Pre-Reading Materials

Please Read This a Few Times Before

Attending the Wealth Academy Program.

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1
 Table of Contents
INTRODUCTION --- --- --- 03
Chapter 1: RATE OF RETURNS --- --- --- 04
Chapter 2: THE POWER OF COMPOUNDING RETURNS --- --- --- 07
Chapter 3: WHAT CAN I INVEST IN? --- --- --- 10
Chapter 4: INVESTING & STOCK MARKET BASICS --- --- --- 14
Chapter 5: UNDERSTANDING INDEXES
& EXCHANGE TRADED FUNDS (ETFs) --- --- --- 22
Chapter 6: HOW TO PICK WINNING STOCKS --- --- --- 27
Chapter 7: THE BALANCE SHEET --- --- --- 31
Chapter 8: THE INCOME STATEMENT --- --- --- 38
Chapter 9: THE STATEMENT OF CASH FLOWS --- --- --- 44
Chapter 10: UNDERSTANDING FINANCIAL RATINGS --- --- --- 47
Chapter 11: THE TIME VALUE OF MONEY --- --- --- 51

Chapter 12: BASICS OF TECHNICAL ANALYSIS --- --- --- 54

Chapter 13: THINK OR SWIM

& CHART NEXUS ACCOUNT CREATION --- --- --- 62

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Introduction

Dear Friend,

Before you begin the Wealth Academy training, it is very important that you begin to
familiarize yourself with the language of wealth, which is finance & accounting.

Remember that if you want to be wealthy, you must study wealth and speak
the language of wealth. Knowing the basics of finance and accounting is not just
necessary for the ‘investment’ aspect of wealth creation, but is necessary in
designing your financial destiny, managing your personal finances and building
multiple streams of income.

The single biggest reason most people fail in managing their money, managing
a business and investing is because they do so blindly, relying entirely on
instinct and dumb luck, instead of the vital financial know---how they need to
make the right decisions!

If you already have a background in accounting & finance, the pages that follow
will seem pretty basic you. If you have zero background in finance and
accounting, then some parts may seem tough going and at first maybe a bit
confusing. You may have to read through it a few times to grasp the ideas or even
consult some of your friends & family but whatever it is, never give up! You have
to stretch out of your comfort zone and believe that you can understand &
master this. Even if you come to the program with some confusing
thoughts…Don’t worry! We will be there to help you.

I look forward to seeing you at the program

Adam Khoo
Master Trainer
TM
Wealth Academy

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 RATE OF RETURN

RATE OF RETURN

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Chapter 1: Rate of Return

There are only two things that can make you money: TIME and MONEY. As
a wealth creator, you must always think in terms of Rate of Return.
How much are you earning in return for the TIME or MONEY you are investing?

What is Your Return on Time?

If you are earning $3,000 for every 180 hour week worked, your rate of return
on your time is $3000 ÷ 180 = $16.67 per hour. To create more wealth, you must
then develop strategies to increase your returns per hour put in. In Wealth
Academy, you will learn how to increase the return on your time through
increasing your value or through the power of scaling your value.

If you are a salesperson who calculates your time to be worth $250 per hour, then
you will be wasting your time doing your own accounts. Why? Because you could
hire an accounts clerk & pay him $12 per hour do the job. By spending time doing
the accounts yourself, you are potentially losing $238 ($250---$12) per hour,
because you could be spending the time getting in sales & generating profits.

By looking at yourself as an asset, you will focus on areas where you generate
the highest return for your hour spent.

What is Your Return on Money?

In investing in assets such as private businesses, property, stocks of listed

companies, bonds, unit trusts etc.., you must again calculate your return
on investment (ROI).

This tells you how fast your money is growing and making you more money.

Return of Investment (ROI) = Net Profit x 100%

Total investment

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5
Rate of return or return on investment (means the same thing) is usually based
on per year period & expressed as a percentage.

The Rate of Returns of Different Asset Classes

Investment Compounded Annual Return Years to Double

(30 Years 1982 – 2012)
Inflation (US) 3.7 %
Inflation (SG) 3.2 %
(1965 – 2005)
Fixed Deposit SG (3---year) 1.5 %
US Treasury Bills (3---mths) 4.5 % 15.3 years
Gold 7.6 % 9.47 years
US Corporate Bonds 6.4 % 11.3 years
Stocks (Dow Jones) 12.35 % 5.83 years
Stocks (STI) 7.91 % 9.1 years

For the last 50 years, the best investments you could have made in are stocks.
They have achieved a compounded annual rate of return of over 12.35% in the US
and 7.91% in Singapore.

12.35% and 7.91% returns quoted are assuming you just passively bought an index
fund (we will talk more about this later) that tracked the US and Singapore stock
markets and just DID NOTHING. This is the complete idiot’s guide to investing and
should be the MINIMUM returns you should be demanding.

With the active portfolio investment strategies you will be learning at Wealth
Academy, your targeted Rate of Return should be between 15%---23%. At 15%,
your money will double in 5 years and at 23%, your money will double in every 3.1
years!

Warren Buffet, the world’s greatest investor has managed to achieve an average
return of 24.7% per year over the last 49 years. $1000 invested with him in 1956
would have grown to be worth $25.3 million today.

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 THE POWER OF COMPOUNDING RETURNS

THE POWER OF
COMPOUNDING
RETURNS

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7
Chapter 2: The Power of Compounding Returns

An inflation rate of 3.2% and a Rate of Return of 12% may seem small in the
short term, but through the phenomenon of compounding, the effect of
money growth is huge over the long term.

This powerful compounding effect can work for you (when you invest) or
against you (inflation and when you owe money).

How Inflation Can Kill You Over the Long Term

3.2% may not seem much. However, what costs $100 now will cost $220 in 25
years. Meaning, your money’s value would have shrunk by more than half!
25
$100 exposed to inflation of 3.2% will be = $100 x (1 +3.2%) = $220 in 25 years.

Think of what a movie ticket cost 20 years ago ($3.50) and what it costs today
($8). Think about how much a bowl of noodles costs today compared to 20
years ago.

How Compound Interest Can Turn Your Savings into A Fortune

Like the way Warren Buffet turned $100,000 into $47 billion by just using
the power of compounding over 49 years, you too can turn your savings into
a fortune.

Compound interest is when the interest earned in a year is added back to the
original principal sum and interest earned on the next year is earned on the
larger principal sum.

Compound interest allows smalls amounts of money to grow into huge

amounts over a long period of time.

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The table shows what $10,000 invested today will be worth in 10, 20 and 30
years if allowed to compound at different rates of return.

