Chapter Takeaways

Chapter 1

Introduction   

What this Chapter covers

Why we, too, can, and must build our own wealth.  It is our responsibility! A gift to ourselves. Not the priority of anyone else.

Other takeaways

  1. What is wealth?
  2. Our wealth. Whose responsibility?
  3. What are the two powerhouse building blocks of wealth?

Chapter 2.

Putting Stock Market Investing into perspective

What this chapter covers 

This chapter uses two historical illustrations to demonstrate that, just buying the shares of a good dividend-paying company and leaving them to the two powerhouses of wealth accumulation (Compounding & Time, as measured in decades) can make anyone look like an investing genius. Microsoft, which everyone in the world knows, and The Bank of Nova Scotia Jamaica Ltd (now trading as Scotia Group Jamaica) which mostly only Caribbean readers know, are used to illustrate the power of the stock market in building wealth for investors while the sleep peacefully at nights. 

Other takeaways

  1. Stock market investing not as easy as breathing but…
  2. The lessons from the two companies?
  3. Who will be the next Microsoft (from among the Disruptors?)
  4. Who will be the next Bank of Nova Scotia Jam Ltd (one from the Junior market or a re-invigorated oldster?)
  5. What is Compound Annual Growth Rate (GAGR)?
  6. How can the concept CAGR be used to improve one’s investing prospects?

Chapter 3.

How to prepare to start building inter-generational wealth through the stock market 

What this chapter covers

A sound philosophical basis for becoming an investor 

Other takeaways

  1. Investment Objective
  2. Investment time frame
  3. Six Mindsets to succeed in building wealth in the Stock Market

Chapter 4

Why are more of us not wealthy too? 

What this chapter covers 

This chapter goes in search of why so many of us are financially poor. We should never have been but, according to Reid Hoffman, LinkedIn Co-founder & Airbnb Investor, “The vast majority of the human race are not good at imagining the upside. They think of risk first.” Also, according to the Credit Suisse Global Wealth Reports 1% of the people on the planet own more than 50% of its wealth because, they see opportunities among the challenges that the rest of us don’t. It advocates the re-wiring, and remedial-education of our minds, to see the ‘diamonds among the stones’.

Other Takeaways 

  1. It’s a mind-set you have to cultivate if there isn’t a legacy of wealth creation ‘in your family cohort’ 
  2. Developing one’s own vision
  3. ‘Failure’ as a component of the success formula
  4. Dream BIG and re-imagine and re-purpose your future
  5. Don’t just move the needle on wealth! Become the needle

Chapter 5.

Could it be the ‘Poverty’ of our Education System?

What this chapter covers

In respect of entrepreneurship and family wealth, most ‘Education Systems’ have not been helpful. Generally, we were mostly ‘trained’ to become workers and follow orders. Not free-thinkers, entrepreneurs and wealth builders. It’s time we change this imposed status. Ourselves! Time to start becoming aware of our ability to ‘step up ina life’ (Jamaican expression) by creating our own wealth, using either the tools at hand or, creating new ones where none previously exist. Just like the wealthy do through the stock market and other avenues.

  1. The responsibility for our own wealth status is ours. Not anyone external to us
  2. Forget that ‘by the sweat of thy brow’ narrative
  3. Who ‘educated’ you? 
  4. And for what purpose?
  5. Needed: A transformational mind-shift to turn our ‘education’ on its head so that it teaches us to think, to be curious, creative, and to want to build better ‘mouse traps’ for ourselves and the world 

Chapter 6.

Dispelling some of the myths of the stock market

What this chapter covers

It is almost true, but not quite so, that the language of the stock market was designed to obfuscate and confuse!

It is not true that the market is mostly rigged by gangsters and or wealthy investors to keep out others. Like the work that most of us do, the market relies on known principles and strategies and, anyone who can tell if the amount in his or her pay envelope is correct, already has most of the smarts to be a successful stock market player. Get this upfront. Successful investing is a long-term process, a marathon. It is not a sprint like Usain Bolt’s 100m race or one-shot event like throwing a dice in a game of chance.

