7/30/2019 Stock Categories by Adam Khoo

1/18

n o stoc t s.

Category 1: Dividend Cash CowsDividend Cash Cows are stocks of companyields but do not appreciate very much in pusually market leaders in slow growth, matu

A company usually pays a high dividend raamount of free cash flow and do not need ththeir operations anymore. As a result, they to you as a shareholder in the form of a div

Dividend cash cows are ideal for investors waim of earning passive income. Many of my

prefer to invest in this category. Although tprice very much, they do not fall very much

7/30/2019 Stock Categories by Adam Khoo

2/18

The chart shows Singtel,During this 3-year perio$3.20, an annual compothat period, you would h

share, bringing your totaFor dividend cash cows,dividend yield of 5% orcapitalization (Market Ccertain kinds of REITs aSome of my favourite diStock Exch

Starhub SingaSin tel Sin a

a typical defensive, the Singtels stocnded rate of returnve collected a tota

return to 15.18%.I usually look for c

ore, is in a defensp of at least $10 bdividend cash cowidend cash cows ange

poreore

7/30/2019 Stock Categories by Adam Khoo

3/18

.

If it is able to continue to innovate breakthrand profits will continue to increase exponecontinue to skyrocket. However, if a compeor Google comes out with an even better phhuge amount of market share and see its sha

This is exactly what happened to Nokia! Noin phones and boasted a share price of $35. their Nokia phones for Androids and iPhonfallen to only $2.38!

On the other hand, can we be sure that 5-10

still eat at McDonalds, drink Coca Cola, Usbrush their teeth with Colgate, get a bank lo

7/30/2019 Stock Categories by Adam Khoo

4/18

Nike USMcDonalds USCampbell Soup USSMRT SingaporeVicom SingaporeDairyFarm Singapore

Asia Pacific Breweries SingaporeStarhub/Singtel Singapore

* Note that Starhub & Singtel are both DiviCap Predictable stocks.

Category 3: Large Cap Growth

Warren Buffett would never invest in stock

7/30/2019 Stock Categories by Adam Khoo

5/18

7/30/2019 Stock Categories by Adam Khoo

6/18

7/30/2019 Stock Categories by Adam Khoo

7/18

now.

Category 4: Deep Cyclicals

This category of stocks is relatively more riprofits from them if you know how to inves

at the right time.

Deep cyclical stocks are stocks of companieand highly cyclical industries. This includecompanies, property companies, commoditcompanies, banks and manufacturers.

Since these companies are highly capital inrespond to demand changes quickly. For ex

7/30/2019 Stock Categories by Adam Khoo

8/18

the historical high. You should also make uAverages to help you enter when the uptrento go into a downtrend.

I love to start buying Deep Cyclical stocks of their chart ranges and see my investment

the economy starts to recover. At this time European Debt Crisis, many Deep Cyclical(DSX), Neptune Orient Line (NOL), AlcoaTransocean (RIG) are selling near their hista great investment opportunity once they st

Category 5: Turnarounds

Have you ever read about well-known com

7/30/2019 Stock Categories by Adam Khoo

9/18

to buy a great company at a temporarily depoil spill was a temporary problem and althobillions of dollars in damages, it would eveis one of the largest oil companies in the wostrength to survive through the crisis. I wasshare price eventually rebounded back to $

These are my rules for investing in turnarou

Rule 1: The company must be a Large Cap advantage. It must have the financial strengloss in profits.

Rule 2: The bad news must be temporary inthe companys sustainable competitive adv

7/30/2019 Stock Categories by Adam Khoo

10/18

Small Cap, you could see your investment ma Large Cap.

While the idea seems exciting, small/mediumuch risker than established blue chip stockusually have narrow economic moats (they

and may be less financially strong. Many smgo bankrupt or get delisted when they run inunable to pay their debts during a recession

When you consider investing in small/medithat they dominate a niche, have little or noof cash flow. I have personally made huge p

companies like Osim International, Goodpaand FJ Benjamin. All the above-mentioned

7/30/2019 Stock Categories by Adam Khoo

11/18

.

When you invest in ETFs, you are investingcompanies. Hence you do not have to calcuintrinsic value and be afraid of company spETFs, you only have to concern yourself wto invest only on an uptrend and to sell whe

downtrend.

Building a Winning Portfolio For Y

Now that you understand that not all stocks

that different stock categories have differenreturns, you can begin to build a portfolio th

7/30/2019 Stock Categories by Adam Khoo

12/18

, and Exxon Mobil came down as well. WheMorgan lost $2 billion in 2012 as a result ocrashing down more than 30%. This causedCitigroup, Bank of America, Morgan Stanlecrash down as well. This is known as mov

If you had invested half your portfolio into portfolio would have taken a very big hit! Iand invested in rest of your money into othstocks, industrial stocks, oil stocks or technwould have cushioned the blow.

3) Invest In No More Than 3 Turnaround S

Deep Cyclicals and Small Fast Growers At Dividend Cash Cows, Large Cap Predictabl

7/30/2019 Stock Categories by Adam Khoo

13/18

When the market is at the top of its cycle (wwould start to selling to lock in profits and stock market starts reversing into a downtreusually sell everything and keep 100% of minvestor, you do not always have to be invesituation is not favourable, it is better to ho

time to put your money back to work.

5) Your Portfolio Should Be Aligned To YoAppetite

Many people make the huge mistake of blinadvice and stock picks of experts. This is th

expert you listen to may have a totally diffeholding period and lifestyle as compared to

7/30/2019 Stock Categories by Adam Khoo

14/18

statements and who fear picking the wrong should consists only of ETFs and REITs. Aonly portfolio is shown below:

Portfolio A

S&P 500 SPDR ETF (SPY)S&P 400 MidCap ETF (MDY)S&P Technology ETF (XLK)Morgan Stanley China A Share ETFSingapore STI ETFSuntec REITK-REIT

Ascendas REITCapitaMall Trust

7/30/2019 Stock Categories by Adam Khoo

15/18

Kimberly Clarke (US Large Cap PreMcDoanlds (US Large Cap PredictabClorox (US Large Cap Predictable)

7/30/2019 Stock Categories by Adam Khoo

16/18

Nike (US Large Cap Predictable)Proctor & Gamble (US Large Cap PrAsia Pacific Breweries (Singapore LVicom (Singapore Large Cap PredictJardine C&C (Singapore Large Cap G

7/30/2019 Stock Categories by Adam Khoo

17/18

Osim International(Singapore Fast GrowGoodpack International (Singapore FastVisa (US Large Cap Growth)Bank of America (US Deep Cyclical/TuNoble Group (Singapore Deep Cyclical)

6) Adapt Your Portfolio to The Market Cyc

You have learnt in a previous chapter that thcycles of highs and lows, leading the econo6-9 months.

When the stock market is recovering from t

7/30/2019 Stock Categories by Adam Khoo

18/18