For the last several years, I’ve been investing and reading numerous books on stock markets, finance, and investing from non-fiction, biographies, and academics.
During this journey, a lot of my friends ask me they want to learn about the stock market or how should they go ahead with investing?
But it’s difficult to explain this in person every time to different people. It’s more difficult to explain how the stock market works to someone in a few minutes, especially, when that person has developed wrong perceptions about it. If someone who doesn’t know anything about the markets then it’s much easier to explain (it’s a place where businesses are bought and sold). But we’re hard-wired to think that the stock market is a place to make money, become rich or lose it all.
So I decided to compile all my knowledge, understanding, and wisdom of investing in one place, in one book.
You may have been investing in the stock market but in small quantities that it hardly makes any difference.
Or you’ve been investing but haven’t made any significant profits yet.
This is because you haven’t followed the right investment approach. Because whatever game you play in life, you always have to know the rules to enjoy and win it.
Significantly vast majority of people choose only one option in the stock market: The hit-and-trial method to discover whether they can make money in stocks or not.
Investing gives us an opportunity to become rich and achieve financial freedom.
The reason I wrote this guide so that you don’t need to make those mistakes when the timeless wisdom, knowledge, and concepts can be summarized and presented in one place.
With this guide, I have converted the complex process of the Stock Market Into Simple Words.
What’s included in the guide?
Part 1: The Foundation: Building the Right Mindset
- How the stock market works and how to approach it.
There will be recessions, market corrections, and whatnot. Every market participants face this. You want to get there. You want to become rich and wealthy but your goal should be to ensure you’re the coolest and calmest cucumber in the room who is also trying to figure out things instead of panicking.
If you start your journey in the wrong direction, you end up at a wrong destination. This chapter is going to set up a solid foundation in your investment journey on how to think of the markets, how the pro investors think, and will help you remain calm and think differently.
Remember, every seller during a market crash has a buyer. The seller sells in panic and the buyer buys during the panic. One gets the maximum loss and other get the maximum profit.
- Complex financial concepts in the form of a simple story
With the help of a story, I will explain some of the must-know concepts of investing such as DCF, various applications of PE, PEG, PS, ROCE (Return on Capital Employed), Dividend and it’s reinvestment.
- Detailed comparison of various investment options such as gold, real estate, bank deposits, and myths related to the stock market along with inflation.
The extensively researched data will speak for itself.
- Mistakes to avoid that causes huge looses—list of behavioral biases and how to overcome them
We humans by nature are very ignorant, lazy, and biased. The moment we’re born, we’re given a religion and we spend our whole life defending it without doing any research. This clearly indicates there are many biases we hold in ourselves. This is the reason why stock market investing looks difficult and why people end up losing their money. The most important lessons in investing before we proceed with stock selection.
Part 2: Investing
- What to Buy
Our ancestors were pessimistic and hence the majority of the population is too.
Think of it this way. Let’s say you were born 10,000 years ago. You and your friend are roaming in the jungle and you hear a lion’s roar. Your friend is an optimist and says, “don‖t worry, he’ll not find us”. You’re a pessimist and say, “I’m running”. You survived and your friend didn’t. But we aren’t living in the Stone Age. We’re living in the 21st century and it’s the (rare) optimists who win in the long run.
But that does not mean we choose any company. We choose the most conservative approach to invest. Because it’s not about how fast we can make money, it’s about how long we can stay on our course. This is why the stock market has many beginners but very few good finishers.
Hence, here we discuss the time tested criteria to identify highly profitable investments. There are some more concepts that are discussed here.
I also cover extremely important topics such as moat and identifying moat in companies. If you spot companies with strong moat, you basically buy money-making machines that pay you more and more for a long period of time.
- When to Buy
A great company bought at a high price is a bad investment. Everyone knows the price of the stock but nobody knows its actual value.
In this section, we discuss various valuation techniques that you can use to estimate the correct price of the stock to avoid overpaying. I also discuss which technique is used for which type of company.
This is very important as most of the investors miss this point and end up following the crowd and taking huge losses. In other words, they become pessimistic and optimistic and exactly wrong times.