Other Takeaways

  1. You, too, can understand it. Just disregard the hype
  2. You can know what to buy 
  3. You can know when to buy
  4. YOU can know how much to pay for it
  5. You will know where to go for help and guidance once you make up your mind to become a stock market investor 
  6. John Jackson’s columns of the 1990s will help

Chapter 7.

A basic introduction to stock markets                 

What this chapter covers 

This chapter covers most of the basics of the market, answers some questions for potential investors like you and shows the similarities with markets in general and how this type differs in some important respects. 

Other Takeaways

  1. It calls the stock market one of man’s best innovations
  2. shows how you can use it to put money at work, and
  3. introduces many of the concepts that drive successful investing

Chapter 8:

Knowledge, they say, is power (but don’t let the lack of it frighten you!) 

What this chapter covers

It speaks to the impact of market information, how, and from where to get it, how to use it, and, how to manage the investing process if you do not possess the knowledge yourself, yet! Still, what they say is true. ‘Knowledge is power’! Even a little bit can be very helpful in anything that we do. But, to get the stock market to work for you, does not mean you need to be the expert yourself. However, in building your own knowledge base, so that, eventually, you can make your own stock selections, the following are some concepts you are strongly encouraged to understand 

Other Takeaways

  1. know the transformational concepts of wealth creation, 
  2. know from where, and 
  3. from whom, to access the general and specific information to make better investing decisions including understanding of other concepts such as market indices, Dollar-cost-averaging, and the Rule of 72 

Chapter 9.

Some avenues through which to seamlessly build your stock market investing knowledge base

What this Chapter covers

Sources of actionable stock market reportage

Other Takeaways

  1. Nightly radio and TV news reports
  2. Stock market page in most newspapers that carry many very good stock market commentary
  3. Free subscription to webpages of many brokerages who anticipate that if you use their free offerings, you will be impressed enough to seek their professional advise
  4. Stock market seminars
  5. Subscription investment magazines
  6. Subscription stock market selectors
  7. Stock market Investment books
  8. Wide range of free investment apps for mobile phones

Chapter 10:

How to do basic evaluation & performance comparison as a new investor 

What this Chapter covers

In Chapters 7-9 we focussed on building what is called  your ‘knowledge base’. This chapter is to strengthen your awareness, skills and competence level in understanding how the market works. It  is designed to enable you to start selecting your own companies in which to invest in as short a time as possible. Your experienced RIA might dazzle you with his superior training and skill with tools like Discounted Cash Flow and other valuation metrics. That is his job.  As a new investor just ‘learning the ropes’, I want to introduce you to some of the basic measuring tools and, in this Chapter, we will look closer at indexes, other metrics and performance values that you can use as guides. Still, remember that my basic recommendation stands supreme. That is, you should start off as an investor with the help and mentoring of your Registered Investment Advisors (RIAs) 

Other Takeaways

  1. Importance of historical performance values
  2. On building a relationship with a brokerage
  3. More on Compound Annual Group Rate (CAGR) and its importance 
  4. Not everything that glitters is gold 

Chapter 11:

What is inter-Generational Wealth?

What this Chapter covers

This chapter offers a definition of Inter-Generational Wealth and looks at:

  • some of the most important factors impacting it
  • some families (with it) as a basis for conveying the concept, and
  • invites you, my reader, to incorporate the concept in your own family for a better financial future

Key takeaways

  1. What is it?
  2. How to encourage it in your family
  3. How to pass on the wealth to family and institutions like schools, universities, libraries and others that promote the welfare and wellbeing of others

Chapter 12:

How, or where, does family wealth begin?

What this chapter covers

The objective of this book is the inauguration of inter-generational wealth building strategies in the family of every reader. In this chapter, we take one perspective on how this kind of wealth starts and look at some of the families who have laid down some templates.