Rate of Return 5% 8% 15% 20% 25%

10 years $16,288 $21,589 $40,456 $61,917 $93,132

20 years $26,532 $46,610 $163,665 $383,375 $867,361

30 years $43,219 $100,627 $662,118 $2.37m $8.08m

50 years $114,673 $469,016 $10.83m $91m $700m

In Wealth Academy, you are going to learn the strategies to get the highest rate of
return on your money of at least 15%---23%…without much additional risk

The Rule of 72

To calculate how long it will take to double your money, just divide 72 by the
annual interest rate. For example, a $1000 investment at 15% would double
to $2000 in 4.8 years (72 ÷15).

This means that with the strategies to achieve at least 15% return each year,
you will be able to double your money in less than 5 years.

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9
 WHAT CAN I INVEST IN?

WHAT CAN I INVEST

IN ?

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10
Chapter 3: What Can I Invest in?

Although Wealth Academy will teach you the strategies of how you are going
to invest in the highest returning instruments like Exchange Traded Funds
(ETFs), Stocks and CFDs, it is important to understand the most common
financial instruments people invest in.

Bonds (Also Known as Debt Instruments)

A bond is a debt security issued by a borrower to raise money to finance its

operations. A corporate bond is when a company borrows money from the public &
issues the bond. A government bond is when the government issues the bond.

As a bondholder, you are the lender of money. In return, you receive interest
(coupons) over a specified period of time (e.g. 10 years) and your principal
sum (par value) at the time of maturity.

Bonds are less risky than stocks as their prices are less volatile. However, their
returns are also lower. Also, investors get paid a regular stream of income
from the coupons.

Prices of bonds tend to move opposite from interest rates. When interest
rates rise, bond prices fall. When interest rates fall, bond prices rise.

Stocks (Also Known as Equity)

When you buy a company stock, you become a partial owner of that
company. Each share of stock gives the shareholder partial ownership to that
firm. If you own 10,000 shares (10 lots) of ABC Co. which has 5 million shares
issued. you would own 0.2% of the company.

Owning shares entitles the investor to vote on matters related to the corporate
governance of the company. It also entitles you to share in the income & assets
of the business.

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11
Investors buy shares of stock in a company with the prediction that the shares
will become more valuable as the business’s profits increase and hence it’s
assets. Investors also when the company distributes profits as dividends.

Stock markets consists of stock exchanges that allow investors to buy and
sell their ownership of shares in a quick and easy way. Stock brokers and
stock broking companies help to facilitate the buying & selling of shares.

Mutual Funds (Also Known As Unit Trusts)

A unit trust is an investment scheme where a fund management company

pools money from many investors (thousands), to invest in a diversified
portfolio of assets like bonds and stocks.

The portfolio of assets is managed by a professional fund manager. Unit trusts

allow small investors to tap the expertise of professional fund managers and
achieve broad diversification, although their investments are relatively small.

Index Funds

Index funds refer to a type of mutual fund that invests its portfolio with the
investment objective of tracking or duplicating the movements of a specific
stock index. For example, the Vanguard 500 fund tracks the S&P 500 composite
index (US stock market). At the same time, there are index funds that track the
Singapore STI index.

Money Market Funds

A specialized form of mutual funds that invests primarily in extremely short---term

bonds. Money market funds generally pay better interests than a conventional
savings account, but below what you could get from fixed deposit accounts.

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Fixed Deposits/Time Deposits/Certificates of Deposits (CDs)
All meaning the same thing, this is a specific deposit you make at a bank or
financial institution for a fixed period of time from one month to 5 years.
Interest payments are made at regular intervals until the Fixed Deposit matures.

Exchange Traded Funds (ETFs)

ETFs are index funds or trusts that are listed and traded intraday on an exchange.
ETFs are constructed like Mutual Funds (Unit Trusts), but trade like stocks. ETFs
allow investors to buy or sell an entire portfolio of stocks as a single security.

Advantages of ETFs versus Mutual Funds

Exchange Traded Funds Mutual Fund/Unit trust
Continuous pricing YES NO
Can be sold short YES NO
Can buy on margin YES NO
Can use stop &limit YES NO
orders
Lower expense rations YES NO

Stock Options
A financial instrument, sold by one party to another, that gives the buyer the
right, but not the obligation, to buy (call) or sell (put) a stock at an agreed-
--upon price during a certain period of time or on a specific date. You will learn
a lot more about this in chapter 12.

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 INVESTING & STOCK MARKET BASICS

INVESTING & STOCK

MARKET BASICS

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Chapter 4: Investing & Stock Market Basics

You Can Buy & Invest in the Shares of Public Listed Companies

Many of the largest companies (like Coca-Cola, McDonalds etc) in the world are
public listed companies. This means that anybody can buy shares in these
companies from the stock market. A company’s shares are also known as ‘equity’.

When you buy a company’s shares, you become a part owner of the business.
As a shareholder/owner you have the right to a portion of the company’s profits.

For example, McDonalds Corporation has 1,000,000,000 shares outstanding.

What this means is that the company is divided into 1,000,000,000 parts (or
shares). These are the total number of shares that exist to be owned. If you
buy 2,000 shares of McDonalds, you would own 0.0002% of the company. You
would be entitled to 0.0002% of the company’s profits.

How Do I Make Money Owning Stocks?

1) You May Receive Cash Dividends

So, how do you benefit from your share of the company’s profits? Well as
a shareholder of some companies, you get a portion of the profits paid
out to you in cash every year.

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15
2) Share Price Increases

Not all companies pay out dividends to their shareholders. Companies that
need cash to grow will prefer to keep their profits and to use it to reinvest in
the business. For example, companies like Google, Berkshire Hathaway and
Amazon do not pay out any dividends.

When the company reinvests its profits to grow, it will lead to higher future
sales and profits, making the company’s shares more valuable. Eventually,
the share price will rise to a higher price.

For example, you could have bought one share of Amazon at $120 in January
2010, believing it had huge growth potential. As the company increased its
sales and profits, its share price increased to $268 by January 2013. By selling
your shares at this higher price, you would have made a net profit of $268 -
$120 = $148. Your return on investment would be $148 ÷ $120 = 123%!

Going Long On Amazon

Sell at $268

Buy at $120

Going Long
On Amazon

The concept of buying shares of a company at a lower price in the

expectation of selling it at a higher price is known as ‘Going Long’.
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16
Many Shares Do I Need to Invest In?

For company shares listed on the US stock exchanges, there is no

minimum number of shares you need to buy. You can buy a single share if
you wish. The share of a large and well-known company can be as cheap
as $7 (Bank of America) to as expensive as $650 (Google)

What Is A Company’s Share Really Worth?

Before you buy the shares of any company, you have to have a good
idea of how much the company and its shares are really worth. Are you
buying the shares at a cheap or an expensive price?

In Wealth Academy, you are going to learn the most accurate way that professionals
use to value a company’s shares. In this basic reading material, I am going to show
you a simpler method to tell if a company’s shares are cheap or expensive.

