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INVESTING
MADE EASY
FOR
NEWBIES
A Basic Value Investing
Guide in the Philippine
Stock Market for
Beginners
Table of Contents
Introduction .................................................4
Why Should You Read This Book .......................6
Your Stock Market Journey Awaits .....................7
Why Should You Even Bother to Invest in the
Stock Market?............................................8
How Can Compound Interest Make You Rich? .. 10
4 Important Things You Should First Do Before
You Start Investing in the Stock Market ........... 12
How Much Money Should You Invest in the Stock
Market? ................................................. 15
Introduction to Value Investing ........................ 18
2 Basic Value Investing Principles That Most
Investors Neglect...................................... 21
How to Look at Stocks the Right Way? ........... 22
How Does a Business Work? ........................ 23
How to Determine the Right Price? ............... 29
Stock Price vs. Companys Value .................. 32
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Introduction
Hi! Im Mark, an Electrical Engineer by profession
and the creator of the Philippine Value Investing Blog
www.investingengineer.com!
When I first started investing, it took me a while to
learn the most common mistakes and failures that
every investor makes.
Learning from the mistakes and experiences of others
has led me to understand what Value Investing is all
about.
Most investors fail to realize the importance of a
value-based approach strategy once they start making
huge losses.
These mistakes came simply because most of them
lack the ability to make accurate estimates of the
stocks intrinsic values.
When I started, I dont have any idea how to make
stock valuations. No one taught me what to do and I
had to figure this out on my own.
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P5,000
P65,000
P20,000
P10,000
P100,000
27
P55,000
P15,000
P10,000
P80,000
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P15,000
P65,000
P20,000
P10,000
P110,000
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P25,000
P5,000
P10,000
P40,000
Total Equity
P70,000
30
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My Final Message
Ive explained in this book the definition of what
Value Investing is all about and how you can value
stocks using two basic methods; the P/E Ratio model
and the Return on Equity model.
Ive also discussed briefly how Warren Buffett finds
companies worthy to invest by looking at a companys
Durable Competitive Advantage.
These methods require a lot of different assumptions
and therefore, are not perfect. But knowing these
kinds of calculations will give you trust and
confidence in making investment decisions. Just dont
forget that investing is more common sense than
elegant mathematics. Dont heavily rely on the figures
that youll get but instead, use them to justify whats
really happening in the real world.
Thank you for the time reading this e-book. If you like
it, please share it to people who you think will benefit
from it.
Happy investing!
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56
Glossary of Terms
Note: All definitions are taken from www.investopedia.com.
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E-book Disclaimer
(1)
Introduction
No advice
No representations or warranties
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(4)
69
Exceptions
Severability
70
Our details
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