Table Of ContentContents
Foreword
Preface
Acknowledgments
Chapter 1: The Making of a Value-Growth Investor
The Common Journey of New Investors
Short-Term Trading to Long-Term Investing
Growth Investors
Value Investors
Value Investors versus Growth Investors
Value-Growth Investors
Warren Buffett’s Journey
Value-Growth Investors
Definition of Growth Companies
Common Misconceptions about Growth Companies
Why Value-Growth Investing?
Summary
Chapter 2: The Secrets of Successful Value-Growth
Investors
Healthy Thoughts Lead to Sustainable Results
Summary
Chapter 3: The Jigsaw Puzzle—Four Pieces to Value-
Growth Investing
The Jigsaw Puzzle Model
The Art and Science of Investing
Looking for the Right Information
Information Released by the Company
Information from Outsiders
Summary
Chapter 4: Business—The First Piece of the Puzzle
Understand a Company’s Business Model
Simple Business
Circle of Competence
Going Beyond the Limit
Competitive Advantage
Knowing the Competitors
Think Like a Customer through the Scuttle-Butting Process
Finding Future Growth Drivers
Understanding Risks—What Can Go Wrong?
Summary
Chapter 5: Management—The Second Piece of the
Puzzle
Management Forms the Cornerstone of a Business
Criterion 1: Trustworthiness
Criterion 2: Candid in Reporting
Criterion 3: Aligned with Shareholders’ Interests
Criterion 4: Track Record/Experience
Criterion 5: Visionary Managers
Summary
Chapter 6: Numbers—The Third Piece of the Puzzle
Numbers Do Not Lie
Numbers to Look at When Reading the Income Statement
Numbers to Look at When Reading the Balance Sheet
Numbers to Look at When Reading the Cash-Flow Statement
Summary
Chapter 7: Valuation—The Fourth Piece of the Puzzle
The Valuation of a Stock
Price-to-Earnings Ratio
Price-to-Earnings-to-Growth Ratio
Discounted Earnings Model
Margin of Safety
Summary
Chapter 8: Screening—Buy—Monitor—Sell
Screening (Using Numbers against Competitors)
Buy, Monitor, and Sell
Buy, Buy, and Buy
Monitor, Monitor, and Monitor
Sell, Sell, and Sell
Summary
Chapter 9: Portfolio Management for Growth Companies
Understanding Your Portfolio
Types of Diversification
The Sky Is the Limit
Summary
Chapter 10: Avoid Common Mistakes
The Dos and Don’ts of Investing
Summary
Chapter 11: Case Studies and Conclusion
Bibliography
About the Authors
Index
Cover images: magnifying glass © Burazin/Getty Images; bar charts © Erik
Dreyer/Getty Images Cover design: Wiley
Copyright © 2013 by John Wiley & Sons Singapore Pte. Ltd.
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Foreword
After reading this book, you might come away with the feeling that Victor and
Rusmin have seriously pounded Singapore’s pavements in search of value-
growth companies. Not only have they traveled East Coast Parkway to Changi
Village and back to the central business district (scouring for value companies)
in Singapore, but they have also been out to Woodlands to check out its
industrial zone. Bottom-up investing is all about discovering a company’s value
early, getting its stocks well before the crowds, and exiting (hopefully with a
profit) as mainstream investors move in and push up the valuation. Typically,
these sorts of opportunities are found within second-and third-line stocks rather
than well-known blue chips. It is a long-term strategy that requires discipline and
patience, on top of a robust system, to have a reasonable chance of success.
Despite their differing backgrounds, Victor and Rusmin have merged paths,
and value investing has become their common identity. In my opinion, it takes
guts to write a book in the first place, but talent to write about a process that has
merit and can be empirically tested over time to add value.
This book provides for an entertaining read that takes you through a system
that, if followed closely, should help you identify quality stocks and reject
unfavorable ones. There is, of course, no guarantee that following this system is
a sure recipe for instant riches. However, it certainly provides a comprehensive
check that would help you avoid investing in dud stocks and steer you toward
those with solid fundamentals and decent rerating potential over time.
After reading this book, it will serve as a ready-to-use reference. The
techniques outlined herein are timeless and can be referred to over and over
again as you make progress in your investment journey. This is an enlightening
read, and thoroughly enjoyable for those interested in learning about value-
growth investing and starting their investing journey.
Digby Falkiner
Former Indonesian Research Director at Deutsche Bank Former Regional
Research Operations Head at Societe Generale Private Investor and Lead Trainer
for Millionaire Investor Program Advanced