What Is A Company Worth? A Simple PE approach!

Remember that when you buy shares, you are actually buy parts of a
company. So, you have to first understand how companies are valued
before knowing how much each share is worth.

Let me give an example. If I told you of a successful restaurant business, Yummy

Inc that earned $1 million a year in net profits, what is the most you would you pay
to buy this entire company? Would you pay $1m, $3m, $5m, $10m or more?

When I ask most people this question, they would usually say $3 million to
$5 million. That is in fact how much a private company is usually valued at! If
a private company earns $1 million a year, it should be worth at least $3
million! If you pay $3 million to buy the business and you earn $1 million of
profits a year from it, then you should make back your entire investment
within 3 years. Most people think that is a fair deal.

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17
Introducing the Price/ Earnings Ratio Concept

As an investor, you must be very familiar with the concept of ‘Price/ Earnings
Ratio’ or PE Ratio. It is a ratio that is derived from taking the ‘Price’ of the
company and dividing it by the ‘Annual Net profit (also known as ‘Earnings)’

Price/Earnings Ratio = Price of the Company

Annual Net Profits

(Note: PE Ratio is also = Price Per Share )

Earnings Per Share

In this case, what is the PE ratio of the company you are buying?

PE Ratio = Price of the Company = $3 million = 3 times(x)

Annual Net Profit = $1 million

If you are paying $3 million for a company that earns $1 million in annual
profits, essentially, you are valuing the company at a Price/Earnings ratio of
‘3 times’. You are paying 3 X earnings or a multiple of ‘3’.

What Is The PE Ratio of Most Publicly Listed Companies?

So, if the PE ratio of most private companies is ‘3 to 5 x earnings’ (based

on what most people like you and me are willing to pay), what is the PE
ratio of most public companies that are listed on the stock exchange?

Let’s take a quick look at the PE ratios of some well-known companies in

the listed on the US stock exchange (as of June 2012).

Company Stock Price PE Ratio (29 June 2012)

Coca-Cola $77.71 20.64 x
American Express $57.90 13.85 x
IBM $194.64 14.51 x
Apple $577.00 14.08 x
McDonalds $88.31 16.5 x
LinkedIn $106.50 658.75x
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18
You can see that on average, based on the share price, most people are
willing to buy these public companies at a PE of 15 x. This means that for
every $1 of net profit they make, people are willing to pay a share price of
$15! In the case of Coca-cola, investors are willing to pay a price of $20.64
for every $1 of net profit the company makes.

Coca Cola’s Earnings Per Share is $3.77 (the total net profit divided by the
total number of shares outstanding). Coca-cola’s share price is $77.71

So, the PE Ratio of Coca-Cola = Price Per Share= $77.71 = 20.64

Earnings Per Share $3.77

Does this mean that investors are willing to wait 20 years to earn back the
amount they have invested? This does not sound logical, right? Let me explain.

The reason investors are willing to pay a price of 20 times earnings for
Coca-Cola is because they expect Coke’s net profit to increase every year!
For example, if Coke’s profits can increase by 20% every year, then the
investor would earn back his investment fairly quickly. The higher the growth
rate of a company, the higher the PE ratio.

PE Ratio, ‘Earnings Growth Rate’ and the PEG Ratio

A company’s ‘PE ratio’ should be equals to its ‘Earnings Growth Rate’.

When this happens, it means the company is fairly priced.

For a Fairly Priced Company.

PE Ratio = Earnings Growth Rate

This means that if the company’s net profits (i.e. earnings) are growing at
20% every year, the company stock’s PE ratio should be 20 x.

A PEG Ratio is used to determine if a company is expensive or cheap.

The PEG Ratio is derived from taking the PE Ratio and dividing it by the
‘Earnings Growth Rate’.
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19
PEG Ratio = PE Ratio
Earnings Growth Rate (EGR)

If the EGR is 20% and the PE Ratio is 20 times, then the PEG Ratio = 1.
This means the stock is fairly priced.

If the PE Ratio is greater than the EGR, then the PEG ratio will be greater
than ‘1’, meaning the stock is expensive.

If the PE Ratio is less than the EGR, then the PEG ratio will be less
than ‘1’, meaning the stock is cheap.

What Makes Share Prices Change Daily?

You can check out the prices of your favourite stocks at anytime by looking
at stock investment websites ([Link]/finance) and from your
online stock broker ([Link]).

What Makes Share Prices Go Up?

So, what is causing these stock prices to move up and down? The answer
is ‘demand’ and ‘supply’. On a certain day, when people are optimistic
because of some good news (e.g. the economy is reported to grow more
than expected), there will be more people wanting to buy shares than there
are people wanting to sell their shares.

Since there are more people wanting to buy than people wanting to sell, the
optimistic buyers (known as the ‘bulls’) would offer a higher and higher price
to entice more sellers (known as the ‘bears’ to sell their shares. This causes
the share price to be transacted at a higher price. The share price jumps up.

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20
What Makes Share Prices Go Down?
At the same time, what causes share prices to fall? Usually when there is
bad news (e.g. reports that the economy is slowing or that the company
made an unexpected loss), there will be more potential sellers (bears)
coming out than potential buyers (bulls).

In the short-term, stock prices may not always reflect the true value of the
company. In the case of Apple, the stock should be worth at least $820, but
at the time of my writing, the shares are being priced at only $450 because
of negative emotions towards the stock.

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21
 UNDERSTANDING INDEXES AND EXCHANGE TRADED FUNDS (ETFs)

UNDERSTANDING
INDEXES & EXCHANGE
TRADED FUNDS (ETFs)

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22
Chapter 5: Understanding Stock Exchanges, Stock Indexes
and Exchange Traded Funds (ETFs)

The stock market is where millions of buyers and sellers meet everyday to
buy and sell shares of public listed companies. The stock market is like a
supermarket of companies. It has become a virtual market place since the
transactions now take place over the Internet.

Companies are listed on stock exchanges all over the world. The biggest
and best companies in the world are listed on the US Stock Exchanges.

Stock Market Main Stock Exchanges

United States New York Stock Exchange (NYSE)

Nasdaq Stock Exchange
American Stock Exchange

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23
Stock Indexes Measure the Performance of a Stock Market

Thousands of companies can be traded on a particular stock market. In the US stock

market, there are over 10,000 companies being traded over the various exchanges.

How do we know how well a stock market is performing? We use ‘Indexes’ to

measure the performance of a stock market. An index is a small group of stocks
that is used to represent the entire market (or a segment of the market). There
are many indexes that are used to measure different aspects of the market.

