Sharing a Good Book: How I Learned to Invest at 45 and Earned $2 Million in Dividends Annually

I learned to invest in stocks at 45, receiving 2 million in dividends annually: A retired teacher who started late in investing teaches you the "Coffee Plantation Stock Investing Method," turning the stock market into your money tree.
Author: Hsieh Shih-ying Publisher: Caishe Culture
Publication Date: 2020/06/28

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• Readmoo Online Book Purchase

Preface:

This is the sixth book I've read this year. Teacher Hsieh Shih-ying is also a teacher I saw on YouTube. I think his explanation of the concept of stock investing is easy to understand and very practical. There are no complicated or profound principles, just a lot of easy stock investing operations and psychological preparation for investment. So I bought this book to understand the author's investment philosophy.

Content Summary and Thoughts:

Hsieh Shih-ying, a high school industrial technology teacher who knew nothing about investing before the age of 45,
In 2000, inspired by the book "Rich Dad, Poor Dad" and the Foolproof Investment Method, he began to learn about investing.

At the age of 45, Teacher Hsieh set a goal to have over ten million by the age of 50,
He invested with a principal of 2.2 million in the first year,
It became 4.4 million in the second year,
It became 8.8 million in the third year,
It became 10 million in three and a half years,
He achieved his goal in less than five years.

How did he do it so well?

After Teacher Hsieh decided to learn to invest, he began to study the Foolproof Investment Method,
He found that this lazy, no-brainer investment method originated from Warren Buffett's value investing,
And from it, he refined his own successful stock investing method, the "Coffee Plantation Stock Investing Method."

Ordinary people buying stocks is like buying coffee trees, waiting for the price of the coffee trees to rise and then selling them to make a profit.
But stock investing is like planting coffee trees, taking good care of them, and waiting for the coffee trees to bear fruit, producing coffee beans,
Then use the money from selling the coffee beans to buy two more coffee trees,
Over time, the coffee plantation will have more and more coffee trees, so much so that one day there will be more coffee than you can drink or sell.

Chapter Outline

Chapter 1: Learned Stock Investing at 45, Rolled Over Ten Million in Three and a Half Years

"Rich Dad, Poor Dad" opened the author's path to financial management, and that's when he started looking at stocks. He bought China Steel as his first stock and began his financial management journey. The starting capital was 2 million, and the starting time was around 2000.

Chapter 2: The Coffee Plantation Stock Investing Method, Turning the Stock Market into a Money Tree

Chapter 3: Principles of Buying and Selling in the Coffee Plantation Stock Investing Method

The author used the story of a hen that laid golden eggs as an example. The hen laid a golden egg every day. But a greedy person killed the hen, only to find that there was no gold in its body, and instead, he suffered a loss. The author treats the stock account like a coffee plantation, which needs to be patiently planted to continuously produce new coffee beans. Don't rush to cut down the coffee trees. Several concepts are as follows:

• Coffee trees won't produce coffee beans immediately; you need to be patient.
• Many people directly buy and sell coffee trees (for price differences), which requires considerable time and many techniques, which the author does not recommend.

Reasons for Investing in Good Companies:

• Maintain consistent profitability: can be sustained and make good money in the core business.
• Good management team
• Continuous competitiveness
• Simple and easy-to-understand companies: buy companies you understand
• Directors and supervisors hold more than 10% of the shares

The reason you buy is the reason you sell.

This is a very important concept. The author also mentioned that unless it's for the following reasons, there is no reason to sell the coffee trees:

• The company has gone bad
• A better target
• It's expensive

Chapter 4: Practical Experience Sharing of Stock Investing

Regarding the experience of investing in Uni-President:

• The author originally wanted to buy Uni-President Enterprises, but it was too expensive. Uni-President's related companies performed well and became long-term holdings.
• Pacific Construction was bought, but a typhoon caused many problems with the houses. Coupled with internal instability in the company, it was decided to sell. (The company has gone bad)
• Don't have too many investment targets to choose good companies.
• Receive dividends and continue to invest. Generate considerable compound interest effects.

Chapter 5: Building a Wealth-Building Mindset and Good Habits for Stock Investing

• Have good financial management concepts
• Save money early, and the compound interest effect will be stronger
• Earning steadily is safe; don't mind being slow
• Generate passive income to make your income endless.
• Have the habit of self-checking information; don't believe TV and reports to buy or sell.
• Have the opportunity to understand the company; talk more to get to know a good company.
• Don't stare at the market every day, but review the nature of your investment company.

Chapter 6: How to Safely Survive Every Stock Market Crash?

When a stock market crash occurs, many retail investors want to cash out quickly. But they often suffer many losses and sell at the lowest point when closing their positions. They become the ones who sold at the bottom.

• When a stock market crash occurs, continuously review the quality of the companies you hold to see if they have deteriorated.
• Because you can't know how far the market will fall, don't close your positions casually. Only sell companies with deteriorating quality.
• Add more shares of companies with good quality at low prices to increase the coffee trees in your coffee plantation.
• Don't expand credit casually; if you can't guarantee profits even with cash and spot stocks, then expanding credit will only expose you to greater risks.
• Have a "worst-case scenario"

Thoughts

This book doesn't have complicated technical line teaching or too much fundamental analysis. But it has many personal experiences and ideas about investing from the author. As someone who only started investing at the age of 45, it contains many clear and easy-to-understand operating methods. It's very suitable for those who don't have time or, like me, started learning to invest very late.

The author often uses the example of coffee trees to explain the basic concepts of stock investing. He also decides whether to add more shares or sell them based on his understanding of good and bad companies. These basic but often forgotten operating methods are actually very important for the psychological preparation of retail investors. I highly recommend it to those who, like me, can't fully watch the market but want to do stock investing.