Key Takeaways-Families who epitomizes inter-generational wealth

  1. Ten of the wealthiest families in the world (in OneDrive)
  2. Some other families whose legacy of wealth lives on

Gleaner company Jamaica…… ………….1834

Proctor & Gamble…………..………………..1837

Johnson & Johnson……….………………….1886

Coco Cola……………….………… ..started 1886

Fords…………………….………………………….1903

Caterpillar………….…….………………………1925

Walmart …………….. ……….…………………1950

Chapter 13

What does the stock market have to do with the family wealth?

What this chapter covers

 This chapter shows how the stock market can be used to generate family wealth and gives some examples of the link between the two.

Key takeaways: How other families build wealth through the stock market

  1. The Davis Dynasty
  2. Berkshire Hathaway
  3. The Waltons

4. The Rockefellers

Chapter 14

How does the stock market create wealth for investors?

What this chapter does

In this chapter, the stock market is called the 8th Wonder of the world and an explanation cum justification is given for this description. The justification is the power of compounding inherent in it and the multiplying value of time (as measured in decades).

Key Takeaways

  1. Twelve (12) illustrations from the major US Market from their IPO to the last trading day in 2017.

2. Twelve (12) illustrations from the Jamaican market over 30 years of tradingfrom Dec 1987 to Dec 2017

3. Ten (10) illustrations of 10 small stocks that grew by hundreds of percentage points over 10 years

4. Impact of time on compounding

5. Impact of Rule of 72

6. CAGR: Measuring investment compounding and time (as measured in decades) at work

Chapter 15

What are dividends?                                                  

What this chapter covers (SEC 1934 about dividends)

‘a bird in hand is better than 2 in the bush”

This chapter explores most of the features of dividends about which every investor should be aware (whether new or existing)

Takeaways

  1. Dividend as refund on purchase price
  2. Reward for being a part owner of company that pays it
  3. the multi-dimensional impact of dividends in portfolio growth and value,
  4. Dividend yield
  5. Cost per dollar of dividend (especially for retirees)
  6. How it highlights outstanding companies,
  7. How it provides an income stream to investors and how those investors can use it to grow their wealth over time (DRIP).
  8. The dividend Aristocrats in the American market
  9. The dividend Kings
  10. Dogs of the Dow
  11. JSE: Dividend yield of main market 2018
  12. JSE: Dividend Yield of Junior Market 2018

Chapter 16

One Hundred years of dividend payment

What this chapter covers

Key takeaways

Twelve American companies which have paid unbroken dividends for more than 100 years

Chapter 17

Are there any principles or strategies that impact, or guide the operation of the stock market?

What this chapter covers

It expands on the two fundamental, transforming, and game-changing concepts of Compounding and Time (as measured in decades) and uses examples from earlier chapters to illustrate these two principles

Key takeaways

Chapter 18

Anything special to know about the market before getting involved?

What this chapter covers

This chapter explains that

There are no guarantees in the stock market

Key Takeaways

  1. poor judgement on one’s own part or

2. poor judgement on part of wealth advisor

  •  explains why and
  • offers suggestions on many strategies that investors can use to mitigate the absence of said guarantees
  • Understanding the concept and impact of Total Returns (S&P500 1925-2015)
  • Understanding the concepts of alpha, beta and correlation
  • Understanding the concept of Relative strength index
  • Understand the concept of volatility
  • Understand the concept of bull and bear markets
  • Understanding the concept of diversification
  • Understanding how dividends can be used to grow share count and investment value (DRIP)

Chapter 19

How should you prepare yourself for becoming a stock market investor?

What does this chapter covers?

This chapter emphasizes a critical and commonsense similarity between stock market investing and many of the things we do for our livelihood. For example, every career or occupation has a training or apprenticeship component where ‘greenhorns’ get introduced to the principles and strategies they should grasp to perform optimally in their job. It posits that, as a prospective investor, you should bring the same mindset, i.e. prepare yourself, though not necessarily by going to formal classes. It’s somewhat like driving your car. You need not be the expert mechanic to fix it but at least, you must have an idea of the parts that make up your car and the interlinkage between each.

