Thursday, 28 March 2013

Investment Basics (a 38 Week - Comprehensive Course)


Investment Basics (a 38 Week - Comprehensive Course)
By: Professor Steven Bauer
Text: Google has the answers to most all of your questions, after exploring Google if you still have thoughts or questions my Email is open 24/7.
Each week you will receive your Course Materials. There will be two kinds of highlights: a) Prof's Guidance, and b) Italic within the text material. You should consider printing the Course Materials and making notes of those areas of questions and perhaps the highlights and go to Google to see what is available to supplement those highlights. I'm here to help.
Freshman Year
Course 101 - Stock Versus Other Investments
Course 102 - The Magic of Compounding
Course 103 - Investing for the Long Run
Course 104 - What Matters & What Doesn't
Course 105 - The Purpose of a Company
Course 106 - Gathering Information
Course 107 - Introduction to Financial Statements
Course 108 - Learn the Lingo & Some Basic Ratios
Sophomore Year
Course 201 - Stocks & Taxes
Course 202 - Using Financial Services Wisely
Course 203 - Understanding the News
Course 204 - Start Thinking Like an Analyst
Course 205 - Economic Moats
Course 206 - More on Competitive Positioning
Course 207 - Weighting Management Quality
Junor Year
Course 301 - The Income Statement
Course 302 - The Balance Sheet
Course 303 - The Statement of Cash Flows
Course 304 - Interpreting the Numbers
Course 305 - Quantifying Competitive Advantages
Senor Year
Course 401 - Understanding Value
Course 402 - Using Ratios and Multiples
Course 403 - Introduction to Discounted Cash Flow
Course 404 - Putting DCF into Action
Course 405 - The Fat-Pitch Strategy
Course 406 - Using Morningstar as a Reference
Course 407 - Psychology and Investing
Course 408 - The Case for Dividends
Course 409 - The Dividend Drill
Graduate School
Course 501 - Constructing a Portfolio
Course 502 - Introduction to Options
Course 503 - Unconventional Equities
Course 504 - Wise Analysts: Benjamin Graham
Course 505 - Wise Analysts: Philip Fisher
Course 506 - Wise Analysts: Warren Buffett
Course 507 - Wise Analysts: Peter Lynch
Course 508 - Wise Analysts: Others
Course 509 - 20 Stock & Investing Tips
This Completes the List of Courses.
Wishing you a wonderful learning experience and the continued desire to grow your knowledge. Education is an essential part of living wisely and the experiences of life, I hope you make it fun.
Learning how to consistently profit in the Stock Market, in good times and in not so good times requires time and unfortunately mistakes which are called losses. Why not be profitable while you are learning? Let me know if I can help.

http://www.safehaven.com/article/20772/investment-basics-course-505-wise-analysts-philip-fisher



Author: Steve Bauer

This is a Course called "Investment Basics" - created by Professor Steven Bauer, a retired university professor and still active asset manager and consultant / mentor.

2011

2010

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Philip Fisher: Quality first, Price second

•Philip Fisher:
Quality first, Price second
•
•Fisher formulated a clear and sensible investing strategy (which I'll get to in a second), wrote one of the best investment books of all time, Common Stocks and Uncommon Profits, and made a good deal of money for himself and his clients.
•
•His son wrote that Phil's best advice was 
•to "always think long term," 
•to "buy what you understand," and 
•to own "not too many stocks." 
•
•Charles Munger, who is Buffett's partner, praised Fisher at the 1993 annual meeting of their company, Berkshire Hathaway Inc. (BRK/A): "Phil Fisher believed in concentrating in about 10 good investments and was happy with a limited number.
•
•That is very much in our playbook.
•And he believed in knowing a lot about the things he did invest in.  And that's in our playbook, too.
•And the reason why it's in our playbook is that to some extent, we learned it from him."
•
•In addition to the warning against over-diversification — or what Peter Lynch, the great Fidelity Magellan fund manager, calls "de-worse-ification" — the book makes three important points:
•
•(1)  First, don't worry too much about price.  (Quality first, Price second)
•(2)  Second, Fisher says that investors must ask, "Does the company have a management of unquestionable integrity?" 
•(3)  Finally, Fisher offered the best advice ever on selling stocks. "It is only occasionally," he wrote, "that there is any reason for selling at all."
•
•
•
•(1)  First, don't worry too much about price.  (Quality first, Price second)
•
•(1)  First, don't worry too much about price.  (Quality first, Price second)
•"Even in these earlier times [he's talking here about 1913], finding the really outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people than did the more colorful practice of trying to buy them cheap and sell them dear.”
•(1)  First, don't worry too much about price.  (Quality first, Price second)
•In fretting about whether a stock is cheap or expensive, many investors miss out on owning great companies. 
•My own rule is: quality first, price second.
•
•
•(2)  Second, Fisher says that investors must ask, "Does the company have a management of unquestionable integrity?" 
•
•(3)  Finally, Fisher offered the best advice ever on selling stocks. "It is only occasionally," he wrote, "that there is any reason for selling at all."
•
•Yes, but what are those occasions?
•They come down to this: Sell if a company has deteriorated in some important way.  
•And I don't mean price! 
•
•Fisher's view, instead, is to look to the business — the company itself, not the stock. 
•
•"When companies deteriorate, they usually do so for one of two reasons: 
•Either there has been a deterioration of management, or 
•the company no longer has the prospect of increasing the markets for its product in the way it formerly did."
•
•A stock-price decline can be a key signal:  "Pay attention!  Something may be wrong!" 
•But the decline alone would not prompt me to sell.  
•Nor would a rise in price. 
•
•Time to sell? 
•If you did, you missed another doubling.
•
•"How long should you hold a stock? 
•As long as the good things that attracted you to the company are still there."
•  
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The Peter Lynch Approach in Brief


