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.

Thursday 4 October 2012

How To Land A Finance Job With A Bachelor's Degree

Finance is an extremely competitive profession, especially at the entry level. The desks of investment professionals' are piled high with the resumes of students who have dreams of big money, nice cars and getting on the path to being Masters of the Universe by the time they are 30. Finance is also a cyclical job market: when the stock market is booming, finance jobs boom as well, but when returns dwindle, so do the job listings. And even when the market is flush with jobs, finding a good job is key. Follow these five tips to dramatically increase your chance of landing a finance job even before hitting graduation.

Tip No.1 - Land An Internship

For entry-level positions, interviewers do not expect candidates to know much. Many companies have orientation and training programs that teach new recruits the specifics of what they need to know, but having background knowledge is still expected. An internship can help to fill in for the lack of full-time experience and is not as difficult to get as a real job. Internships do not generally require much, if any, prior knowledge. They will likely be based around grunt work, performing tasks that anyone can do, such as making copies. But they provide learning experiences, references, networking opportunities and something tangible to talk about in an interview. Doing several internships also provides a great display of work ethic, which is a sought-after quality in the finance industry.

Tip No.2 - Start Early

If you start in the summer before your first year in college, you can have a total of four summer internships before senior year. Is it necessary to do that many? No, but why not? Many finance internships are paid, so there are no excuses. If you are going to get a summer job anyway, it is better to do something that will further your career instead of just flipping burgers. The same holds true when attending college in a metropolitan area. Instead of working part-time at the local clothing store during the school year, file papers for a local investment advisor.

Tip No.3 - Diversify Your Experiences

Don't do five internships for equity traders unless you're 100% sure you want to trade for a living. Try to switch it up a little and land internships around the industry. This will help you gain a better perspective in different areas and help you figure out what you really want to do. If you want to research bonds, an interviewer is likely to ask why. If you had an internship in fixed income and another in equities, you can give a more eloquent answer than, "I just like bonds." Also, the different branches of finance are generally interconnected somehow. Portfolio management makes use of trading and research, for example. Knowing a little about how the different sectors of finance work can give you an edge in the job market.

Finally, work hard at any internship you land. The references can be valuable no matter what, but more importantly, impressing your bosses during an internship can be a great way to open doors for a future full-time job with that company. Many of the summer analyst/internship programs at big banks are created to look for entry-level hires for the next year.

Tip No.4 - Learn to Talk the Talk

To get a job in finance, you should ideally pick a business-oriented major like finance or economics. Many companies say that this does not matter, and it is very common to hear, "We hire all majors - we even have art history majors working at XYZ Company." All is not lost for the art history majors, but it is still certainly better to apply for finance jobs with a finance degree.

Another great way to learn is to make reading the financial news part of your regular routine. Pick up a subscription to The Wall Street Journal and/or the Financial Times and read it every day. As a student, you can normally get discounted subscriptions for these publications. Picking up a weekly magazine like The Economist orBarron’s will help expand your knowledge as well.

Immersing yourself in financial reading will help you get used to the terms and jargon of Wall Street, which is one of the biggest hurdles to cross. Do you know what MBS, CDS, BPS, EBITDA and federal discount rate mean? Regularly reading the financial news throughout college will help you pick up all the basics in due time. Even if you are studying this vocabulary in your courses, reading more about finance will help you to solidify that knowledge and feel more comfortable discussing it. Other ways of picking up financial knowledge are reading investing books, from basic to advanced topics, and reading tutorials and guides from financial websites (looks like you're already on the right track there). Treat learning the financial language the same as learning a foreign language. Instead of ignoring words that you don't understand, look those terms up to help broaden your knowledge.

Tip No.5 - Start Your CFA

As stated earlier, the job market in finance is always very competitive. Many applicants will have high GPAs and degrees from good schools and will have done the things listed above. It is always good to go above and beyond to differentiate yourself from the pack. One way of doing this is to take the Chartered Financial Analyst (CFA)Level 1 exam. The CFA designation is well respected in the financial industry. You'll need to pass three exams and have four years of eligible work experience to obtain the designation, but the first exam can be taken in the final year of a bachelor's program, either in December or June.

Financial professionals know the amount of time and dedication that the program entails (a minimum of 250 hours of study is recommended per exam), so coming out of an undergraduate program having passed the first exam will certainly make you stand out among other job candidates. The commitment to the program will display your work ethic and dedication to finance.

The Bottom Line

In both good and bad times, it is difficult for undergraduates to land a good entry-level position. Your resume is going to get lumped in with hundreds of others from candidates with strong credentials. The competitive nature of the finance job market means that focusing early, gaining experience with internships and gaining knowledge from following the news and reading will help you stay at the front of the pack. Finally, doing something to break off from the pack, like entering the CFA program in your final year of college, can better your chances of landing a good job. Work hard and good luck!

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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)

Thursday 4 October 2012

How To Land A Finance Job With A Bachelor's Degree

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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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