Key takeaways

  1. Start with a good reason, basic grasp of market fundamentals & long-term perspective
  2. attend free and paying seminars
  3. read free financial/investing press
  4. Subscribe to selected investment magazines
  5. Read some recommended investment books
  6. Select from among these Apps for financial news and education
  7. From where will investable funds come?
  8. Know your risk profile
  9. Revisit Evaluation metrics
  10. More illustrations with evaluation metrics/CAGR/RSI/Beta
  11. The importance of stock market records; standardized or you own creation. (See those saved in OneDrive)
  12. Importance of the Beginning and Ending “Contract Notes” for DRIP A/Cs (See in OneDrive)

Chapter 20

What kind of investor should you aim to become?

What this chapter covers

“Do you really like a particular stock? Put 10% or so of your portfolio on it.  Make it one of or your principal accounts. Good ideas should not be diversified away into meaningless oblivion” Bill Goss, courtesy,  The Motley Fool

This Chapter looks at some broad categories into which investors can be grouped and describes the defining characteristics of each. Once you understand these characteristics, and, depending on what the investing trade calls your risk profile,  this will assist you in positioning yourself over time as the investor you want to become. It will take time and exposure to the market.  It helps to understand, however, that few, if any investors, fall exclusively in any one group alone. Good Illustrations are given at takeaways

Takeaways

Among the broad categories are:

  1. buy and hold for the long term
  2. value investors as per Benjamin Graham
  3. dividend investors (high dividend yield for income)
  4. growth stock investors (capital gains)
  5. mixed capital gains & dividend income
  6. index, mutual fund & unit trust investors as per Jack Bogle & Burton Malkiel (Keep up with market value. 80% of wealth advisors fall behind the market average)
  7. hedge fund investors

Chapter 21*

What investing strategies could you use to pursue your own inter-generational wealth accumulation?

What this chapter covers

“Someone is sitting in the shade today because someone planted a tree long ago”

 Warren Buffett chairman Berkshire Hathaway courtesy Forbes magazine

Various seminars, text books, leading investment researchers and outstanding investors have been preaching about recommended strategies for years. This chapter mentions six of the leading ones.

Takeaways

  1. Buy and hold for the long term
  2. Re-invest dividends to compound and grow share number of shares and value of portfolio
  3. Buy strong dividend paying stocks because of the stability they offer
  4. Look for growth stocks because of the promise they offer
  5. Minimize transaction costs and taxes
  6. Passive Investing-look for low cost mutual funds, Unit Trust & EFTs
  7. Embrace the disruptors

Chapter 22

Some other important things to know about stock markets 

Although stock markets have been around for a long time, the industry is still a very dynamic environment and is continually evolving and throwing up new concepts, new products and new services and surprises.  For example, many hold that, at the heart of the 2008-8 Great Recession, were some of these new products and services, many of which were not even fully understood and hence there were as yet no ‘antidotes’ for them. This chapter looks at some of the standard concepts of the trade as well as some of those new ones. Some of these are as follows:

Takeaways

  1. Bull market
  2. Bear market
  3. Distinction between ‘bear’ and regular volatility
  4. What is the ‘herd mentality’?
  5. How to manage and resist it (stick to basics/each market’s own ‘gold standard’
  6. Don’t invite, but make use of bear markets to buy good companies at ‘floor board’ price

Chapter 23*

What should I buy, and when? 

(Mar 15 2023 do two sets of ten Stocks for a) Caribbean & Diaspora b) American Stocks for world wide audience) See mail 15/3/23 to claremontkirton@gmail.com

What this chapter covers

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years”

 Warren Buffett, chairman, Berkshire Hathaway Inc, courtesy Forbes magazine Chinese

It will be a little nerve-racking for you and most new investors to pick stocks on your own, though many (including yours truly) did exactly that. To wash away the apprehension, this chapter recommends meeting with a licensed investment advisor at the start of your investing journey.  And, to help you on to your ‘graduation’ to becoming your own stock picker, this chapter looks some more at my Three Es of stock selection i.e. Everybody, Everyday, Everywhere. Finally, within the framework of the invitation to become an inter-generational wealth builder (a well-defined philosophy on its own) it will speak to, and offer guidelines, to help you define some of the less profound but still important parts of your own investment philosophy. For example, some people will only buy stocks that pay dividends whereas others prefer what are called growth stocks. Usually, these do not pay dividends but, their share price tends to grow faster than the dividend-paying ones.

