Cash The Crash- Cnbc Best Seller

Happionaire’s

™

Cash The Crash! Create Even More Wealth Every Time There Is A Stock Market Crash, Economic Slowdown and Global Gloom!

“The secret to financial security, freedom and wealth creation is in your hands.”

By Yogesh Chabria Investor and Bestselling Author of Invest The Happionaire™ Way

HAPPIONAIRE™ (Happionaire™) is a trademark owned by Yogesh Chabria Happionaires™ Cash The Crash, The Happionaire™ Way © Copyright 2009 Yogesh Chabria. All Rights Reserved. www.happionaire.com

People who create wealth do things that others don’t!

“I, Yogesh Chabria, promise to make one billion Indians financially literate. The journey has just started, but I know we will make it happen.”

Before you start reading, I want you to do something very simple that will help you fully benefit from the message in this book. I want you to write down what has been written below and follow it. Saraswati, wealth, happiness and knowledge grow only when we share them. It might not seem logical at first, but trust me, it will do wonders.

I,(your name), promise to share what I read in this book with at least ten people because people who are financially literate are happier, healthier and wealthier!

Please Write It Here In Your Own Handwriting: -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Thanks a lot and welcome to the world of Happionaire!

Acknowledgments The first book under the Happionaire series, Invest The Happionaire™ Way, was officially launched on 17th, April 2008. By the grace of God and your support, it became an instant bestseller and introduced innumerable people to investing and creating wealth in a fun, simple and interesting way, or as I call it – The Happionaire Way. It was equally heartening to see the Hindi translation helping so many more people across India learn about finance and investing. ITHW focused on how easy it is to start investing in the stock markets, and how I started investing when I was sixteen years old. As I write this, Invest The HappionaireTM Way continues to be on the bestseller list. Sales have been growing simply because of word of mouth publicity – the best and most honest form of marketing according to me. I would like to thank all of you for making The Happionaire™ Way so successful and sharing the message with your friends, family and loved ones. Today, there are countless Happionaires all across the world and they continue to grow in number with every passing day. As I have always said, this isn’t about me, but about all of us. It is extremely humbling to get so much love from all of you and I hope I am able to continue reciprocating that love by sharing my ideas on investing and wealth creation. This book is my way of thanking you for your support and letting you know that every challenge is an opportunity in disguise. I wrote this while the world economy was in recession; however, the ideas shared are timeless and can be used irrespective of whether there is a crash or an oversupply of cash. Lots of people have helped either directly or indirectly. Without their love, support and ideas, this book wouldn’t have been possible. I would like to thank all of them. Gauri Jassal, for putting in so much time, effort and love to make sure what I wrote from my heart also made grammatical sense and for always letting me know that this book would be an instant bestseller. Arlene O’Neil, my editor; My lovely family for always being there on my side and supporting me with whatever I do - Murli, Deepti and Jasmine Chabria; Sushi, Khushi and Gita Wadhwani; N.P. Pandya, Bombay Stock Exchange Investor Education ; Dr. Kirti Narain, Principal, Jai Hind College; Rakesh Jhunjhunwala, RARE Enterprises; Warren Buffett, Berkshire Hathaway; A.M. Naik, Managing Director & CEO, L&T ; Ganesh Raj, Senior Vice President & Managing Director Subcontinent, DPW; D.G. Kamath, Head - Marketing, Enercon; Dr.

Robert Cialdini, Social Psychologist; Simran Bhargava, One Life To Love; Harjeet Johal, Spice Enterprises, Prashant Thakur,MD, Thakur Infraprojects; Shivaji Kotak, Aniket Waghmare, Mubin Panjwani, Vivan Bhandarkar, Raksha Rajpal, Kuldeep Sanadhya, Loktej. The list wouldn’t be complete without thanking my research and legal team. If I have forgotten to mention anyone, please pardon my oversight and know that I thank you from the bottom of my heart. God bless you. Thank You! Yogesh Chabria, Happionaire

