Contents
Disclaimer
Acknowledgements
INTRODUCTION
Approaches to Investing in the Stock Market
Debunking Some Myths
Common Investing Errors
3 Steps to Successful Stock Market Investing
The Structure of the Book
SECTION I: SOME FUNDAMENTALS OF INVESTING
1: PERSONAL FINANCIAL AND INVESTMENT PLANNING
Paying Down Your Mortgage Makes Good Investment Sense
Risk Assets vs Non-risk Assets
2: COMMON INVESTING ERRORS
Inappropriate Use of Debt
A Lack of Diversification in Risk Assets
Speculating Rather than Investing
Obtaining Poor Value
Mistaking a Temporary Loss for a Permanent Loss
A Haphazard Approach to Investing in Individual Stocks
3: WHY MARKETS SHOULD RISE OVER TIME
Returns from Risk Assets must be Higher than Bank
Deposits
Businesses First, then Property
Stock Market Indices
4: THE POWER OF COMPOUNDING
The Rate of Return Matters
But Time is Also a Powerful Force in Compounding
5: DEFINING THE LONG-TERM
The Lump-Sum Investor
The Regular Investor
6: UNDERSTANDING STOCK MARKET VOLATILITY
Understanding the Markets
Volatility is Not the Same as Risk
Economic Expansion and Contraction
Corporate Earnings Are Volatile
The Markets are Emotional and Liquid
7: STOCK MARKET AND DIRECT PROPERTY INVESTING: COMPARISONS AND CONTRASTS
The Comparisons
The Contrasts
8: THE PITFALLS IN DIRECT STOCK PICKING
Risk
Coca Cola: Case Study
SECTION II: A TOUR OF THE ASSET CLASSES
9: INVESTMENT CHOICES AND RETURNS
Introduction
Risk Assets and Non-risk Assets
Summary Returns from the Various Asset Classes
Bank Deposits
Government and Corporate Bonds
Equities (Shares)
Commercial Property
Commodities and Precious Metals
Precious Metals – Gold
Hedge and Absolute Return Strategies
Alternative Assets – Timberland (Forestry)
Summary Conclusions
Overall Conclusions
10: BANK DEPOSITS
11: GOVERNMENT AND CORPORATE BONDS
No Income from Developed Market Government Bonds
12: EQUITIES (SHARES)
A Valuation Framework for the Key US Equity Market
13: COMMERCIAL PROPERTY
14: COMMODITIES
Can Commodities be Valued?
15: PRECIOUS METALS – GOLD
The Physical Attributes of Gold
Returns from Gold
16: HEDGE AND ABSOLUTE RETURN STRATEGIES
17: ALTERNATIVE ASSETS: TIMBERLAND (FORESTRY)
Final Note
SECTION III: IMPLEMENTING AN INVESTMENT PLAN
18: WAYS OF GAINING EXPOSURE TO THE
MARKETS
Investing through Funds
Exchange-Traded Funds
Do-it-Yourself (DIY) Investing
The Key Characteristics of ETFs
The Key Promoters / Sponsors of ETFs
The Structure of ETFs
Investment Companies (Investment Trusts or Closed-end Funds)
Characteristics
Other Considerations
19: AN INVESTMENT PLAN: GETTING STARTED
Getting Started
Opening a Stockbroking Account – Savings and Pension Monies
Security of Client Assets
Managing Your Own Pension
20: INVESTING ACROSS THE ASSET CLASSES
Build Your Own Fund of Funds … at Minimal Cost
Investing for Income across the Asset Classes
21: ENHANCING RETURNS: VALUE INVESTING IN THE FTSE 100 INDEX
Make the Stocks Identify Themselves
We Are Not Good at Forecasting
Better Just to Select Stocks by Value
Stock Picking in the FTSE 100 Index
The FTSE 100 Low Price-to-earnings Approaches
Compounding in the FTSE 100 Index
Points to Consider
Some Frequent Questions
Implementing the Approaches in Practice
22: TIMING THE MARKETS
Timing the Markets
Technical Indicators
Dow Theory
The 30- & 50-Week Moving Average Indicators
The Coppock Indicator
Capitulation Indicators: Buying Panic also Pays High Returns
23: THE FINANCIAL SERVICES INDUSTRY
The Investment Advisor and the Client are on Opposite Sides
Fund Managers are not the Problem
The System Needs to Change
The Stockbroking Community
24: 3 STEPS TO INVESTMENT SUCCESS
Putting It All Together
Online Dealing and Independent Advice
25: GILLENMARKETS
SECTION IV: A SHORT STORY
About Virginia Gilbert
26: A VILLA IN THE SUN
Comments on ‘A Villa in the Sun’
APPENDICES
1: Stock Market Valuation Terminology
Determining Value
Case study: CRH plc
Summary
2: Guaranteed Structured Products
3: Calculating the 30- & 50-Week Moving Averages
FTSE AllShare Index Spreadsheet Example
4: Creating Your Own Coppock Indicator Template
FTSE AllShare Coppock Spreadsheet Example
5: Recommended Reading
Value Investing
Growth Stock Investing
Trading / Speculating
Technical Analysis
Hedge Fund Industry
Others
Charts
Figures
Tables
Index
About the Author