Takeaways

  1. Invest in what you understand
  2. Pay attention to my Three Es of stock selection
  3. Cultivate an understanding of intrinsic values to limit over-paying for stocks
  4. Understand what the trade calls the market cycle and buy during bears vs during bull runs
  5. Beware of the herd mentality
  6. Get a perspective on what the trade calls ‘disruptors’
  7. Look at performance history (if any,)
  8. What is the management team incentivized for; their own remuneration or alignment with shareholder value?
  9. Look at company culture
  10. Look at competitive advantage (if any)
  11. Should you buy at the IPO, or later?
  12. others

Chapter 24*

Dividend Re-Investing: A Dependable Strategy at all stages of the investment cycle (de minimis concept)

What this chapter covers

This chapter focuses almost exclusively on one of the transforming and investing game-changing attributes of dividends called Dividend re-investing Plan (DRIP.) This is where ‘Compounding will compound’ and time will show its worth. Real life examples are used to bring the narrative alive.

Takeaways

  1. What is dividend re-investing
  2. How does it work?
  3. Is there any research data to support its claims?
  4. Excellent way to benefit from bear markets (low share price) where same number of dollars of dividends will buy more shares
  5. Which age group exemplifies it best?
  6. How to strategize it into your investment portfolio
  7. Companies with D_R_I_Ps
  8. Actual illustrations of D-R-I-P at work

Chapter 25*

How to nurture generations of wealthy people across the globe

What his chapter covers

In Chapter 21, we looked at how the individual parent can build wealth for each child by investing for each in a dividend paying stock market investment, preferably between birth and age five (5)  and using the facility of dividend reinvesting and leaving said investment to grow with each child. In this Chapter, we extend the same principle and look at the various strategies that can be used to achieve the objective i.e. enrich people from the equator to the four corners of the globe.

Takeaways

  1. Individual dividend account at your bank….pros & cons especially where banks charge monthly fees for maintaining accounts below prescribed limits
  2. DRIP accounts by individual companies
  3. DRIP accounts by the depository facilities of individual stock exchanges

Chapter 26*

For my Readers in Jamaica, the Caribbean & The Diaspora -Should it be Wall St. or Harbour St?

What this chapter covers 

This chapter gives a brief overview of the Jamaican market and the Stock Exchange over its ‘young’ 50 years. It uses some real life company performances  to illustrate how  stock markets in general and the JSE in particular, has been creating wealth for investors  and posits whether investors are likely to get better investment returns on Wall Street in New York or Harbour Street in Kingston, Jamaica. Finally, against the background of index (passive) vs active investing, it speaks to the importance of accurate record keeping for computing your investing results.                              

  1. Brief market overview and index
  2. Market Index Chart 1969-2018
  3. 50 year Market CAGR-JSE vs NYSE
  4. Performance of 12 companies over 30 years (1987-2017)

5. CAGR 18.83% How The Bank of Nova Scotia Jamaica Ltd turned 10,000 shares into more than seven million in 38 years

6. CAGR 22.51:% How the Bank of Nova Scotia Jamaica Ltd turned $10,000 into $404M  in 57 years

7. Warren Buffett’s CAGR 20.9% vs samples from the Jamaican Market

8. As Bloomberg sees it

9. How National Commercial Bank is transitioning from eighty eight cents per share in 1999 into a successful regional financial powerhouse @ $249/share in July 2019

10 Will Access Financial Services become the major funding source for SMEs in Jamaica?

11. Proven Investments Ltd or Sygnus Credit Investments Ltd- Which will become the more dominant private equity company?

12. Where should you invest for your inter-generational wealth creation? (a) Harbour St, Kingston? (b) Wall St, New York? Or (c) in In both markets?

13. The stock market, wealth creation and record keeping

Chapter 27*

The Jamaican Junior Market: Can it become the ‘Market Nursery’ of the Caribbean & Latin America?

