Value Investing News

When it comes to pleasing Wall Street, some companies would do anything to spruce up their books. One of the most common shenanigans management would use is one-time charges.

"Price is what you pay. Value is what you get." says Buffett. Valuing a business is, therefore, a fundamental skill that every value investor must master to be able to discern the intrinsic value of a business from publicly available information.

In How to Find Money to Invest, I suggested investors just starting out to invest in a low-cost index fund such as Vanguard 500 Index Fund. It’s a fine advice (because I gave it). Indexing is awesome because you don’t have to know a thing about investing. But even if you hate investing, the least you can do for yourself is to understand indexing.

Picking the right company to invest in is like trying to pick up a grain of sand in your rice with your chopsticks. To come out unscathed, one needs to avoid a lot of investment follies. But everyone makes mistakes. Fortunately, simply avoiding the biggest mistakes is sufficient for you to do well.

Buy low, sell high. It's obviously good advice. In practice, it's not as easy as it sounds. How do you know tomorrow the price will not drop another 10% or 30% for that matter? If you bought today with all the cash at hand and it drops another 50% tomorrow, no amount of self-kicking would relief the pain inflicted.

As I mentioned in my earlier post As I mentioned in my earlier post The Best Kept Secret to Successful Investing, the most important rule to remember in investing is never lose money. However, there is one assumption that could throw all your assumptions off course, even with a wide margin of safety.

Welcome to the hundred-and-first edition of Festival of Stocks. The Festival of Stocks is a blog carnival dedicated to highlighting bloggers’ best articles on stock market related topics. This will include research and commentary on specific stocks, industry analysis, ETFs, REITs, stock derivatives, and other related topics.

Anurag Gupta, an average Joe retail investor, buys 150 stocks and he's the poster child of diversification. Who's Anurag? Doesn't matter. What's important is he managed to beat the broad market. That's something. Or is it?

The typical American spends $28,000 on a brand new car. This translates to approximately $8,000 yearly to own and drive the car. When I think about how a $10,000 investment could grow into a $1 million in 50 years, I would hesitate spending even a dollar from that $10,000. Do you really want to lose $100 in 50 years just so you can have that Wrigley’s spearmint gum?

"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1." Yes, everyone has heard this famous Buffett quote before. But it’s like me telling you, "Rule No. 1 in becoming a millionaire is to make a lot of money." And you’d roll your eyes and mock me, "Yeah, duh! The 64-million-dollar question is how the hell do you make a lot of money?"

The average person has some disposable income. Disposable income is money left over after paying for basic necessities such as housing, food, clothing, transportation and entertainment. Notice how our necessities have evolved from prehistoric needs to include entertainment. Well, I’m being realistic.