Recently, Warren Buffett announced that US stocks were very cheap and that he was buying aggressively again. Should you as an investor blindly jump in and take the cue from the world’s greatest investor and one of the world’s richest man? Yes and no. It all depends.

First let me say that I am one of Warren Buffett’s biggest fans and admirers. Studying his strategy of buying high good quality companies at huge discounts to intrinsic value has made me a lot of money in the last 10 years. He is known as the world’s greatest investor and has achieved an amazing track record. However, I have found that following his strategy ALONE can be very dangerous to most small time investors. Let me explain.

When Warren Buffet invests in a stock, he only focuses on the company’s fundamentals. This means that he looks for companies with a good business model, consistent earnings growth, competitive advantage, low debt and good management. He buys as long as the company’s current stock price is selling BELOW the true value of the stock (intrinsic value). He does NOT study the price pattern on the stock chart at all (known as technical analysis). He also does NOT take into account macroeconomic data like interest rates employment and inflation data.

Why does he do this? The reason is because when Buffett buys a stock, his minimum holding period is 10 years. So he does not care about the short and medium term trends that you can see from a stock chart. However, by using technical analysis, we can see if the stock price is on a downtrend or on an uptrend. When a stock is on an uptrend, it means the market psychology is optimistic and prices tend to move higher (upward momentum). When a stock is on a downtrend, it means the market is pessimistic and prices tend to go lower (downward momentum). The danger is that when a stock is on a downtrend, you do not know how low it can go. A cheap stock can become EVEN CHEAPER. In a downtrend, ALL stocks go down, both good and bad companies. No matter how good or cheap a stock is, a downtrend will always send it lower.

Warren Buffett does not take this into account at all. Can you follow his style? Yes! However, you may buy a stock on a downtrend that goes 20%-50% lower before eventually rising years later. If you are prepared to hold for 10 years and not less, then no problem. However, if you want to achieve higher returns in months and not 10 years, it makes sense to combine Buffett’s fundamental investing methods with technical analysis strategies used by other gurus like George Soros & Victor Sperandeo. Technical analysis helps you to better time your entry. While technical analysis is not 100% full-proof and while you can never buy right at the bottom and sell right at the top, it certainly improves your chances to buy NEAR the bottom, at the beginning of an uptrend and to sell NEAR the top, at the beginning of a downtrend.

When I started combining technical analysis strategies with Buffett’s value investing approach, I found that I have been able to make more money in a shorter period of time. At the same time, when stocks went on a downtrend, I was able to get out earlier and not see my investments fall 20%-60% before it would come back years later!

Let me give an example with a stock that has made me alot of money… Goodpack, listed in Singapore. Goodpack is a very good company that passes all of Buffett’s investment criteria (consistent earnings, low debt, competitive advantage, good management). This stock has an intrinsic value of $2.20+. In Wealth Academy, I teach my students how to determine intrinsic value using a discounted cash flow method.

Look at Chart X below. If you just purely use Buffett’s method of value investing (buying a good company when it is undervalued), you may have invested at point A, when the price is $1.60. It is definitely undervalued. However, what happened? 6 months later, the stock price went to $0.60 because of continued bad market sentiment. A cheap stock became EVEN CHEAPER! As a pure buffett follower, you would just hold for the long term. Sure enough, 1.5 years later, the price went back to $1.60. You had to wait 1.5 years just to break even!!! 6 months later, you would have made a profit when the price went to $2.20 (the intrinsic value). There is nothing wrong with this method except that it takes too long to make money.

CHART X

Now, look at Chart Y below. Using technical analysis, you would know that you should never buy on a downtrend. You must always wait for the price trend to REVERSE into an uptrend before buying. When a stock is on a downtrend, you never know how low it can go. This is driven by emotional psychology of fear and greed. A stock is on a confirmed downtrend when it breaks below the 200 Day moving average (the red line) and confirms a reversal into an uptrend when it subsequently breaks above the same 200 Day moving average.

CHART Y

If you had known this, you would never have bought at $1.60 when it was on a downtrend. You would wait for the trend to reverse into an uptrend and buy at the NEW POINT A, when the price is $1. Immediately you would have ridden the uptrend all the way up to the top at $2.30. You would have locked in profits and sold when the price cut the 200 day MA & reversed back into a downtrend at $1.90 (NEW POINT B). This would have given you a 90% return in just 15 months!