What this chapter covers

This chapter gives an overview of the ten year old Junior Market which it sees as a godsend for inter-generational wealth builders and, against the background that many international ‘juniors’ have gone to London’s AIM for exposure, wonders if the JSE’s Junior Platform could similarly become the ‘drawing card ‘ for junior start-ups in the Caribbean and Latin America.  An analysis is given of juniors listed up to end 2018 to show how it has thrown up capital for New Entrepreneurs and is creating wealth for New Investors. A comparison is made with the CAGR of

Takeaways

  1. The two stocks analyzed in Chapter ?!-Microsoft and The bank of nova Scotia Jamaica ltd
  2. The 24 analyzed in Chapter 12
  3. The 50 year performances of Warren Buffett’s Berkshire Hathaway
  4. The 50 year performance of the Scotia Group Jamaica, trading then as Bank of Nova Scotia Jamaica Ltd.

Also treated are:

5. Origin of the Junior Markets/AIM/Toronto

6. Thinking behind it

7. Legislation to support it

8. Market response

9. The 1st Ten Years

a. Number of listings

b. Equity raised

c. Contribution to GDP

10. What should ownership structure be? (80/20 or 70/30) considering benefits given to entrepreneurs?)

11. Table #1 Market Acceptance and Response: Capital Raised

12. Table #2 How the Junior Market is creating wealth for investors via stock splits and share price appreciation  

13. CAGR: 1st Ten Years: How have the Juniors responded

14. How the Junior Index has grown in 1st ten years

15. From the glory days of BNS to the regional promise of NCB and the Junior Market beyond

16. Not everything that glitters is gold (3rd reference for emphasis)

Chapter 28*

What is volatility and how should I respond to it?

What this chapter covers

 This chapter looks at the wide price swings which occur in markets sometimes and which many experienced investors refer to as a ‘market noise’ because, many times, they happen without clear and defined causes. Other times, however, the reasons are more clear cut.  The important thing is to recognize that these swings provide opportunities to get the shares of good companies ‘on the dip’ (share value vs share price relationship) and  buy more when  price comes closer to value or falls below it.

Some investors see it as illustration of buying a good stock when it is ‘wounded’ and its price falls below ‘floor level’. A volatile market presents a time to ‘buy on the dip’. Not a time to sell. as many ‘investors’ seem to believe

Takeaways

  1. What is volatility?
  2. What causes it
  3. How to respond it

Chapter 29*

(New) Stock Market Investing & Retirement Planning-Any Connection? (see Global Retirement Index @ OneDrive article with ‘Chapter name’ & Essays at my website)

What this Chapter covers

It covers the relationship between:

  1. Medical breakthroughs
  2. Former employees living longer in retirement
  3. The financial cost of the longer retirement years
  4. How stock market investments can add quality to the life of retirees

Takeaways

5. Retirement ‘playing field’ redesigned because of

a. Medical advances

b. Employees ‘more mobile’> Less ‘lifetime employment’

c. Workers living longer

d. Living & health benefits gone up

e. Not enough young workers contributing to the pension pool

6. Benna’s 401 (k) discovery in US Tax code

    7. Responsibility Shift from employer to employee

    8. From the ‘Rolls Royce’ to the VW/Beetle model

    9. Stock market dividend income stream from defensive & other kinds of stocks

    Chapter 30*

    Should Women become stock market investors too?

     What this chapter covers

    This chapter posits that there are many reasons why women should become independent investors and discusses some of these. While basic investments tenets are identical for men and women, there are a few that may apply more uniquely to women, especially those who may not be inclined towards marriage and must therefore plan their own financial and retirement future. Some of these are:

    Takeaways

    1. Living healthier and longer
    2. Usually outlive partners
    3. Even with many standouts, not usually the best long-term money managers
    4. Can’t rely on children to pick up expenses of longer lives as in former times
    5. Let compounding and ‘longer’ decades work for them
    6. What if
    7. Ideal investing strategies/Embrace disrupters

    Chapter 31*

    How to start and grow as a New Investor 

    What this chapter covers

    What we do not know, or understand, can generate its own apprehension and appear more difficult than it really is. This chapter posits that becoming an investor should be treated as an important project and planned and budgeted as such. Preparation is key. From where will one garner the knowledge and operations strategies? At times of scarce resources, from where will investable funds come? This chapter looks at some options

    Takeaways

    1. Build knowledge base both formally and informally over time
    2. Get an investing mentor
    3. Access the available technology
    4. Develop a plan, and a strategy, to find the funds to invest

    Chapter 32*

    What is transaction cost?