Happionaire’s

Cash The Crash! Contents

• I Have No Money! • What Is The Key To Financial Nirvana? • The Big Crash • What Do Things Like Sub-Prime Actually Mean? • The Bailout Package – Day Light Robbery? • Do You Want To Be Like The Monk Who Mortgaged His Ferrari? • The Rich Guys Are Telling Us The Economy Is Terrible (And What They Actually Mean!) • Is This The Greatest Destruction of Wealth In History? • Every Ending Is Also A New Beginning! • What Is Keeping You Away From Cash? • Don’t We All Have Pet Elephants in India? • Is India Immune To The Financial Crisis? • Why Am I So Optimistic About India’s Future?

• The Happionaire Way Of Understanding Financial Statements – Balance Sheets to Profit and Loss! • The Secret Of Free Cash and Free Assets! • The Monkey Who Didn’t Buy His Ferrari! • Do Most Things Actually Become Cheaper or More Expensive? • Should I Invest In Real Estate Now? • What Currency Do You Have In Your Pocket? • What Happens To Commodity Prices? • Professional Strategies – Put Options, Call Options & More! • Future Investment Opportunities • Analyzing One Of My Investments And Why I Made It • How To Detect A Crash Before It Comes! • There Is Nothing Like Unemployment If You Believe In Finding Opportunities! • The Solution To The Global Financial Crisis • Conclusion - This Isn’t The Last Chapter – But The First! • Financial Glossary

Introduction What Do I Do When Things Get Tough? Job losses, pay cuts, bankruptcies, stress, depression, slow downs , stock market and mutual fund losses, are the types of things that almost everyone gets concerned about every time our economy goes through challenging times. Everybody suddenly seems to be feeling poorer every time there is an economic downturn. Some of the biggest names in the world of finance, business and entrepreneurship, have gone bust or been taken over in the West and fortunately, or unfortunately, India too has been affected. Right from the biggest real estate developers, to big investment bankers to the pav-bhaji stall outside the Bombay Stock Exchange – everybody is saying business is down and there is no work. Now while most people sit and worry and curse their luck, the economy, inflation, stock markets, mutual funds, capitalists, their mother-in-law (I don’t think cursing your motherin-law is a very good idea; it could have very grave consequences!) and whatever else they can out of frustration, there is a small minority who quietly and silently benefit and make the most of such situations. Almost every time in History, this group of people have taken advantage of such situations and have gone on to create tremendous wealth. This book will help you think like them, and hopefully become one of them.

Now Is The Time To Get Wealthy! “Be Greedy When Others Are Fearful. Be Fearful When Others Are Greedy.” This is what the richest man on Earth, Warren Buffett says, and still most people never seem to follow this logic. Many of you might not believe it, but some of the best times for me to invest, create wealth and capitalize on opportunities, are times when there is economic depression, recession, and gloom.

I have learnt from experience and from some of the richest people around, that simply looking for opportunities while others are cursing their luck and the economy, can create immense wealth. Cursing your luck, politicians, big institutional investors and people around you won’t help your financial situation at all. Instead, if you want to create wealth and succeed, you need to make the most of now, invest in knowledge and use this knowledge practically. I have never believed in waiting for opportunities to find me and then knock at my door. I would rather build my own house and several doors right in front of the opportunity and then pounce on the opportunity. Happionaire’s Cash The Crash is meant for anybody and everybody who wants to create wealth irrespective of whether the stock markets are up or down - irrespective of where inflation, interest rates, real estate prices are headed – and irrespective of which economic cycle we are in. Being in control of your own destiny and prosperity is very important. Everybody makes money when things are good. But the truly wealthy people, preserve, create and control wealth irrespective of the environment around them. This book has specially been written for someone who might not have a PHD in finance, but simply wants to know what to do when times get challenging and how to actually benefit in such times. It is based on the principles of being a HappionaireTM and creating wealth in a fun, simple and interesting way.