This is why in my Wealth Academy boot camp, I do not just teach Warren Buffett’s value investing strategy. Instead, Conrad and I teach our students ALL THE INVESTMENT STRATEGIES used by top investors & traders like George Soros, Victor Sperandeo, William O Neil, Philip Fisher and John Paulson. To be a successful investor, you have to learn fundamental analysis, technical analysis, Macroeconomics and sector rotation. When you combine the very best strategies of many investment experts, you take their best ideas and leave out their individual shortcomings.

Just to give you another example of why you should not follow Buffett’s methods blindly. In October 2008, He announced to the press that he was buying American stocks. What he did not know was that stocks were STILL ON A DOWNTREND.

What happened? Stock prices continued to decline 30% over the next 5 months!

So, although Buffett is bravely buying stocks now (i.e. August 2011), I would suggest that you wait for the downtrend to reverse into an uptrend first before you enter the market. In my coming Wealth Academy programmes, this is exactly what I will be teaching my students. Although stocks ARE very cheap now (undervalued), they can become much much cheaper if the downtrend persists!

Another interesting point to note is that Buffett achieved his best stock market performance and made the majority of his money during the 1970s to 2000. At that time, the stock market was on a secular bull market with minor corrections along the way. See chart below.

However, over the last 10 years (and the time to come), stock markets have become extremely volatile, as recessions and crashes get shorter and shorter. Over the last 10 years, we went through the Dotcom crash, 911, Gulf War, Subprime mortgage crisis, Euro debt crisis, Japanese earthquake etc… Look at the chart from the last 10 years below.

Dow Jones 2000-2011

Merely buying and holding stocks may not maximize your returns. In Wealth Academy, Conrad and I teach our students how to use technical analysis to enter only at beginning of major uptrends and to exit at the beginning of major downtrends so they do not have to suffering and hold onto losing positions for years. In this way, they truly maximize their returns.

If you were to just buy and hold over the last 10 years WITHOUT paying attention to the stock chart trends, you would have made only 20% return over 10 years. See chart Z below.

Chart Z

However, if you had entered ONLY during uptrends and exited when downtrends began, you would have made a 55% return in 4 years and another 20% return in 1 year. See chart M below.

Chart M

In January 2009, together with CNA reporter Ryan Huang and Millionaire Trader Conrad Lim, I launched the Book ‘Profit from the Panic- How to Make Your Fortune from the Greatest Financial Crisis Since the great depression’. I then went on Channel News Asia to inform people how cheap stocks were at current levels and that anybody who invested at these distressed price levels would leap great gains once markets recovered.

Within 2 months, the stock market boom began. The US market rallied 90%+ in 22 months while the Singapore STI jumped over 110% in that same period.

My book became a #1 best-seller at Borders and more importantly, my investments made me over $3 million+. More importantly, my students and readers who took action made their fortune as well.

It was NOT a prediction or a guess. It was plain common sense based on the study of the history of stock markets. Over the last 80 years of data has shown that every time stocks plunged from emotional panic, they will eventually recover to much higher levels. Every crisis will end. At the end of every crisis will pave the way for the next financial boom. People who invest in high quality companies at distressed prices would become millionaires when the boom came. “Recessions create millionaires”. In fact, during the last financial crisis, the number of millionaires in Singapore increased by 32.7% because of their investments.

The Panic is Happening Again

On 5 August, the S&P credit rating agency downgraded the US government’s debt and the fear of another recession has sent people to panic once again. In a week, US stocks have plunged 16%, Singapore stocks are down 19% and Hong Kong stocks are down 18%. This is despite the fact that companies earnings have posted record earnings growth. This sell off is purely driven by fear and presents another great investment opportunity to PROFIT from the PANIC AGAIN!

How Do You Profit from the Panic
Those that sell during these emotional panics and STAY OUT OF THE GAME will be the BIGGEST LOSERS. Those that do nothing will be the BIGGEST LOSERS. Those that hold onto stocks of LOUSY COMPANIES will never see them ever recover. Smart investors who buy the stocks of the RIGHT COMPANIES and AT THE RIGHT TIME will have the greatest opportunity to make huge profits when the markets recover.