US Stock Indexes
There are three main indexes used to measure the health of the US market. The
Dow Jones Industrials Average, The S&P 500 Index, and the Nasdaq 100 Index.

a. The Dow Jones Industrials Average

The ‘Dow’ is an index that is made up of the 30 largest companies in the
entire US market. These 30 companies have been selected to represent
the different sectors of the economy.

The ‘Dow’ price is calculated by taking the weighted average price of these
30 largest companies that include Coca-Cola, American Express, Wal-Mart,
Microsoft, Proctor & Gamble, McDonalds, Bank of America, IBM, 3M,
Honeywell, Boeing, Pfizer etc

b. The S&P 500 Index

The S&P 500 is another index that comprises the 500 largest companies in
the US market. Again, the S&P 500 index price is calculated by taking the
average price of the 500 largest company stock prices. These 500 stocks
essentially represent the entire US market.

b. The Nasdaq 100 Index

Finally, the Nasdaq is an index that represents the technology sector of the US. Most
of the largest technology companies in the US like Google, Apple, Amazon and
Facebook are listed on the Nasdaq Stock Exchange. The Nasdaq 100 index is
calculated by taking the average price of the 100 largest stocks in this exchange.

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24
When all three indexes are rising, the US market is bullish and when
all three indexes are declining, the US market is considered bearish.
In the long-term, stock indexes like the Dow Jones Index and the S&P 500 index
always move higher. However, in the short-term they usually go through ups
and downs and the economy expands and contracts.

Dow Jones Index, 1970-2012

If you study the price chart of the Dow Jones index, you will realize that in the short
term, prices are volatile, going up and down like rollercoaster. However, in the long-
term, the value of the index keeps trending up, making higher highs and higher lows.

The easiest way to make money in the stock market would be to buy ETFs that
track the index and hold it over the long-term. However, we can make much higher
returns in the short-term by buying the strongest companies with the best
performing share prices.
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25
What is an ETF (Exchange Traded Fund)?

Exchange Traded Funds (ETFs) are investment funds designed to track the
performance of an index. The shares of an ETF investment fund are listed on the
stock exchange and you can buy or sell them like any other company’s shares.

When you buy a normal share, you are buying a part of a one company. When you
buy an ETF, share you are actually buying a portion of many companies in the fund.

For example, if you want to invest in the US S&P 500 Index, you can buy shares
of the “SPDR S&P 500 ETF”. By investing in this ETF, you are investing in
shares of the 500 largest & most successful companies in the US market.

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26
 HOW TO PICK WINNING STOCKS

HOW TO PICK
WINNING STOCKS

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27
Chapter 6: How to Pick Winning Stocks

What is the secret to picking winning stocks? As investors, we want to buy

company shares that rise rapidly in price.

There are two ways to analyze a stock’s potential to increase in price. The
a) logical approach and the b) emotional approach.

a) Logical Approach (Fundamental Analysis)

Logically, a company’s share price should increase when the company gets more
valuable. A company becomes more valuable when it is able to increase its
Sales Revenue, Net Profits and Cash Flow. We can determine a company’s
ability to do this by analyzing its competitive advantage, its current sales & profits
and its future growth potential. This is known as ‘Fundamental Analysis’.

Through fundamental analysis, we can determine a company share’s

intrinsic value. In the short term, stock prices go up and down based on
market sentiment (emotions). However, over time, a company’s share price
will tend to move towards its intrinsic value.

Successful investors use fundamental analysis to find companies that have a much
higher intrinsic value than where the share price is today. They believe that the share
price will then increase towards its true value, allowing them to earn a profit.

For example, if you do a fundamental analysis on Google, you would find

that its intrinsic value is $800 per share. Analyzing the company’s profits
and assets will show you that the company is financially strong with high
growth potential and a strong competitive advantage.

When I first bought Google, it’s share price was selling at only $380. Using
Fundamental Analysis (Logic), we would definitely buy the stock at this
price, knowing that it will eventually rise to $800 (or more) in the future.

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28
b) Emotional Approach (Technical Analysis)

In the short-term, the stock market is driven by emotions and not logic.

When buyers get more optimistic and greedy and outnumber sellers, they will
bid prices up. When sellers get more pessimistic and fearful and outnumber
buyers, they will drive prices down. The emotions of fear and greed is what
drives the direction of stock prices in the short-term.

By using Technical Analysis to study chart patterns, we can tell if investors

are getting more and more positive (price uptrend) or more and more
negative (price downtrend). Technical analysis is therefore the study of
emotional patterns that are captured on stock price charts.

Successful investors who use Technical Analysis, buy a stock when it is on

an uptrend. The increased optimism is what pushes the stock price higher,
making them a profit. At the same time, we will want to sell a stock when it is
on a downtrend. The increased fear pessimism will drive their prices lower!

Winning Formula: Fundamentals + Technicals

I have found that the best investors who are able to consistently make
money in both the short and the long term use both Fundamental and
Technical Analysis. They look at both the logic of what a company is worth
as well as the current emotions driving the market.

Fundamental Analysis tells you the potential value of the stock and
Technical Analysis helps you determine when investors feel optimistic
enough to drive the stock to its true value.

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29
 Understanding Financial Statements

Understanding how to read and analyze financial statements is the one

of the MOST IMPORTANT skills that you must learn. Your ability to do this
will not only make you a powerful investor, but it will also allow you to
manage your large company, home based business or personal finances
with better.

In order to analyze a company, there are 3 financial statements to look

at; the ‘Balance Sheet’, the ‘Income Statement’ and the ‘Statement of
Cashflows’.

I can admit that it can be pretty tough going for a beginner,

but hang in there and you will master it in no time!

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30
 THE BALANCE SHEET

THE BALANCE SHEET

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31
Chapter 7: The Balance Sheet
The balance sheet tells you how much a company owns (assets) and how much
it owes (liabilities) at a particular point in time. The difference between the two
is its shareholder’s Equity (Equity). Equity is the value of the money that the
investors own in the company.

Therefore ASSETS (OWN) – LIABILITIES (OWE) = EQUITY

Or it can be expressed as ASSETS = LIABILITIES + EQUITY

It therefore, tells you the financial strength & stability of the company.

A Personal Example

For example, imagine if you bought an apartment for $100,000. You put down a
deposit of $20,000 and took a loan of $80,000. Therefore, your balance sheet
will look like this:

Asset: $100,000 The value of your apartment

Liability: $80,000 The loan you owe the bank

Equity: $20,000 The value of your investment

A Balance Sheet Must ALWAYS Balance

ASSETS = LIABILITY + EQUITY

When ASSETS increase, then (Liability + Equity) must increase to balance it.
For example, in order to purchase a new factory (asset), the company must
either borrow money (increase in liability) and/or get more investors to invest
money by selling shares (increase in equity)

Similarly, when ASSETS decrease, then (Liability + Equity) must also decrease
to balance.

