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.
Saturday 24 July 2010
Friday 23 July 2010
Yen Carry Trade
Traders have been shorting the Yen and using the funds to purchase stocks,
http://www.marketoracle.co.uk/Article11784.html
Volatility Play Investing
Volatility Play Investing
A method of trading stocks that myself and my team have developed. It involves buying and selling the same stocks, again and again, as they undergo repetitive fluctuation in price.
Short-Selling
Short-Selling
Short selling is the strategy of selling the shares first, then having the commitment to buy them back at a later date.
Sell Urgently when the Fundamentals Deteriorated
Averaging Down
Buying more shares of a stock you already own, and getting the new shares at a lower price because the stock has been dropping.
Averaging Down is not advisable in this situation.
Remember:
Transmile, Nam Fatt, Kenmark, Carotec
Country GDP as US States
Fascinating stuff: Carl Størmer points us to this amazing map of the United States. Each state's economic output is analogized to another country's GDP.
Notable omissions: U.K., Japan, Germany, China,
Russia
, Italy.
Russia
, Italy.
I cannot vouch for the precision of this, but by eyeball, it looks about right.
http://bigpicture.typepad.com/comments/2007/01/countries_gdp_a.html
Good and Poor Risk-Reward Ratios and their relationships to Expected Return
When the Risk-Reward Ratio is Good:
The Probability of Loss is Lower
The Expected Return is Higher
When the Risk-Reward Ratio is Poor:
The Probability of Loss is Higher
The Expected Return is Lower
http://www.centaur.co.za/investment_methodology/index.html
Margin of Safety Principle: Historical Stock Price Vs Intrinsic Value Per Share
http://www.oldschoolvalue.com/investment-tools/investment-spreadsheet-how-to-use-tutorial/
http://www.hendersonassociates.co.nz/investment-philosophy-xidc11189.html
*Intrinsic value can be defined as the future cash flow a company will generate, discounted back into today's dollars.
Investment Philosophy
Our investment philosophy is based on the notion that if you want to become successful in a discipline, start off by studying those that have already succeeded in it.
When seeking some of the greats in the investing industry to learn from, you can't go past the likes of Warren Buffett, Benjamin Graham and Phil Fisher. Buffett is the Chairman of Berkshire Hathaway and has devoted his life to investing. He is the second richest person in America, behind Bill Gates, and has made over US$35 billon in the stock market over a fifty year period. When it comes to investing people will tend to listen to their friends at the pub, neighbour, stock broker, or a newspaper columnist who has maybe never made money in the stock market, etc, but for some strange reason they dont tend to listen to those that have successful track records.
After studying these investors you learn of a philosophy containing such terms as 'Intrinsic value'*, 'Mr Market', 'Value investing', 'Look-through earnings' etc.
Based on this philosophy we construct our portfolio from a New Zealand investors perspective. We run a database on the top investors from around the world and use this to pick the top ten investment managers for our equity portfolio.
Invariably the factor that distinguishes the managers we use is their focus on purchasing shares that are priced at a sufficient discount to the companys Intrinsic value*. This then provides what Benjamin Graham termed a 'Margin of safety'. Ben wrote in The Intelligent Investor - "Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety."
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