To make your fortune from this market crash, you have to know…
1) How to choose stocks of high quality companies that will be the first to rebound when the market recovers?
2) Which markets to invest in and which to avoid. US? China? Hong Kong? Jakarta? Malaysia?
3) When is the safest time to get back in?

These are all the insights and strategies you are going to learn at the coming Singapore Wealth Academy Expo 2011 (August 20-21). We have got 9 investment strategist specializing in property, stocks, commodities, options and forex to guide you.

You can still grab your tickets for this must-attend event at www.waexpo2011.com. Tickets start at $99 only.

Be Responsible for Your Own Financial Destiny
I feel the most sorry for the elderly and the uneducated. They will be the ones who suffer the most in recessions and stock market crashes. However, if you are someone who is educated, you owe it to yourself to financially educate yourself. You have no excuse to lose money and to not make huge profits for yourself. I started teaching money skills 7 years ago because I feel it isn’t fair that only 10% of the population gets to become rich. I feel that it isn’t fair that the knowledge of money and investing lies in the hands of a few. All of us deserve to be rich and successful. However, it is up to you to take action and help yourself first. When you can help yourself, be sure to help the elderly and the uneducated with your donation of time, money and knowledge. They need to be helped as well.

This is another inspiring story to prove that anybody can succeed in achieving their dreams if they put their mind to it. No obstacle, no matter how insurmountable, can stop you from being successful.

Meet Laura Sloate, aged 65. When Laura was aged 6, she became blind as a result of an illness that caused her retinas to become detached. When Laura was aged 10, she found her passion…stocks! Her dad who was an investor who would call her in on New Year’s Eve to calculate the value of his portfolio. She says she’d do the calculations in her head faster than he could with a pad and pencil.

She dreamt of becoming a stock analyst and a to make millions from the stock market. Her dream drove her to study hard and despite her blindness, graduated with a Masters Degree in History. While interviewing for her first job as a securities analyst, a research chief at a brokerage firm basically told her to forget about a career on Wall Street. “He said, ‘You have three things against you: You’re a woman; you can’t see; and you’re inexperienced,’ ”

Laura refused to believe it. She says, ‘”Blindness isn’t an obstacle. It just forces you to do things differently.” She proved him wrong. After landing her first job as a stock analyst after many many stinging rejections, she went on to become one of the top stock analysts and investors on Wall Street, achieving a 20%+ annual compounded return from the stock market that turned her into a millionaire.

Today, she manages a $405 million stock portfolio even though she can’t read a stock chart, scan a spreadsheet or look at an annual report. In 1974, she started her own investment firm, Sloate Weisman Murray & Co., She also manages the Strong Value fund, which gained 13% in 2008 despite the stock market’s crash during the financial crisis.

Paying the Price
So, how did Laura succeed despite all the odds stacked against her? How is she able to beat 95% of other stock analysts and money managers who only make 10%+ return a year and lost millions in the financial crisis?

It is because she is willing to pay the price for success and to work 10 times harder than a normal person who can see.

Laura sleeps less than four hours a night. Her day starts at 3:45 a.m. The minute she gets up she “flips on” the paper. Picking up the phone, she dials a number and keys in a six-digit access code. When the call connects, she gets a line-by-line account of stories published by top national newspapers

To keep up her level of energy at fitness (she is aged 65), she starts her exercise at 5:30 a.m. she’s climbing up and down 75 flights of stairs in her Manhattan apartment building. A personal trainer arrives at 6 a.m. to spot her during her workout with weights. The fit 5-foot-6, 110-pound Sloate bench-presses 60 pounds 60 times — in three consecutive supersets. She arrives at her Park Avenue office by 8:30 a.m.

Once at her office, she spends the whole day analyzing the stock market, news and other financial data. Because she’s blind, she uses technology to feed her the information.