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32
 SUCCESS LTD’S BALANCE SHEET

ASSETS $(millions)
2002 2001
Current Assets:
Cash & equivalents 284 205
Account receivables 842 827
Inventories 644 697
Other current assets 328 369
Total Current assets $2,098 $2,099

Long Term Assets:

Plant, property & equipment 1,874 1,872
Investments 633 337
Intangible assets 90 79
Other assets 415 390
Total long term assets $3,091 $2,770

Total Assets $5,189 $4,869

LIABILITIES $(millions)
2002 2001
Current Liabilities:
Short-term debt 412 458
Accounts payable 315 251
Payroll 137 180
Income taxes owed 173 199
Other current liabilities 449 416
Total current liabilities 1,486 1,503

Long Term liabilities:

Long Term debt 713 507
Other liabilities 913 830
Total Liabilities $3,132 $2,840

SHARE HOLDER’S EQUITY

Common stock 2 2
Additional paid up capital 97 97
Retained earnings 1,958 1,930
Total Shareholder’s equity 2,057 2,029

Total Liabilities + Shareholder’s Equity $5,189 $4,869

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33
UNDERSTANDING ASSETS

There are two major categories of assets. Current assets and Long term
(non-current) assets.

Current Assets
Current assets are assets that are likely to be used up or easily converted to
cash within a year. Current assets include: Cash & equivalents, accounts
receivable, Inventories etc…

a. Cash & Equivalents

This includes how much money the company has in its savings & checking
account. It also includes fixed deposits and one-year bonds that the
company can turn into cash quickly without much price risk.

Having enough cash is a good sign as it shows that the company can easily meet
its monthly expenses and keep the business running smoothly.

However, having too much cash is also bad as it shows that management is
not putting investor’s money to good use where it can generate a higher rate
of return. In this case, a good company should return excess cash back to
shareholders in the form of dividends.

b. Accounts Receivables (AR)

This is the money that is owed to the company by customers who have already
purchased the company’s products or services but have not yet paid. These
[Link] are expected to be paid within 30-90 days, depending on the nature of
the business.

If account receivables are increasing at a much faster rate than sales, it is not a
good sign. It means that the company’s credit policy is too lax & is not efficient
at chasing for and collecting money. Accounts receivables or AR can quickly
turn into bad debts when it drags too long.

c. Inventories
Inventories are important to watch in manufacturing and retail companies. They
include raw materials, partially finished products and finished products yet to be
sold. The value of inventories must be looked at skeptically as its market price is
often way below its value on the balance sheet.
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34
Having lots of inventory lying around for too long is no good because it ties
up cash that could be better put to use elsewhere. Also, the longer the
inventory stays, the faster its value will drop.

Long Term (Non Current) Assets

Long-term assets are assets that are not expected to be converted into cash or
used up within a year. They include property, plant & equipment (PPE), long-
term investments and intangible assets (goodwill).

a. Property, plant & equipment (PPE)

These assets form a company’s infrastructure that includes buildings,
land, plant, machinery equipment and so on.

b. Long-Term investments
This includes money invested in long-term bonds or stocks in other companies.

c. Intangible Assets
Intangible assets include the value of intellectual property (patents, copyrights,
trademarks) the company owns as well as its goodwill.

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35
UNDERSTANDING LIABILITIES

Again, there are two major categories of Liabilities. Current Liabilities and Long
term (non-current) Liabilities.

Current Liabilities
Current liabilities are what a company owes and is due to pay out within a year.
They include:

a. Account payables
These are bills that a company owes to individuals (like staff salaries) and other
companies (suppliers) that are due to be paid within a year. It is kind of like
phone bills and credit card bills we receive each month and are yet to pay.

b. Short-term borrowings
This is money that a company borrows for less than a year. This is usually
made up of an overdraft line.

Long Term (Non Current) Liabilities

Long-term liabilities are what a company owes and can slowly pay back over a
longer period of time. This usually includes long-term debt that the company
borrows from the bank or bonds that it issues to the public.

Leverage- Why Having Some Debt is Good

A company which takes on some long-term debt allows it to achieve greater

financial leverage. For example, by taking on a loan of $80,000, (long term debt)
you will be able to afford an apartment worth $100,000, (asset) although you
only have to put down $20,000 (equity).

If the apartment increases in value by 20% to $120,000, you would have

earned a return of $20,000, although you only invested $20,000. This leverage
allows you to achieve a high rate of return of $20,000 ÷ $20,000 = 100%!

If you had to invest the entire $100,000, then your rate of return would be only
$20,000 ÷ $100,000 = 20%! Therefore, taking on debt allows shareholders to
achieve a HIGHER rate of return on their investment.

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36
However, if a company takes on too much debt and it is not able to pay the
interest and the loan, it can go bankrupt. Avoid investing in companies with
too much debt.

What To Look Out for in the Balance Sheet

The Balance Sheet gives us clues on how financially strong the company is. To
help us analyze this, there are a few financial ratios to look at.

1) Current Ratio

The current ratio measures a company’s ability to pay its short-term debts.

Current ratio = Current Assets ÷ Current Liabilities. Obviously, we would want

the company to have more current assets than current liabilities. So, a Current
ratio greater than ‘1’ is safer.

2) Debt to Equity Ratio

Debt-to-equity ratio measures how much gearing (debt) the company has
taken on.

Debt to Equity Ratio = Total Liabilities ÷ Total Equity. We would want a company
to have more equity than liabilities, so a Debt-to-equity ratio less than ‘1’ would
be safer.

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37
 THE INCOME STATEMENT

THE INCOME
STATEMENT

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38
Chapter 8: The Income Statement
The Income Statement (also known as ‘Profit and Loss Statement’) tells you how
much profits the company is making or losing during a year or a quarter. Below are
the various components of an income statement.

(Note: Income. Earnings & Profit are used interchangeably. E.g. Net Income, Net
Profit and Net Earnings are all the same thing. Figures in brackets represent
negative numbers.)

Basically the formula for determining Net Income is:

Sales Revenue
-Cost of Goods Sold
= Gross Profit
- Operating Expenses (i.e. overheads)
= Operating Income
- Interest expense
+ Interest Income
= Income before
Taxes - Income Tax
=Net Income

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39
SUCCESS LTD INCOME STATEMENT

$ (in millions)
Sales Revenue $5,444
Cost of Goods Sold (COGS) -$2,832
= Gross profit $2,612

Operating Expenses
Sales & marketing -$1000
General & Administrative -$240
Research & development -$300
Deprecation -$57
Total -$1,597

Operating Income $1,015

Interest Expense -$ 27
Interest Income +$ 13
Income before Taxes $1,001
Income Taxes - $322

Net Income after tax $679

No of shares outstanding 215,827,338

Earnings per share $3.15

Earnings Per Share = Net Income after Tax = $679,000,000 = $3.15
No of shares outstanding 215,827,338

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40
Sales Revenue

Sales Revenue represents how much money the company has brought in over the
period. Sales Revenue = Price per unit x Quantity of units sold.