    What this chapter covers

    There is no ‘free lunch’ anywhere, anymore. Each buy/sell transaction imposes a cost. After a stock is qualified and bought, every unnecessary trade of it is like ‘stealing’ from yourself

    This chapter looks at options to minimize transactions and both its obvious and ‘hidden’ costs (good for investment advisor but bad for investor)

    Takeaways

    1. Each buy/sell transaction imposes an operations cost and fees
    2. Each might also impose a tax
    3. ‘Switching lanes’ may not be your best option
    4. The long term ‘hidden’ costs and impact on portfolio returns

    Chapter 32*

    Do you need a broker to buy your shares and if so, how can you find a good one?

    What this chapter covers                                                                                                             

    To protect the interest of investors, all markets have rules and regulations that stipulate how transactions should be conducted. These rules and regulations are monitored by stock market exchanges.

    The people or organizations who are empowered by these exchanges to buy and sell the shares of listed companies on behalf of investors are called brokers. Brokerages employ salespeople, usually called investment , or wealth advisors, who are the individuals who will sit with you to make a purchase (or a sale for existing investors). Markets in general require that brokerages and their sales peoples have certain minimum qualifications and are certified to conduct investment transactions with the public. In every market, there are some exceptional advisors in terms of quality of advice, guidance, mentoring and stock selection competence. For many others, it might just be a job. Recall the ‘buyer beware’ admonition at Chapters 15 & 16.

    Takeaways

    1. Yes, you need a licensed broker/investment advisor
    2. One method to find a preferred wealth advisor
    3. What to expect from investment advisors
    4. Brokers with street address and how you access them
    5. Brokers with online address and how you access them

    Chapter 33*

    Are there any measurement/selection tools (indices) to assist you as a new investor?

    What this chapter covers

    This chapter introduces certain guidelines, called market indexes (indices) and investment characteristics called metrics, which act as markers to guide investors as to whether the price (vs value) of a stock can be regarded as being:

    1. Cheap
    2. About right, or
    3. Over-priced

    However, the stock market is not an exact science and the ‘laws of buy and sell’ are predicated on what a willing buyer will pay and a willing seller will accept. Therefore, different people (traders) will buy, and or sell the same stock, on the same day, in the same market, for different prices based on their individual assessment and circumstances. Market indices ‘start somewhere’, and are based on defined criteria and, are mostly related to the specific markets in which they are developed. However, in order to offer uniform measurement criteria across markets in different geographical locations, different ‘international metrics’ have been developed e.g. MSCI and FTSE Global All Cap Index. All indexes are dynamic. That is, at any particular time (day, month, year) the result (performance) of any stock, or any stock picker (your investment advisor, e.g.) can be compared against the average of the market which is represented by the index of said market (in the same time frame.)

    Takeaways

    1. Distinction between value and price
    2. What is a market index?
    3. How are indices constructed?
    4. What is a market metric and which are among the most universally used?
    5. What is the historical performance value for each metric?
    6. Are there any other metrics outside of universal ones?
    7. How can you use market indices to monitor/improve your investing results?
    8. Compound Annual Growth Rate (CAGR)

    Chapter 34*

    What strategy can you use to transfer stock market wealth to your children, grandchildren, preferred institutions and or family foundations?

    What this chapter covers

    This chapter looks at how you can use a  three-strand-strategy to implement your inter-generational wealth programme (which is the objective of this book).