She listens to breaking business news that spills out of her PC’s speakers at 320 words per minute. To Check stock quotes, she hits the F3 key on her PC and punches in the symbol ‘C’. A robotic voice responds with a quote for Citigroup, her top holding: “C… Bid … 50 … Point … 5265 … End … Ask … 50 … Point … 750 … End.”

To reading e-mail, she double clicks on a message from a Wall Street analyst dissecting Citigroup’s earnings report released before the bell. The computer reads the e-mail’s content to her . He work ends only midnight, every day! That is how you become the best in the world at what you do, you must be willing to pay the price.

Multi-bagger stocks do not come from investing in established companies, but they exist in the realm of ‘small companies’. When you buy an established company, with a wide economic moat, you can make consistent profits of 15%-25% like Warren Buffett and myself (er…hmm). However, to make multiple returns on your money, you have to know how to pick the right ‘Small Capitalization Stocks’ before they become medium, big and eventually, mega capitalization companies.

One person specializes in finding the stocks of small cap companies before they become famous brands, before they develop an economic moat and before stock analysts and investors even know they exist. His name is Jason Wee (BSc, CFA). While most people make their millions in business (myself included) and real estate and subsequently grow their net worth from stocks, Jason has become a multi-millionaire solely from investing in the stock market!

A Top Equity Research Head and The Trainer of Analysts

At age 40, after making millions for himself and his clients, Jason retired from his position as Head of Asian small caps Research at CLSA (Asia’s leading investment brokerage and investment group). During his final years there, he created three model portfolios for clients which doubled their value within two years! In acknowledgement for his broad experience and ability to sift through thousands of stocks to unearth these rare gems, he was voted the best analyst providing research for Asia’s smaller companies by investors across all three continents (Asia, Europe, US) in the prestigious Greenwich poll in 2005.

Here are some of the leading brands that he identified and bought way before any other analysts recommended it and way before anyone else got in… And more importantly, he knew went to get out before they started getting overvalued and moving down from their peaks.

Golden Agri- Resources
Jason recommended this stock to his clients and bought in at $0.18 in May 2006. The stock climbed to a high of $0.90+ (a 500% return/ 5-bagger)!

Datacraft Asia
Jason recommended Datacraft in 1998 to his clients and bought in at $1.80. The stock climbed to a $8 before he sold for a 400% return/ 4-bagger!

China Overseas Land
Jason recommended this stock to his clients and bought in at less than $ 1.50 in 2004. The stock climbed to a high of $17 (a 1000% return/ 10-bagger)!

Other hugely profitable picks by Jason include Ezra, Olam and Raffles Education ( a 10 bagger.. )

An Opportunity to Learn How to Pick Stocks Like the Pros…

Would you like to learn how Jason identifies, researches and selects these multi-baggers? Would you want to know the ones that he has identified today? Up till now, he only trains other analysts and investment professionals at the CFA program (Chartered Financial Analyst) and gives short talks at the Singapore Stock Exchange, where he has written many of their investment guides.

I am really excited because I have managed to convince him to run a full fledged training program for non-professionals investors FOR THE VERY FIRST TIME in Singapore. Trust me, it was tough to get him to do this as money was not his motivator. I had to promise him something else….

Adam Khoo Learning Centre is really proud to bring the ‘Asian Stock Investor’ programme to you. It will be run from 23-26 September in Singapore. I will be making a guest appearance to cover the basics of investor psychology as well.

What You Will Learn…

These are just some of the things you will learn in the ‘Asian Stock Investor’. You can get more details from our Brochure as well.

1) Advanced stock valuation techniques. Learn how to value all kinds of companies from banks to manufacturing and services companies using in-depth valuation models.
2) How to identify companies before they develop their economic moats and become market leaders
3) How to analyze the most profitable sectors and markets that will growth your portfolio in the next 10 years
4) How to beat professional stock analysts and professional investors at their own game and much more…..

Grab the Opportunity and Take Action

If you want to enhance your investing skills and become a great stock investor, then grab the opportunity and take action by registering (call 65-62740105) for the next preview on 17 August (tues), 7pm at AKLTG training centre, Singapore. If you are afraid all the seats will be snapped up by then, you can also sign up right away by calling my office or emailing daniel@akltg.com

It was great seeing so many of you at the Wealth Academy Expo! We had a sell out event with 1,300 people in attendance. The 2 full days were packed with amazing speakers that were made up of top professional traders/ investors, CEOs, economists, real estate strategists, investment analysts. The crowd got immense value and all the financial knowledge to help them to achieve their financial goals.