So if the company sold 1000 widgets and each widget was priced at $10,
Sales revenue = $10,000.

Cost of Goods Sold (COGS)

Also referred to as cost of sales (especially for service companies with no actual
goods). This represents all the expenses directly necessary in producing the
goods or services for sale. So this could include certain salaries, raw materials,
supplier costs, wholesale prices of goods etc…

Gross Profit

Gross profit = Sales Revenue – COGS. This tells you how much a company is able to
mark up its product or services over the cost of producing it. It is more useful
when expressed as a percentage, such as Gross Profit Margin.
Gross Profit Margin = Gross Profit x 100 %
Sales Revenue

Look for companies that are able to maintain the highest Gross Profit Margins in
their industry CONSISTENTLY. This is an indication that they have a sustainable
competitive advantage that allows them to charge premium prices and competitors
cannot eat into their profits.

Operating Expenses

Operating expenses (also known as overheads) include fixed running costs such
as marketing, administrative salaries, research & development, depreciation and
nonrecurring charges/gains (also known as extraordinary items)

When analyzing a company’s profitability DO NOT take into account extraordinary

profits or losses as they do not accurately reflect a company’s profitability.

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41
Operating Income

Operating income = Sales Revenue- Cost of Goods Sold – Operating Expenses.

It shows the profit the company made from its actual operations, before
adding/subtracting income/loss from interest and extraordinary items.

Net Income after Tax

Net Income after Tax

= Operating Income +/- Interest income/expense - Taxes

Net Income After Tax is also known as ‘Profit after Tax’ (PAT). This represents the
actual profit the company has made after deducting all expenses.

‘Number of Shares Outstanding’ & ‘Earnings Per Share (EPS)’

As an investor, the most important thing you will want to know is how much of
that net profit (earnings) is actually going to you! How much are you earning per
share that you own.

Why? Because the earnings per share is a primary determining factor to the share
price. Increasing earnings per share usually results in the share price increasing.

It is important for you to know:

c. Earnings Per Share

Earnings Per Share (EPS) = Net Profit After Tax

Number of Shares Outstanding

Earnings Per Share is very important in valuing a company as a company’s

share price is always based on a multiple of EPS.

For example, Success Ltd EPS is $2.78 and current share price is $40. This means
that the share is priced 14.38 times its earnings. This is known as the Price-Earnings
ratio (PE ratio). So if EPS increases to $3, the share price is theoretically valued at:
Share price = EPS x 14.38 = $3 x 14.38 = $43.14

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42
What to Look Out for in the Income Statement
Here is a summary of what to look out for the Income Statement.

1) Gross Profit Margin = Gross Profit x 100% Sales

Revenue

Look for companies with the highest and most consistent GPM in their industry.

2) Net Profit Margin = Net Profit After Tax x 100%

Sales Revenue

Look for companies with the highest and most consistent NPM in their industry

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43
 THE STATEMENT OF CASH FLOWS

THE STATEMENT OF
CASH FLOWS

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44
Chapter 9: The Statement of Cash Flows
A ‘Statement of Cash Flows’ records all the cash that comes into a company and
all the cash that goes out. It tells you how much cash the company actually
generated and how much it has used up over the accounting period.

Besides looking at the Income Statement, It is VERY IMPORTANT to analyze a

company’s cash flow as it will give you a true picture of the company’s profitability.

The difference between the ‘Income Statement’ and the ‘Statement of Cash
Flow’ results because of accrual accounting. In other words, earnings is recorded
when the sale is made, even though cash has not been received. At the same
time, income taxes & depreciation are recorded as an expense, although there is
not need to physically pay out the cash immediately.

A company can show a good earnings report on its Income Statement, but the Cash
Flow tells exactly how much cash was received. Even if company makes healthy
profits, it may still be a lousy investment when customers do not pay up cash or if the
company must plough back a lot of cash for maintenance of plant & equipment.

Without enough cash flow, the company cannot meet its monthly payments and
could be forced into bankruptcy.

The cash flow statement is divided into 3 parts: a) Cash flow from Operations, b)
Cash Flow from Investing Activities and c) Cash Flow from Financing Activities.

In calculating a company’s intrinsic value, we only need to look at the ‘Cash Flow
from Operations’.

Cash Flow from Operations

The ‘Cash Flow from Operations’ tells you how much cash came into the
company as a result of its operations. From the Table below, you can see that the
‘Net Cash from Operations’ was $1,063m.

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45
At the top of the table you can see that Net Income was only $680m. So, how is it
possible that although the company made a profit of $680m, $1,063m of cash
came into the company? Where did the additional cash inflow come from?

You can see that the additional cash came from the following items.

Success Ltd’s ‘Cash Flow from Operations’

Cash Flow from Operating Activities ($in millions)
Net Income $680
Adjustments to reconcile net income to
Net cash provided by operating activities.

Depreciation & amortization +318

Deferred income tax provision +193
Pension contribution -362

Changes in assets and liabilities

Accounts receivable -15
Inventories +53
Other current assets +41
Other assets -25
Account payables +97
Other liabilities +83

Cash from Operations $1,063

(Operating Cash Flow)

What to Look Out for in the Statement of Cash Flows

1) Look for companies that have consistently increasing Net Cash from Operations.

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46
 UNDERSTANDING FINANCIAL RATIOS

10

UNDERSTANDING
FINANCIAL RATIOS

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47
Chapter 10: Understanding Financial Ratios

Financial ratios are used to help you determine the health and
performance of a company.

Earnings Per Share (EPS)

EPS is the net profit earned per share of stock.

Earnings per share (EPS) = Net profit after tax

Total shares outstanding

For example, if Success Ltd 2004 Net Profit After Tax was $126m and
has 150 million shares outstanding,

So, EPS = $126 million = $0.84 per share

$150 million

In other words, each share of stock earned $0.84. If you owned 100 shares, you
would have theoretically earned $84 in profits as a shareholder. This profit is paid to
you as DIVIDENDS or it may be re-invested into the company, causing the share
price to increase. In this way, you earn money through the gains in the stock price.

Knowing a company’s EPS is important as it has a direct relationship t o the

stock price. A company that is able to increase its EPS every year will
experience an INCREASE in its share price. If a company’s EPS is falling,
then the stock price will fall too.

Market Capitalization (Market Cap)

Market Capitalization is the share value of the entire company. It tells you
how much the whole company is worth. In other words, if you wanted to buy
100% of the company, how much would you have to pay?

