others. Each time you
return for revision or as a coach you will
pick up something new or recall some
forgotten tip.
“We don’t have to be smarter than the
rest. We have to be more disciplined
than the rest.”
– Warren Buffett
34

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