The Street Teaches Us The Most! I am someone who believes that life and the street teaches us the most. My university has been the street and practical experience. I started not by enrolling for a financial degree, but by actually investing and learning from my mistakes and by actually making losses. I’m not ashamed or afraid to accept the fact that the losses I made in my early days have in fact, been a blessing as they have taught me the importance of several things.

Never be afraid of tough times, but be afraid of being afraid of tough times. It is very important to realize that and not be afraid of failure, losses and tough times. Those who are able to stay cool and not lose hope, are usually the ones who get ahead in every field. Whether it is sports, war, relationships, business or investing, not giving up is what makes you win. Today with the crash of the entire global financial system, rules and laws that were written decades ago mean nothing and everything has to be re-written. Almost every book written about conventional finance and capitalism, today will no longer be relevant

as they have no solution to the problems and challenges faced by millions of common people. Old world rules of capitalism written by the West, which were meant to be a world standard and something all of us should follow, today are no longer relevant. Every time old rules collapse – new rules need to be written. The very small minority, who know these rules, will end up benefiting the most. It is up to you to make the most of this rare opportunity in history, or a few years from now you will look back and say, “I wish I had done this and I wish I had done that.”

Why This Book Is For Everyone One of the main reasons for the American and Western financial crisis is a lack of practical financial education and literacy. What I’m talking about isn’t some theoretical course, which teaches you about quick ratios and liquid ratios, but something that teaches money management in a more basic and practical manner. Today, money is a basic tool needed for survival. It is almost like oxygen or water or food. Yes, most certainly money isn’t everything. But it is something without which you won’t be able to survive. If more people learnt and understood how money works and treated it with respect, many more people would be financially free and independent. If more people are financially independent, they would certainly be happier than when they are financially dependant. Being financially secure does make things easier. A few might not agree, but I can certainly tell you from experience that I have experienced both - being financially secure and also not being so financially secure. I would chose being financially secure and free any day! Of course being wealthy is not at all a key to being happy; it’s just a tool that makes things easy. The global financial crisis could have been avoided if America and Americans had had more financial literacy and education. If they had been taught the value of money, saving and investing wisely in the past, today USA and the rest of the world wouldn’t be in such a condition. When people earning only $ 2,000 a month go out and buy houses worth $ 500,000 and cars worth $ 50,000, something is terribly wrong. I had found this very strange the first time I went to the West. Almost everything people bought was on credit, and even though on the outside, everything looked nice and fancy. These people had empty bank accounts and virtually no assets. The Hugo Boss suit, expensive cars, first class air travel, and fancy watches weren’t assets. I had somehow always known that one day this wasteful and illogical spending would come to an end, and all crumble down like a deck of cards. Of course not too many

people believed me, and many in India tried to adopt that type of lifestyle and spending habit. Today the entire American and Western economy is falling like a rocket, which had gone up high on hot gas of excess credit and loans, and now has run out of fuel. Today millions of Americans are homeless, unemployed and in debt. While the ones who are responsible for this are still very wealthy, life has become very hard for millions of Americans. A situation like this could have been avoided if there were more financial literacy programs for everybody. If more people were made to realize the disastrous affects of buying expensive cars and gadgets on loans and EMIs, the global economy would be better off. I hope that instead of simply granting bailouts and reducing interest rates, America also will invest in educating people. They are smart and hard working people, who have grown on the basis of merit and entrepreneurship. I’m sure with the right decisions and steps, the American economy can once again grow and prosper. If today we don’t make sure that our people are made financially literate, I wouldn’t be surprised that in ten to fifteen years, India too would face the same problems America is facing today. Letting more people know that taking that holiday to Europe on credit probably isn’t the best financial decision you can make, would be sound advice. Instead, saving and investing wisely, will let you take that holiday to Europe by paying in hard cash just a few years later – absolutely stress free. You could be a doctor, engineer, fashion designer, musician, artist, homemaker or someone who hunts for ghosts for a living. Being financially literate is as important and basic as knowing how to eat food or drink water. It is a survival skill needed in the modern day world. The Happionaire™ Way is dedicated to spreading this in a way that connects to everybody. It is all about making finance and money simple, fun, interesting, and relevant to our daily lives.

