myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Friday 17 April 2009

Best Small Businesses to Start

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Best Small Businesses to Start

Learn from the examples of entrepreneurs who’ve succeeded in these hot start-up areas
By Matthew Bandyk

Posted November 13, 2008

America's economic future is uncertain. Unemployment is up sharply. Credit is tight. People are worried about their savings. So is it a great time to start a business? "Are you crazy?" might be the quick answer.

But it's not necessarily the right answer. Starting a business has always been a bold, risky move. Even in good economic times, the failure rate of new small businesses is high. But a well-conceived business can always catch on.

So how can a wannabe entrepreneur succeed? U.S. News's Best Small Businesses to Start springs from the idea that those who stand on the shoulders of giants can see the farthest. The entrepreneurs behind the types of start-ups we profile here have defied the odds, finding both profit and an enjoyable, independent lifestyle along the way.

We interviewed over a dozen experts, quizzing them about the economic trends that will most affect small businesses in the years ahead. Then we looked at where entrepreneurs can capitalize on these trends. The 15 start-up ideas here aren't about cashing in on hot fads. They're a way to help you be among the first to catch waves that won't crash down anytime soon.

"The first question you have to ask yourself [before you start a business] is which are the sectors where I have knowledge, skills, and contacts to operate in," says Jeff Cornwall, director of the Center for Entrepreneurship at Belmont University. The 15 Best Small Businesses to Start include a variety of sectors.

Start with this economic trend: the millions of baby boomers who are beginning to retire now. Small businesses like Guava Home Care in Hockessin, Del., are filling the increasing demand for home healthcare, helping seniors stay in their homes and be more independent. Small businesses can offer the human touch and specialized service that larger ones may find hard to provide.

Another trend is globalization. More U.S. businesses than ever are connected with the world. There's a huge market out there for American entrepreneurs to sell to, and it's growing. "There's going to be an equivalent to the U.S. middle class created each year over the next decade" in the developing world, says Steve King of the Institute for the Future.

Some entrepreneurs—be they companies going global or outsourcing firms—educate and train businesses in the new game of globalization. Export managers link domestic buyers with foreign sellers.

The demand for energy efficiency and an environmentally friendly footprint is also spurring entrepreneurship. Energy auditors help businesses and homes save money by reducing energy costs.

In the increasingly competitive field of education, fledgling higher education services like New Mountain Ventures are finding ways to keep people in school.
Parents worried about their kids' development are willing to pay top dollar to athletic trainers in hopes of creating the next star athletes. They also will hire professional tutors who can give their kids the individualized attention that the major test-prep companies maybe cannot.

Today's struggling economy may itself present opportunities. Businesses slammed by the economic slowdown often look to cut back and focus on their most essential tasks. That can mean contracting out jobs once done in-house. Outsourcing does not have to mean moving American jobs overseas. Indeed, the demand for corporate outsourcing has created a profitable opportunity for smart, nimble entrepreneurs who can help bigger companies save. With her website virtualhires.com, Rosemary Zalewski of Cleveland, Ohio places virtual assistants who do freelance administrative work at big companies. Similarly, freelance Web writer Melissa Rudy of wordsbymelissa.com lands projects writing online content for companies that don't have the staff to do it themselves. She now makes more money self-employed than she did working as a technical writer.

Modern communication tools also make it easier for start-ups to get off the ground. Social networking sites and blogs help entrepreneurs, like career counselors and financial advisers, establish their expertise and credibility. And customers can find you today with a mouse click. Sellers of fresh produce are using the Internet to cater to the growing demand for organic food: You can place your order on online farmers' markets and have it delivered to your house.

Many of the Best Small Businesses to Start can be run from a home office, cutting start-up costs. Alex Chamandy of Arlington, Va., runs a computer repair business from his basement. An art dealer is at home today online as much as in a gallery.

It's not just old businesses that are being revolutionized. Some start-ups, like online consignment stores, are a brand-new type of business. Purely online businesses may be more recessionproof than traditional small businesses, as they're not "tied into any particular slowdowns in that local area," says Pamela Slim, author of the Escape from Cubicle Nation blog.

Best Small Businesses to Start shows you how you can make your start-up more likely to succeed. The businesses on our list are certainly not the only way for entrepreneurs to succeed in today's economy (please let us know about your ideas for great start-ups by sending a message to smallbizcenter@usnews.com). But we hope this will get you started.

http://www.usnews.com/articles/business/best-small-businesses/2008/11/13/best-small-businesses-to-start.html

15 Best Small Businesses to Start
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Athletic Trainer
Career Counselor or Coach
Computer Services
Energy Auditing
Export Manager
Financial Adviser
Freelance Web Writer
Going Global Firm
Higher Education Services
Home Healthcare
Online Art Dealer
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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Friday 17 April 2009

Best Small Businesses to Start

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All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

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