Answer: Market Cap = Share price x Number of shares outstanding

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48
For example, Success Ltd’s closing share price was $21 per share. So
its Market capitalization = $21 x 150 million = $3150 million.

Companies are categorized into Mega caps, Big Caps, Small Caps, Micro
Caps in the following way.

Mega-cap: Over $200 billion

Large-cap: $10 billion–$200 billion
Mid-cap: $1 billion–$10 billion
Small-cap: $300 million–$1 billion
Micro-cap: $50 million-$300 million

Price to Earnings Ratio (PE)

The Price to Earnings Ratio (PE) is the simplest & most common way to
value a stock.

Price to Earnings Ratio (PE) = Current share price

Earnings per share (EPS)

For example, if Success Ltd’s closing share price is $21 per share and its
previous years earnings (net profit after tax) was $0.84 per share, then
The PE (historical) is = $21 = 25 times earnings $0.84

What does this mean?

PE represents the number of years that it would take an investor to earn

back his investment (share price) in the form of earnings every year (EPS).

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49
In this case, it means that if you buy the share at $21 and that earnings remain at
$0.84 per share every year, you will take 25 years to earn back your $21.

Why would any investor want to wait 25 years, to breakeven?

Because EPS is expected to grow every year.

Return on Equity (ROE)

Return of Equity (%) = Net profit after tax x 100
Total Shareholder’s Equity

For example, Success Ltd made a net profit after tax of $126 million last
year and has a shareholder’s equity of $420m. Then,

ROE = $126m = 30%

$420m

ROE represents how much earnings a company can generate from its capital. The
higher the ROE, the better. It means that it can generate more profits given less
capital. Normally, a company with an ROE > 15% is an excellent investment.

Why is ROE important?

It represents, how fast the company’s shareholder equity base in
compounding annually and hence the long-term annual compounding
rate of return on your investment.

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50
 THE TIME VALUE OF MONEY

11

THE TIME VALUE

OF MONEY

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51
Chapter 11: The Time Value of Money

Would you rather receive $100 today or one year from now?

Of course you would rather receive $100 today. Why? By taking that $100 and
investing it at the prevailing interest rate of 3%, it will be worth $103 in a year.

$100 is known as the Present Value (PV) and 3% is the interest rate

Therefore, Future Value (1 year later) = Present Value x (1+ interest

rate) = $100 x 1.03 = $103
10
Future Value (10 years later)= Present value x (1+interest rate)
10
= $100 x 1.03 = $134

Therefore, a dollar received TODAY is MORE VALUABLE than a dollar received in

the future & a dollar received in the FUTURE is worth less than a dollar received
today.

Therefore, it is necessary, to DISCOUNT money that we will be receiving in

the future when comparing with money we have now.

Example, if a stock were to pay you $100 in two years time, what is the
money worth TODAY?

Present Value = Future Value = $100 = $94.26

time 2
(1+ interest rate) 1.03

$100 to be received in two years time is worth only $94.26 today.

With the Help of a Financial Calculator you will be able to easily calculate Future
Values, Present Values, Payments, Interest Rates and Time Periods. Knowing
this information will enable you to calculate the INTRINSIC VALUE (WORTH) of a
company’s STOCK. You will learn this process at Wealth Academy.

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52
How to Make Money with Fundamental Analysis
Once you have analyzed the fundamentals of a company, how would you use
the information to buy and sell shares in companies?

In general, you would BUY a company stock when it is financially strong (i.e. low
Debt, high Return on Equity, Positive Cash Flow) and has the ability to generate
higher profits in the future (i.e. high earnings growth rate, high sales growth).

You would most important buy a company’s shares if its intrinsic value is much
higher than the current stock price. In Wealth Academy, you will learn how to
calculate this Intrinsic Value by using ‘Net Earnings’, ‘Cash Flow from
Operations’ and ‘Number of Shares Outstanding’.

Similarly, you would SELL a company’s stock if the company’s fundamentals

were weak and deteriorating.

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53
 BASICS OF TECHNICAL ANALYSIS

12

BASICS OF TECHNICAL
ANALYSIS

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54
 Chapter 12: Basics of Technical Analysis
Before you can understand how to read prices on a chart, you have to be familiar
with a stock’s a) opening price, b) closing price, c) day high price and d) day low
price. A typical US trading day starts at 9.30am and ends at 4pm Eastern
Standard Time (EST).

The first transacted price of the day is known as the ‘Opening price’. In the chart
below, McDonalds opening price was $99.70. During the day, prices will go up and
down. The highest price reached during the day is called the day high (e.g. $100.30)
and the lowest price reached is called the day low (e.g. $99.45). When the market
closes at 4pm, the last transacted price is known as the day close (e.g. $99.99).

If the closing price is higher than the opening price, it is known as a ‘Bullish Day’. If
the closing price ends up lower than the opening price, it is known as a ‘Bearish
Day’.

Chart 3.1: An Intraday Chart of McDonalds on 17 Feb 2012

Day High
$100.30

Close
Price
Open $99.99
Price
$99.70 Day Low
The Line Chart
$99.45

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55
The Japanese Candlestick Chart
The most common type of chart used by professional investors today is known
as the Japanese Candlestick Chart.

Candlesticks tell us the opening, closing, high and low prices during the each
trading day (or weeks/months).

Candlestick Chart of Exxon Mobil from Feb 2009-Nov 2011

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56
Reading Prices On The Candles

Charting software allows you to look ar daily, weekly or even monthly candles. In
this case, we are looking at daily candles over a period of 2 years. Each candle
represents one trading day.

A bullish (white) candle is shown when the day’s closing price is above the day’s
opening price. The bottom of the candle’s body shows the ‘Opening Price’ and the
top of the body shows the ‘Closing Price’. The line protruding line at the top of the
candle is called the ‘upper shadow’ and shows the ‘high price’ of the day. Similarly,
the lower shadow shows the day’s low price.

Chart 3.4: Bullish and Bearish Candles

A bearish (red) candle is shown when the day’s closing price is below the day’s
opening price. This time, the top of the candle’s body shows the ‘Opening Price’
and the bottom of the body shows the ‘Closing Price’. The upper and lower shadow
still represents the day high and the day low price respectively.
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57
Identifying Stock Price Trends

As earlier mentioned, it is almost impossible to predict the emotions of the

market on a day-to-day basis. However, when you look at the patterns of prices
on a stock chart, it is possible to tell if the market is getting more optimistic about
a stock, more pessimistic or simply uncertain.

Price Uptrends
When the market gets more and more optimistic about a particular stock (or
index), it is creates an uptrend pattern.

An uptrend is characterized by a series of stock prices making higher high points

and higher low points. On an uptrend, stock prices still go up and down. However,
every time prices go down, they move up even higher subsequently.