This Is One Of The Best Opportunities in History For Us I know many of you might not believe it and several of you might even brush it off as an overly optimistic thought. But before you do that, read about the wealthiest men in the history of mankind – right from Laxmi Mittal to Warren Buffett to Dhirubhai Ambani and how they started their journey of wealth creation. All of them grabbed opportunities where others didn’t see them. Just because others haven’t noticed an opportunity, doesn’t mean it doesn’t exist. In fact, since most people haven’t noticed the opportunity, you can probably benefit so much more by taking the chance. I shared my knowledge about how many of them created wealth in our first book, “Invest The Happionaire™ Way.” The ideas shared in ITHW, today can very easily be put in practice by all of us since there are so many assets that are available almost for free. Yes, you heard me right: not

cheap, but FREE. Not everybody knows where and how to buy these free assets. I will share a few secrets and actually let you know how you can acquire these free assets. I can’t guarantee that these assets would be free once I share them with you – as people might rush to buy these assets, and thus they would no longer be free. Even though a secret is no longer a secret once it is shared with millions of people, you can still use the same knowledge and technique to discover several other free assets. Many of these opportunities might never be available again. Today, irrespective of what people might say, India is just starting to grow. We have one of the highest saving rates in the world and lots of local money in bank FDs, gold and cash. Over the next few years, we will see incredible economic growth and I foresee one of the largest and most incredible bull markets in the near future simply based on facts and fundamentals. This one will take everyone by surprise, and all those who are able to ride it successfully, will become some of the luckiest, most fortunate and wealthiest people in our history. Imagine what happened to all those who bought land that had oil under it in the desserts of places like UAE, Kuwait and Saudi Arabia in the 1950s or 1960s. It changed their entire lives from being camel riders to multi-billionaire oil barons. Look at the tremendous amount of wealth people created who invested in China twenty years ago, when things were just changing there. Anybody who bought land or invested in a place like Shanghai twenty years ago, is sitting on a pot of gold today. Today the same type of opportunity, which comes once in a lifetime, is there before us: the opportunity to be a part of India’s tremendous economic growth in the coming years. Today the stock markets, mutual funds, commodities and real estate market might all have fallen from previous highs. A few of you might even have suffered losses and might have vowed to never ever invest again, but studying history will show you how such times are in fact, some of the best times to create wealth. Right from 1909, the Great Depression of 1929, Harshad Mehta Scam, Real Estate Bubble, Ketan Parekh, IT Bubble all those who bought quality assets when others were selling in a state of depression, frustration and panic went on to be rewarded handsomely. Those who cash the crash, always benefit!

But I Have No Money To Invest At All. How Do I Do It? A few of you might have lost some money (or maybe a lot of money) by investing in the stock markets, mutual funds or real estate, having bought them at higher prices, but not having money right now shouldn’t stop you from investing or creating wealth. As a matter if fact, not having money right now is all the more reason for you to learn more and acquire the knowledge needed to create wealth. I believe that knowledge is one of those few things that are recession proof!