We had Fengshui and Bazhi expert Joey Yap talk about how to understand our wealth profile and maximizing our luck; Patrick Liew talking about how to make your fortune from real estate; Keong Hee talking about profiting from the Euro and other forex strategies’ Merry Riana on how she made her first million at the age of 26 despite starting with nothing; Jason Wee talking about how to discover undervalued China stocks etc… For those of you who missed this great event, we are going to be selling the video on DVD really soon. So look out for it.

The Expo also saw the launch of my latest book, ‘Profit from the Asian Recovery’ that I authored with Veteran Equity Analyst and investor, Jason Wee. Over 800+ copies were grabbed in just a few hours. This latest book should be hitting Singapore’s bookshelves in the next few days and will be reaching malaysia, Indonesia really soon. Those of you who are from far away can soon download the ebook version once we get it up.

On Jan 24, I launched my book ‘Profit from the Panic- How to profit from the Worst Financial Crisis Since the Great Depression’. At the time, the US market (Dow Jones) had plunged from 14,000 points to 8,000 points (a 43% decline) and the Singapore market crashed from 3,800 points to 1700 points (a 56% decline). Great companies like Singapore Exchange (SGX), Capitaland, General Electric, American Express etc… were selling 50%-90% below their intrinsic values.

Sentiment in the market was that of FEAR. Very few people dared to buy stocks after losing so much money in the last 15 months since the crisis started. I on the other hand, was feeling really GREEDY for huge profits.

My main purpose of writing the book then was that I knew that the stock market was very much undervalued and that the market downturn was coming near to the bottom (although I did not know exactly when it would be). I also shared the fact that from studying the history of past recessions, what goes down MUST always come up. In the long term, the stock market will ALWAYS recover higher than ever before.

The book was to share with people how I was selecting the best stocks to buy at the time. In the book, I gave lots of ideas such as buying oil futures ETF (USO), S&P 500 ETF (SPY), Dow Jones ETF (DIA) and China ETF (FXI), all 50%-70% down from its pre-crisis levels. I also shared about how I selected super undervalued companies like American Express (intrinsic value of $60) selling at only $16 & General Electric (intrinsic value $30), selling at only $11.

I also talked about buying singapore stocks like Bestworld International (intrinsic value $0.78) selling at $0.19, SGX (intrinsic value $7.60) selling at $5 and Capitaland (intrinsic value $3.60) selling at just $1.90. I said that anybody who wanted to make lots of money had to grab this once in a lifetime opportunity where it was the great Singapore and Wall Street Sale for Stocks.

At that time people thought I was crazy for suggesting to buy stocks while the economy was in a recession. Sure enough, the market kept going lower for the next one month, and I accumulated more and more stocks. What gave me the confidence then? Well, I knew that history always repeated itself and the wise words of Warren Buffett gave me confidence: ‘Be greedy when others and fearful and be fearful when others are greedy’. Buy stocks when nobody else wants to buy and start selling when everyone realizes that it is time to buy.

Then in March 2009, the stock market made a turn and stocks exploded upwards. For the last 4 months (Mar-July) The US Market has risen 41% to 9,200 points and the Singapore market has risen 73% to 2,600 points.

Most of my stock picks have near doubled and some even tripled from when I bought them. Here are some of the gains I have made since then. American Express made +69.23%, Bestworld made +83.33%,, GE made +32% +14%, FXI made +50% etc…a six figure profit in just 4 months. To celebrate, took my family on a long holiday and brought my kids to Disneyland.

The best part is that I am happy that the many people who attended Wealth Academy, bought my books then, had faith in my teachings and took action have benefited tremendously as well. Also, all the royalty proceeds from the more than 10,000 copies sold have been donated to charity.

Many people who have missed out on this great stock market rally over the last 4 months have asked me if it is too late. My answer is yes and no. For some stocks, they are currently a bit overvalued and in the short term, there should be a downward correction.