Chart 3.5: Stock Price On An Uptrend

Higher High Points

Higher Low Points

When a stock is on an uptrend, it means that investors are getting more

optimistic about it. This causes upward price momentum that drives the stock
higher and higher.
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58
Only buy a stock when it is on an uptrend because the probability is that it will
keep going higher.

Price Downtrends
When the market gets more and more pessimistic about a particular stock
(or index), it creates a downtrend.

A downtrend is characterized by a series of stock prices making lower high points

and lower low points. On a downtrend, stock prices still go up and down. However,
every time prices go up, they move down even lower subsequently.

Chart 3.8: Stock Price On A Downtrend

Lower High Points

Lower Low Points

When a stock is on a downtrend, it means that investors are getting more and more
pessimistic. As a rule, I never, ever buy a stock when it is on a downtrend.

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59
Consolidation: The Sideways Trend

Stock prices also go through periods of consolidation. This means that the
stock price moves sideways between an upper and a lower range. In the chart
below, LVS’s stock price is consolidating between $37 and $49.

The stock will ultimately break out of this consolidation patterns in either an
upward (uptrend) or a downward (downtrend) direction.

As long as a stock is stuck within a consolidation pattern, there is no point in buying

the stock. Even if the price rises, it will likely hit the upper price range (known as the
resistance line) and reverse back down to the lower price range (known as a
support line). You have a better chance of making a profitable investment only
when the stock price breaks out of this range.

Price In Consolidation
Wait for The Price to Breakout
Of the Range Before Making a
Longer Term Investment

RESISTANCE LINE

SUPPORT LINE

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The best time to buy a stock is when the share price breaks above the resistance
line and out of the consolidation pattern. In the chart below, you can see
resistance level at $34. The moment the stock was able to break above this level,
the buying pressure drove the stock into a new uptrend. A great buy entry would
have been at $35.

Walt Disney (DIS) Breakout

New Uptrend
Buy when Stock
breaks above
the resistance
line

RESISTANCE LINE

SUPPORT LINE

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61
 THINK OR SWIM & CHART NEXUS ACCOUNT CREATION

13

THINK OR SWIM &

CHART NEXUS
ACCOUNT CREATION

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62
 TD Ameritrade (ThinkOrSwim) Account
*NOTE* Creation
It is not compulsory to create a new email account if you already have an existing email
account.

However, if you do not wish to mix your trading matters with your personal and work mail, we
encourage you to open a new email account just for your trading matters.

If you open a new account, you may want to name the user ID as: traderjohntan or traderjohnjt.
(For all your trading addresses, identities and such, it is always best to keep a standard name
for easy reference.)

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63
Open a TD Ameritrade (ThinkOrSwim) trading account.

You do not have to fund it. You will be required to submit some documents to confirm the
account but will not be required to fund it in order to use its tools.

This TD Ameritrade (ThinkOrSwim) account is for demo and workshop purposes only.

To start,
Simply go to:
[Link]

Click On >Try Virtual Trading

Click on ‘Try PaperMoney’

*Fill up all the required fields.

Tick on the following below:

Tick on the following:

• Individual Margin
• I want to apply for futures
trading
• No

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64
 If you open a new account, you
may want to name the user ID as:
traderjohntan or traderjohnjt.
(For all your trading addresses,
identities and such, it is always
best to keep a standard name for
easy reference.)

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65
After clicking submit, IGNORE and CLOSE your tdameritrade page
(DO NOT FILL UP registration step 2 – 5)

Next, proceed to the email account that you have registered with and check for the email that
TD Ameritrade has just sent you.

If you have registered with your gmail, proceed to your email.

You should see this:

The email will look something like this:

Click on the ‘CLICK HERE’

tab to get auto directed back to TD
Ameritrade website and it shows your
email address has been successfully
validated.

After clicking on the ‘CLICK HERE’ link, you will be directed to this page.

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Viola! Your account has been set up!

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67
To download the Trading Platform, go to:
[Link]
You should see the page as shown below:

Click on the ‘Install ThinkDesktop’

tab to initiate the download.
You may want to save the file in
your desktop before installing.

* Do note that for different Operating System, you will have to click on different installation tab.
For Mac OSX & Linux, do scroll down to find your installation file.

After completing the download, start by double clicking on the file to run it. You will see the following
pop-up after running it.

After completing the installation, you can start logging in to your paper trading account.
Your ThinkDesktop has been set up!

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68
Locate your installed application and turn it on.
You may see this screen with UserLogin & Password:

Login with your UserID & Password

*Optional:
Click on the setting button to change your Color
Scheme & Font Size.

Update Your Java System

Click on “Free Java

Download” to update
your latest java
system.
Simply go to:
[Link]
nload

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69
 Chart Nexus Account Creation
Instructions for installing Chartnexus

STEP 1: Start by going to the following URL to download Chartnexus into your
computer: [Link]

STEP 2: On the bottom left of the website, please click on the button below that
shows “Download Now”

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70
STEP 3: You are required to install JAVA on your computer, please click on
“Java Download” and follow the remaining steps. If you already have JAVA,
please click on “Next”

STEP 4: Select your operating system from the dropdown box and click “Next”

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71
STEP 5: Right-click on the Download Setup, then choose "Save target as..." Or
"Save link as..." to save application to Home Screen or Desktop..

STEP 6: Go to your desktop and click on the “Chartnexus_Setup” icon.

STEP 7: Click on “Run” to install the program.

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72
STEP 8: Once the program starts, a pop-up will be shown, click on “Register a Free
Account”.

Step 9: Enter your Login details. (For Primary Market, as a Malaysian please
choose KLSE)

Select “KLSE” as
your Primary
Market

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73
Step 10: After you’ve completed the registration, please click on “I accept” at
the bottom of the form.

STEP 11: At the end of the registration, you will be prompted to go to the email
account to activate your ChartNexus account.

81

Congratulations! You have installed Chart Nexus successfully!

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74
Dear Wealth Academy™ Participant,

Your Journey Into Greater Wealth Has Just Begun…

Congratulations in completing the Wealth Academy™ Pre---Reading

Materials. We strongly believe that after reading through the entire
contents of this booklet that you now have a better and clearer
understanding on the basics of finance and the language of wealth.

For those who still find certain terminologies and explanations confusing
despite reading through the Pre---Reading Materials a couple of times.
Fret Not!! This is perfectly normal as even some with financial background
might find it tough. Most importantly is your desire to learn, to get the
best financial education for yourself and become financially free in the
process!

Do keep all your burning questions in mind as you are now just one step
closer to beginning your Wealth Academy Training Journey with us. Take
care, stay safe and we will see you at the Wealth Academy™ Programme.

Reach For Your Dreams

Adam Khoo

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75