When I started investing, I didn’t have too much money. I started investing when I was sixteen with Rs. 750 but I realized that if I had the knowledge, money would run after me. If I know how to buy Rs. 1 for 50 paise or I know how to buy candy shops for free, I can go on to do very well for myself. Of course it takes patience, persistence and the desire to learn in order to succeed. Not giving up when times are tough, especially after one has failed, is very important. Not being afraid of anything and being optimistic are some of the attributes which are essential for creating wealth. Listening and believing in what you feel is right, irrespective of what people around you say, and staying balanced are extremely important traits too. “You Can Not Be An Investor If You Aren’t Optimistic About The Future.” – Rakesh Jhunjhunwala, one of the richest investors in India who started investing with Rs. 5000 and went on to create several thousand crores. Happionaire’s Cash The Crash has been written keeping in mind the fact that cash is extremely scarce these days, and even though assets are available very cheap, you might not have the money to buy them immediately. I wasn’t born with a silver spoon and that is why I very well understand the value of money. At the same time, I also understand that there is a lot of wealth around us – billions and trillions of dollars that are constantly moving between people all the time. All we need to do is try and figure out how we can get a small percentage of this. I believe that everybody is intelligent and can accomplish wonders if given the right opportunities and knowledge. I’m sure all those of you who read Invest The HappionaireTM Way, would be able to recall how a 21 year old created a million dollars in less than a year, with just a simple idea and how Dhirubhai Ambani created wealth with his coin collection. Most people who succeed aren’t born with tremendous amounts of wealth but instead use their knowledge, creativity and hard work to succeed. Happionaire’s Cash The Crash is about not giving up, no matter how difficult things might seem and about capitalizing on every possible opportunity. In the past I have been through phases of economic slowdown and downturn. At such times, I remember incurring losses, but I didn’t give up and instead used that time as a learning opportunity. Today I thank my luck and thank God for having given me such opportunities.

Why You Shouldn’t Read This Book If you feel you can create wealth just by reading a book and doing nothing else, then this book would have solved the problem of global poverty instantly. If just reading a book was the key to creating wealth, then almost overnight we would have had several million readers all becoming millionaires and billionaires.

This book, or for that matter, any other book, can only give you the knowledge and tools which will help you understand money and wealth creation better. You can learn about how people invest, save and create wealth by reading books, but after learning and getting the knowledge, it is completely in your hands to make practical use of it. That’s what one of the readers of ITHW did, as the message she left on our blog said. She told us how something she read in the book made her base a decision on that information and how because of that, she ended up saving Rs. 20 lakhs. Happionaire’s Cash The Crash will give you tools that will help you think and decide for yourself. After that, you need to take action and decide what needs to be done. If you are someone who doesn’t have the burning desire to create wealth, succeed, learn and take action on your own, you shouldn’t read any further. If you are simply looking for hot tips and ways to make quick money and get rich overnight, please don’t buy this book. Keep it back in the bookstore or library or simply return it to the person from whom you have borrowed it.

An Investment Into Your Financial Literacy I’m glad that you decided to invest in yourself and to read on further. Being financially literate and ensuring that your decisions are balanced, free from any greed or fear, is so very important. We in India have a wonderful opportunity in front of us and I assure you that all those of us who grab this opportunity will be much more prosperous in the coming years. The opportunity is right in front of you. Now it is up to you to decide whether you want to seize it or to simply let it pass. It is my dream and goal to make every Indian financially literate and have a country filled with Happionaires and I’m sure that we can make it happen together! May Saraswati, the goddess of knowledge, always be there with you and may she bless you with Laxmi. Keep smiling and happy wealth creation!

True Knowledge Is Real Wealth And Ignorance Is Real Poverty.

Chapter 1 – I Have No Money! “The Man Who Makes No Mistakes Does Not Usually Make Anything.” Edward John Phelps. It was 24th October, 2008. Just another Friday evening when I had gone for my usual jog to Joggers Park. I find it to be one of the most relaxing places in Mumbai - a lovely park sitting right on the mouth of the Arabian Sea. You can hear the waves splashing on the shore and feel the cool sea breeze even during the hot summer months. Even though it is right in the middle of Mumbai in Bandra, it still feels so far away from all the traffic, noise, pollution and hustle-bustle of the city. The serene environment along with the exercise gives me a tremendous boost in energy and helps me to think more clearly. While walking, I met another regular at the park and started speaking to him. I didn’t know him too well personally, but I love meeting people and speaking to them as I feel I get to learn a lot from other people and their experiences. “Hi, how are you doing Tarun?” I smiled and shook his hand. “Hi Yogesh. I’m good.” he replied, not sounding too cheerful though. “That’s great. So how is work going on these days?” I asked. “Don’t ask…you might be knowing very well how bad the economy is now. Today the stock markets had one of their biggest falls ever. In fact, our company is in big trouble,” he said, sounding worried. “I’m sorry to hear that. But what exactly happened to your company?” I asked, hoping I could try to help him in whatever way possible. “We are in the outsourcing business and over the past three years, we heavily invested all our money into the stock markets, mutual funds and real estate.” “And you have been affected because stock markets, real estate and mutual funds are crashing all over the world?” “Yes. Unfortunately we invested everything we had and didn’t keep any part of it in cash. Even business is being affected as companies in the West are cutting down on costs. We had to lay off almost 20% of our workers. It is hard even for them as they are unemployed now,” he said, as the sea breeze blew across our face and people jogged past us. “Tarun, how come you invested everything you had and didn’t sit on cash?” I asked, very surprised. “Now I know we made a big mistake. To be honest, we got carried away and didn’t do any research or homework. I remember you had told me to read a few good books and