However, there are still alot of stocks that are hugely undervalued and there is still alot more upside to go. In my upcoming Wealth Academy intensive courses, I am going to teach people how to select the right stocks to buy and which are the ones to start selling. If you want to find out more about these programmes, call my Singapore office at 65-62740105 or my Indonesia office at 62-215747511

I am pleased to announce that my latest book ‘Profit from the Panic’ was officially launched on 20 Jan 2009. Even before the launch, we have had sold hundreds of copies at our pre-launch phase.

‘Profit from the Panic’ was featured on prime time news on Channel News Asia. Check it out here…

We were also very pleased to present the initial royalty cheques to the STRAITS TIMES POCKET MONEY FUND and AIDHA.

As you all already know, 100% of the authors royalties will be donated to these two deserving charities. The ST Pocket Money Fund helps distributes funds to children of low income homes which cannot afford to eat 3 meals a day. AIDHA is a not-for-profit organization dedicated to enriching the lives of low income migrant women through financial education.

Thank you for all those of you who have shown your support by buying this book.

30 Days ago, I posted a personal challenge to write a new book from scratch in 30 days. Well, I just completed it with my two authors Conrad Alvin Lim and Ryan Huang (one of my Wealth Academy students and a journalist with CNA). The book should hit bookstores in 2-3 weeks after printing and production. We have all decided to donate 100% of our royalties to help out the needy in this time of crisis.

Here are some updates about the market and excerpts from the book:

Those of you following the market and news will know that volatility is still extremely high and the market is still on a downtrend, following more bad news every week

* Japan, Europe, Germany and Singapore are officially in a recession. The US is unofficially in a recession

* Unemployment rates have hit new highs

* There are news of layoffs everyday, with Citigroup cutting 55,000 + 20,000 jobs worldwide.

* The Big 3 Automakers FORD, GENERAL MOTORS and CHRYSLER are on the verge of bankrupcty

* More and more banks are failing, the latest victim being CITIGROUP. CITIGROUP’s share price plunged to a low of $3.80 and is now fighting for its survival (after the demise of Lehman brothers and the near collapse of AIG, Merrill Lynch etc…)

* Fear has thrown fundamental analysis and even technical analysis out the window, with US and Singapore stocks trading at such low levels no one could have imagined 12 months ago

* This has truly become the worst financial crisis since the great depression. Things like this happen ONLY ONCE in a 100 years. No one saw how bad this would get, including me!

Currently, The S&P 500 Index is at 828 points down 47% from its highs set in October 2007. Singapore is down 58% (at 1,600 points) and China is down 70%.

(STI chart screen captured from www.shareinvestor.com)

I think many people are asking questions like:

1. Will the market ever recover with everything looking so bad?
2. Which stocks will recover and which will not?
3. How long will the recovery take?
4. The FED is printing money like there is no tomorrow (investing $700 billion into the financial system. How will this effect the US economy?
5. How do I best take advantage of this to build my long term wealth

Let me answer these questions to the best of my ability:

1) No doubt, markets will always recover in time. Although this may seem really bad, it has happened many times before (quoted recently Buffett). IN fact, the US market dived close to 50% in 1974 and 2001 and even crashed 80% back during the great depression. The Singapore market dived close to 70% during the Asian financial crisis. At that time, people thought that things would NEVER recover, but they eventually did and the market went even higher than it ever did before. Economics tells us this will be no different. However VERY FEW people have that kind of foresight to dare to start buying LOW and making their fortune when the market sorts itself out.

So, where will the market go from here? Truthfully, NOBODY REALLY KNOWS in the short term (3-12 months). Some experts say that will be in for a major rally at the beginning of 2009 and the market will move sideways for 2-4 years before staging a new sustained uptrend. Some experts believe that for the market to truly hit a bottom (another 10-20% below where we are now), the market has to go through CAPITULATION.

Many past market bottoms have been created from CAPITULATION (it means ‘surrender’ or ‘give up’). Capitulation is a situation where there is INTENSE MARKET PANIC and the masses sell AT ANY PRICE (frighteningly, this has NOT happened yet). This usually results in a HUGE GAP DOWN or a HUGE DOWN DAY. What this does is that is flushes out all the sellers ONCE AND FOR ALL. Only when this happens will a bottom be reached and a new uptrend can start.