•The Peter Lynch Approach in Brief
•Philosophy and style
•Investment in companies in which there is a well-grounded expectation concerning the firm’s growth prospects and in which the stock can be bought at a reasonable price.
•A thorough understanding of the company and its competitive environment is the only "edge" investors have over other investors in finding reasonably valued stocks.
•Universe of stocks
•All listed and over-the-counter stocks - no restrictions.
•
•Criteria for initial consideration
•Select from industries and companies with which you are familiar and have an understanding of the factors that will move the stock price.
•Make sure you can articulate a prospective stock’s "story line"-the company’s plans for increasing growth and any other series of events that will help the firm-and make sure you understand and balance them against any potential pitfalls.
•Categorizing the stocks among six major "story" lines is helpful when evaluating prospective stocks.
•Criteria for initial consideration
•Specific factors depend on the firm’s "story," but these factors should be examined:
1.Year-by-year earnings: Look for stability and consistency, and an upward trend.
2.P/E relative to historical average: The price-earnings ratio should be in the lower range of its historical average.
3.P/E relative to industry average: The price-earnings ratio should be below the industry average.
4.P/E relative to earnings growth rate: A price-earnings ratio of half the level of historical earnings growth is attractive; relative ratios above 2.0 are unattractive. For dividend-paying stocks, use the price-earnings ratio divided by the sum of the earnings growth rate and dividend yield-ratios below 0.5 are attractive, ratios above 1.0 are poor.
5.Debt-equity ratio: The company’s balance sheet should be strong, with low levels of debt relative to equity financing, and be particularly wary of high levels of bank debt.
6.Net cash per share: The net cash per share relative to share price should be high.
7.Dividends and payout ratio: For investors seeking dividend-paying firms, look for a low payout ratio (earnings per share divided by dividends per share) and long records (20 to 30 years) of regularly raising dividends.
8.Inventories: Particularly important for cyclicals, inventories that are piling up are a warning flag, particularly if growing faster than sales.
•Other favorable characteristics
•The name is boring, the product or service is in a boring area, the company does something disagreeable or depressing, or there are rumors of something bad about the company.
•The company is a spin-off.
•The fast-growing company is in a no-growth industry.
•The company is a niche firm controlling a market segment.
•The company produces a product that people tend to keep buying during good times and bad.
•The company can take advantages of technological advances, but is not a direct producer of technology.
•The is a low percentage of shares held by institutions and there is low analyst coverage.
•Insiders are buying shares.
•The company is buying back shares.
•
•Unfavorable characteristics
•Hot stocks in hot industries.
•Companies (particularly small firms) with big plans that have not yet been proven.
•Profitable companies engaged in diversifying acquisitions. Lynch terms these "diworseifications."
•Companies in which one customer accounts for 25% to 50% of their sales.
•Stock monitoring and when to sell
•Do not diversify simply to diversify, particularly if it means less familiarity with the firms. Invest in whatever number of firms is large enough to still allow you to fully research and understand each firm. Invest in several categories of stock for diversification.
•Review holdings every few months, rechecking the company "story" to see if anything has changed. Sell if the "story" has played out as expected or something in the story fails to unfold as expected or fundamentals deteriorate.
•Price drops usually should be viewed as an opportunity to buy more of a good prospect at cheaper prices.
•Consider "rotation"-selling played-out stocks with stocks with a similar story, but better prospects. Maintain a long-term commitment to the stock market and focus on relative fundamental values.
•
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