Part 3: Building the Right Mindset Throughout the Journey
- How to Design and adjust Your Portfolio
How many stocks do you need as per your portfolio, the maximum, minimum limit, and portfolio risk. Do you need debt funds in your portfolio? The concept of compounding and concentrated compounding portfolio for individual investors.
- When to Sell and When NOT to Sell
Let’s say, you and your friend identified the next multi-bagger that’ll give you 100 times return in the next 10 years, the likelihood of holding it for the entire duration is very very less for both of you. One 50% drop is enough to convert long-term investors into momentum traders.
The big one in investing is conviction and controlling emotions.
- The Power of Dividends
My favorite part of this guide. Here, I discuss details of how dividends beat salary and ALL other investment options. A completely different outlook on stock markets that most people don’t know about.
As a bonus, I’ve also included tools and screeners to evaluate companies in few minutes without doing any calculations.
How is this guide different from other books out there?
- Most books have one point to make. They make it, and then they give you example after example after example after example, and they apply it to explain everything in the world. One of the reasons why the midsection of each book becomes so boring. I’ve read hundreds of books and I know it.
- This one is a step by step actionable guide on all the aspect of investing.
- It’s an “own your adventure book”. Once you’ve read the book, you can pick up any chapter where you think you are weak and reread. For example, during the market crises, read the “When to Buy” chapter. It’ll guide you and give you the confidence to make the move when everyone else is afraid.
- I’ve covered important financial concepts that are taught in Business Schools. Without those concepts, you’re going to have a very hard time understanding investing.
- This guide is about picking your own stocks as a DIY investor. Because we have no restrictions like a mutual fund manager and if used wisely, you can beat the mutual fund returns easily and consistently.
- I’ve also included various other investment classes and their arguments (for example Gold, Real-estate, Bank deposits, Mutual funds, etc.) that I personally researched in my early years when I was new to the investing world.
- Most people have shallow or no knowledge about compounding. A small 2%-3% extra in the long-term makes a HUGE impact. That’s magic of compounding, covered in this guide. If you don’t understand it, you’ll never know what it is.
A True Guide
Think of it this way. You’re planning to climb a mountain or go hiking and your friend is there to guide you in advance by telling you what to watch out for and what to carry on the climb. By making you aware of the deadly (or silly) mistakes people make and how to easily avoid them.
This definitely gives you an edge over someone trying to figure it out on his own. Right?
Also, this does not mean reading a book will make you an excellent investor. Just like a climber who has to go through that experience and feel it himself. But your mistakes will be far less and you’ll be much ahead in the journey if you were to compete with someone else.
In finance, there’s something called an opportunity cost. I’ve discussed that in Part 1 where people invest in the wrong places and miss out on real opportunities in life. When the journey could’ve been enjoyable, people choose to save a penny to lose a pound.
Is this guide good for beginning investors?
Yes. The earlier you learn and start investing, the better. All the lessons are presented in a layman’s language. In fact, one of the chapters on Mindset I is “Starting Small” which is a motivating chapter for every new investor because all great legends once started small.
Is this guide good for experienced investors?
Yes. If you have already been investing, you will enjoy the guide because of two reasons. 1) I’ve explained a lot of textual (must know, but boring) concepts that are going to help you level up your game of investing. 2) You’ll be able to grasp the wisdom from the Mindset II to build a better portfolio and enhance your wealth-building journey.
Lastly, you don’t need to know high-level mathematics or algebra to invest, all you need is to understand the important concepts that I’ll talk about in the guide. Its going to be an interesting and knowledgeable read. Make sure you read this with full attention. That’s all I demand from you.
Also, I’ve designed this guide in such a way that you’ll not even need to do any calculations manually, I don’t do it myself either. I’ll share how I use the tools and screeners to filter and evaluate companies in an easy way.
What do I get?
You get the digital copy of this guide (E-Book) in PDF format immediately after the purchase. No physical delivery needed.
Click the below button if you’re serious about taking control of your wealth and grab your copy.
Once you’re going through the guide, feel free to contact me if you have any doubts.