Again, nobody can know when the bottom will be. The good news is that you DON’T HAVE TO buy at the bottom to make money from this crisis. You just have to buy somewhere NEAR the bottom (where I believe we are at now) to position yourself for profits. What I am personally doing is to buy regularly (dollar cost averaging) every few weeks so that I get a low average price.

2) Many people I know are tempted to buy CITIGROUP that has hit a low price of $3.80 (now at $6) or even AIG at $1-$2, believing that eventually, this big brad names will survive and recover. While I was bullish on financials 12 months ago, I have come to realize that the DISCOUNTED CASH FLOW model of valuing companies CANNOT BE APPLIED to financial stocks because of what has happened in this crisis.

The Banks and financial companies WILL NEVER earn the kind of profits they did in the last 10 years. The profitable double digit growth investment banking model has been destroyed by this crisis and so, past earnings/cash flow mean nothing now. Goldman Sachs will never go back to $250 (it is now at $66), AIG will never go back to $70-$80 (now at $1.66) and CITI will never go back to $50 (now at $6). In fact, the truth is that these banks can never realistically pay back the BILLIONS Of dollars loaned to them by the government. They will take 1,000 years to pay it back with interest ( I am not exaggerating here).

So, in my opinion, there is no way to value any financial stocks intelligently right now and that any investment in them is a gamble. For example, a $6 investment in CITI may look great. Although I believe that the Govt will not allow CITI to go bankrupt, they may take over the whole company (in the case of Freddie Mac and Fannie Mae) and wipe out all the shareholders! This means stock price = $0!!!!

The only bank stocks I believe could possibly survive and benefit from this crisis are BANK OF AMERICA and JP Morgan. As for financials, VISA and American EXPRESS are also relatively good investments as they do not suffer from any writedowns.

I think that the best thing to do is to just buy the INDEXES: DIAMONDS (DIA), STI ETF and FXI (China ETF). They are the safest and already offer a huge enough upside. As for individual stocks, look for non-financial stocks that meet the 9 step value investing criteria. You will learn how to do all this from PROFIT FROM THE PANIC

3) How long will the recovery take? Nobody really knows but I believe Singapore and China will recover a lot faster than the US in this case. I am overweight on the first two markets more than the US right now. Check out the chart below and you can see that historically , markets took 3 years to get from the bottom back to their peak!
This DOES not mean you must wait 3 years to make money. If you were to keep buying and averaging down the price at low price levels, you will be profitable in a year or less.

4) The FED printing BILLIONS of dollars into the markets will only mean ONE THING => SUPER DUPER INFLATION and the FALL OF THE US DOLLAR in the years to come. A falling dollar will mean that commodity prices (priced in US dollars ) will go even higher. I believe that although oil prices have come down from their peak of $120+ a low of now $50 (because of recessionary fears), they will eventually go up and up maybe even to $300 a barrel in the next 5 years. You can take advantage of this by buying the OIL ETF, oil related companies or inflationary driven stocks

5) They key to make huge profits from this crisis is to buy the right INDEX ETFs and fundamentally strong stocks whose share prices have been bashed back to the stone age. Learn exactly how to do the right research from PROFIT FROM THE PANIC.

To answer all these questions, I have decided to set myself a CRAZY CHALLENGE of writing a NEW BOOK in 30 DAYS. Usually it takes me 4-5 Months to write a book so this will be super stretch, given the fact that I am speaking every single day and traveling to two countries in a week. But, I believe that anything is possible when you are committed enough.

The book will be entitled ‘PROFIT FROM THE PANIC- ‘How to Protect Your Money and Profit from the Worst Financial Crisis Since the Great Depression!’