study balance sheets, but I never paid attention to any of your advice. It seemed all so simple in the beginning that I thought why waste time learning and reading if I’m already doing well? Making money was very easy, and we blindly started buying whatever we heard others were buying or whatever was being said on TV or by our broker.” he said, sounding almost apologetic to me. “Tarun, even though people might talk about a slowdown, recession and reduced profits, the world is not going to come to an end anytime soon. And I know this might sound very strange and absurd to you but now is in fact the best time to create wealth,” I stated. “Yogesh, you must be joking! How can now be the best time to create wealth? You might tell me to invest now, as everything is so cheap, but how can I invest if I have no money left? I am extremely frustrated and just feel like giving up now. I see stock markets falling everyday and feel much poorer,” he admitted. “When I started investing, I barely had any money. All I had was a burning desire to learn and create wealth from the knowledge I gathered. I started with only Rs. 750 and the first few years went into learning. I remember the time when my entire investment portfolio was down by as much as 70%, and I had absolutely no cash. But I didn’t give up. Such short phases were difficult and challenging but I knew that I would learn a lot from them and that knowledge would help me a lot in the future. I’m glad I didn’t give up because what I learnt from those phases had me much better prepared for the future. And I can very confidently tell you that today, we in India, have one of the best opportunities in history to create wealth.” I replied, trying to reassure and encourage Tarun. “Why don’t you please tell me what to do now and how I can benefit from this opportunity?” he asked, sounding a bit more motivated now. “I’ll do one thing Tarun. Right now I’ll continue with my exercise and you should do the same too. However, I’m writing a book called “Cash The Crash,” to help more people benefit from opportunities like these instead of panicking and behaving like lemmings all heading to jump off the cliff. Read that book and I’m sure it will help you take decisions in a more informed way yourself. In the mean time, all I can tell you is please stay away from investing if you don’t have the necessary knowledge, skills and mindset. Investing can be very risky if done without proper knowledge and experience.” I said, ready to go and enjoy the cool sea breeze and do some push-ups and pull-ups. “I will be eagerly waiting to read your next book Yogesh and thanks for speaking to me. It really helped.” he said smiling. I smiled back and said, “Take care and don’t worry! See you around.” “Bye. See you,” Tarun replied.

Money is evil… and the less we have the more evil it becomes. -Leonid S. Sukhorukov

I’m sure there are millions of people like Tarun out there who have similar problems. Some of you might have lost a large part of your money investing in stocks at extremely high levels, while others might have very little money to invest. And there might yet be still others who although have the money to invest, but reading the newspapers and watching the business channels everyday are probably too scared to invest. They might be thinking that they should keep all of their money in a bank FD forever and perhaps thanking God that they never invested in mutual funds, commodities or real estate and aren’t in any way associated with the gambling den that is called the “Stock Market”. But in my opinion, if you make the mistake of never investing, you will be a bigger loser than gainer in the long run – especially in a country like India…

Want To Read More? Get Your Copy Of Happionaire’s Cash The Crash Visit The Happionaire Website To Find Out How www.happionaire.com