Friday 7 August 2009

Challenges for the Value Investor

A value investor:

1. Has developed his method to analyze stocks.

2. Has established general principles for his stock selection and for protection of his portfolio (portfolio management).

3. Has the ability to distinguish between his investment and his speculation.

4. Has always emphasized safety of his principal in his investing.

5. Has the humility to know that an important but difficult topic is his determination of the future prospects of an enterprise.

6. Has the enthusiasm to look for bargains using his technique of value investing, often placing this technique beyond its relative importance in this entire field of investing.

7. Has adopted a critical approach to his investing being concerned with concepts, methods, standards, principles, and, above all, with logical reasoning.

8. Has a good understanding of the theory for the values that are applicable in his practice.

9. Has avoided prescribing standards which are too difficult for him to follow, or technical methods which are more trouble to him than they are worth.

10. Has the ability to blend his divergent experiences of the recent and the remoter past to help and guide him in navigating the uncertain future.

11. Has always approach his investing "from the viewpoint of calamity."

12. Has guarded himself against overemphasis upon the superficial and the temporary.

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