Remember that Warren Buffet, Peter Lynch and John Templeton all became billionaires in investing because they bought stocks at super low prices when NOBODY ELSE DARED TO BUY during the 1930s (great depression), 1973-74 (the oil shock crash), 1987 (Black Monday) and 2001-2003 (Dot Com Crash). Well, here is another opportunity of a lifetime… IF YOU KNOW WHAT TO DO

Understand that when the market recovers, NOT ALL stocks will recover. Some will DIE and never come back up. Those that do survive will go on to become more valuable than ever (since they have less competitors around). So how do I choose the right stocks? How do I invest and take advantage of the China Market that is DOWN 70%, the US Market DOWN 45% and the Singapore market DOWN 61%? I will reveal all this in PROFIT FROM THE PANIC

However, unlike all my other books, I am going to be printing VERY FEW COPIES of this book. Why? because the market won’t stay this low and attractive for very long. It is only valuable as long as the market does not recover fully yet. So, I am only going to release this book only when the OPPORTUNITY still exists to buy when the whole world is panicking. After taking 30 days to write, it will still take at least another 30 days for production and delivery to bookstores. let’s see what happens!

BY THE WAY!!!! My latest book, ‘Secrets of Building Multi-Million Dollar Business Has Just Hit All Singapore Bookstores!

What you are seeing now in the market is a PANIC!!!! People who have seen their stock value drop by 50% or more cannot take it and are just selling at whatever price they can.

Hedge funds, institutions and people who have borrowed heavily to buy stocks in the last few months, are not able to meet margin calls and are forced to sell. As individuals run to the banks and withdraw whatever money they have left, mutual funds are forced to sell their stock and raise cash to meet this withdrawls. So everyone is SELLING SELLING SELLING at whatever price they can get.

On the other hand, many people with cash are sitting on the sidelines not daring to buy anything for fear that it can go lower.So what happens when you have got millions of sellers and no buyers? Stock prices plunge like a stone! The Dow (8579 pts) is down almost 40% from its highs and the S&P 500 is down 42% to 909 points. This has happened in the last 12 months since the crisis erupted.

When fear and panic happens and people sell irrationally, fundamentals and intrinsic value are thrown out the window. This is exactly what we talked about during Wealth Academy. This is when good companies get dumped together with the bad. (metaphor: This is when people sell 20,000 square foot bungalows on Holland road for $1m). This happened in the 1920s, 1973, 1987, 2002 and now, it is happening again.

Even stocks that are NOT directly related to the financial crisis are being sold at ridiculous prices. Look at Health Care: UNH (intrinsic value (IV) $53) selling @$17.80 , WLP (IV: $95) selling @$36.50 Technology: AAPL (IV: $189) selling@$88.74 Agriculture: MOS (IV:$81)@$36.52 , POT (IV:$184) selling @$92.85, Consumer Staples: KFT (IV:$40) selling@$27.70.

We all know from history and common sense that the market will eventually recover and go to even higher highs. So, why do people still sell when the market is down? Well, because EMOTIONS always overcomes LOGIC in life, even in the markets.

People always fear that THIS IS THE END!!! It will NEVER COME BACK. Also, sometimes it is because people are forced to sell because they have borrowed money to invest or because they need to raise the cash to pay their expenses. This is why you should NEVER borrow to invest or invest with funds that you need for your daily expenses.

So, if you want to emerge a winner, then stay calm, keep your logic and hold and pick up SOUND COMPANIES which are NOT DIRECTLY AFFECTED BY THE CRISIS, have strong balance sheets (low debt, high cash), consistent earnings and a wide economic moat with a high future growth prospects ahead. Here is where you put all your learning s from Wealth Academy to the ultimate test.

If you can do this, you will be one of the very few (like me) who will PROFIT FROM THE PANIC. However, do BEAR in mind (no pun intended), that I personally don’t think this is the lowest point. There is still lots of possibility that the market will still GO LOWER. After breaking the 9000 support, the next support on the Dow is 7500. Meaning it can still go down another 17% from here. Plus, more banks are probably going to fail in the US and in the UK. The UK crisis has just begun and I see that taking a further toll on the market.

This is however, not going to stop me from accumulating strong stocks at discounted prices and accumulating more as it reaches the bottom in a few months. The most important thing is to focus on fundamentally strong stocks that got hit by the collateral damage and avoid the ones that really got hit i.e. Financials. The market will probably not rebound very fast immediately, it will take months or even years for it to climb back up so no rush.

For those of you who have attending my Wealth Academy Program, I will soon email a list of stocks that I am accumulating right now