    Takeaways

    1. Build it (Employ DRIP liberally)
    2. Prepare family for it
    3. Distribute it (via Estate Planning strategies such as Joint Stock Ownership Accounts, Powers of Attorney, Wills and Trusts

    Chapter 35*

    One dozen ways for 1st time investors to ‘psyche up’ themselves to get the motivation to understand the language, and manage the initial drama, and fear, of stock market investing (Twelve (12) will be highlighted

    What this chapter covers

    This chapter summarizes many of the initiatives discussed so far in this book for a simple reason. Many readers will miss some of the lessons on the first go of things. By inviting you to do a recap, the idea is to cement those lessons learnt well and bring back those needing a ‘refresher’ so that you get a better grasp of the basic concepts and strategies that will govern your investing life as you move forward to build your inter-generational wealth platform

    Takeaways

    1. Start with a reflection on those around you who have ‘passed through time’ and have nothing to show for that passage. Vow not to end up like them and start with the how of it
    2. Get a grasp on the mystique of money; how banks and other financial institutions are able to grow it and keep having more and more of it and tell yourself, you want to learn their secret so, you can grow yours too for yourself and your family even though you have no intention of becoming a bank. (At this time!)
    3. Reflect on the free strategies that the banks and financial institutions use…i.e.compound interest and time as measured in decades
    4. Add other 9 in next draft

    Chapter 36

    Preparing for the next wealth-building bonanza i.e ‘stock market crash’

    What this chapter covers

    One of the interesting things about the stock market is that, while over the decades, values do go up, they do not do so in a straight line from the bottom left hand corner to the top right. Instead, they do so through ‘hills and valleys’ (bulls and bears) and, history has shown that when stock prices get too high (experienced investors say that valuations are ‘too rich’) it might be a good time to stand back, take stock of the situation, maybe take some profit (meaning sell something while share price is high) and start charting a course for when the bear ‘walks in’

    Takeaways

    1. Revisit distinction between share value and share price
    2. Pay attention to what the analysts and economists are saying about sustainability of high share price and prospect of a correction (10% change) or recession (20%) change or more
    3. Be aware of the herd mentality when share price is going through the roof
    4. Start looking for stocks to buy when the correction or recession ‘comes to town’
    5. Cultivate discipline to ‘wait on the bear’
    6. Let the Disrupters be your wealth-building machine (historical performance data from  TMF & Riskedge
    7. Whatever the cause, get rotten rich from it by buying when share price comes back down to the ground or ‘below the floor’ as happened in the 2007-9 recession when the S&P500 lost 57% of its value on March 9, 2009

    Chapter37*

    Can governments transfer wealth from one generation of voters to the next (inter-generational wealth transfer) through the stock market?

    What this chapter covers

    This chapter posits that governments can transfer wealth also from one generation to the next and offers a strategy through which to do so.

    Takeaways

    1. Using sovereign wealth fund technique to transfer national wealth
    2. Other avenues

    Chapter 38

    One last Word-Practicing what I preach

    What this chapter covers

    Some people say it is one thing to ‘preach the gospel’ but quite another to live by its tenets. Using two sets of real-life illustrations, this chapter demonstrates how I have used my sixty odd years of stock market investing experience to inform the lessons and recommendations in this book. It is the principles that matter. Not whether I, the author, am a millionaire or not but rather that, if you buy into the free principles of wealth creation, and implement even a few of the major strategies, that you (and those with whom you share them) could become your own millionaire. These real-life illustrations fall into the following two categories:

    Takeaways

    1. Essays to mentally prepare attendees to get the most out of workshop presentations and discussions on how to build personal and family wealth from ‘ground zero’ i.e. starting with what you have. (Essays to DPAFA)  Memos to Fm Group Christmas ‘Presents’ and
    2. (Since I share my investing perspective with both my nuclear family and others) use actual illustrations to demonstrate that I practice what I have preached in my book (DRIPs & Letters to Family & God-children)

    My hope is that you can use these experiences to help create the game-changing strategies and actions to help move you into becoming an owner of money and wealth

    Chapter 39*:

    References

    Chapter 40*:

    Recommended reading