My apologies to my readers. I have not posted since the weekend and will probably not be able to post until after this weekend due to a family emergency. I hope to continue with the portfolio postings and value investing topics next week. Related Posts:No Related Posts
I have decided to set up another real money portfolio to test out my ideas of 80-20 Investing, which I have previously discussed. For 20% of the effort I believe it is possible to get 80% of the investing result. The idea is fairly simple. Set up some investing criteria, and when a stock passes […]
This post is really a riff on yesterday’s A Few Lessons in Behavioral Finance. What I was really struck by is all the psychological traps that are waiting for us. And it really isn’t whether we will make mistakes in investing, that is all but certain, but how we can minimize what often seems to […]
My Investing Notebook has a presentation called Confessions of a Value Investor: A Few Lessons in Behavioral Finance. I am ordinarily not a fan of looking at presentation, because it is easy to make incorrect conclusions without understanding the context or the point the author is trying to make. In this case, I think the […]
After listening to the noise, er, Financial bobble heads, I have often thought, wouldn’t it be great if someone recorded what these idiots said and then held them to their predictions. Well it turns out their is a place that has at least partially granted my wish. It is called CXO Advisory Group (Yes, I […]
One of the things about the pursuit of knowledge, is that it is satisfying for its own sake. I have found that you can often find useful information, or perspectives in other disciplines. One of my new favorite blogs Psy-Fi is the kind of place that opens your mind to other perspectives, but then circles […]
This is really the third in the series of Investing 101, the second of which discussed setting up a Small Investor Portfolio. But the title would have been too long if I left all that in. As value investors we are not just interested in value of our stocks but the process in which we […]
This is really the second in the series of Investing 101 that I previously started.
It is my intention to start an investing account with just $2000. The reason for this is that it is an amount of money that one could save in a year with less than $200/month. I will add $200/month to the account to mirror what a small investor might be able to do. $2000 is also an amount that you may have on hand, saved from not buying a Starbucks latte every day for a couple of years. O.k., lets not get that extreme. Like all the investments detailed on this website, all trades will be real money, so all gains or losses will be actual and reported on this blog. I will call this the Chroma Investing Small Investor Portfolio.
An account of this size will allow you to hold 3 or 4 equity positions and thus to have a focused value oriented portfolio. Starting with a small amount will also force a certain amount of discipline in buying. Knowing in advance that you will initially only be able to hold 3-4 positions will focus our attention on the quality of the investments to make sure that we are making only the best investment decisions.
The investing philosophy will be straight forward: value investing with an emphasis on NCAV and other deeply discounted asset plays, special situation investments, or other empirically supported value investing approaches, all with an emphasis on maintaining a margin of safety and keeping an eye on understanding the investment risks inherent to each company. I will concentrate on small and micro cap companies, where the smallness of our portfolio is actually an advantage over big money investors. I will look for the best value, and not shy away from Penny Stocks, if that is where the value leads. My intention is to avoid leverage, and any investment involving margins, including options and futures. It is possible in the future that I will develop a value approach that looks at investing against the market or an individual company if I can satisfy myself that such a strategy can be made in a beneficial risk/reward scenario.
I do not intend to invest in mutual funds, ETF’s or bonds. Nor will their be any speculation on commodities, currency or other other bets outside of my ken.
Tomorrow I will begin the search for the best online broker for this account.
the empirical research paper Can Individual Investors Beat the Market? by Coval. Hirshliefer, and Shumway (2005).
Individuals, even small investors, beating the market is what this site is all about. This study points out that previous studies showing that individual investors underperform the market, are misleading. It demonstrated that SOME individual investors can consistently out perform the market and their investing peers.
I am starting a new series. I am going to walk investors through the steps of investing. As always I am targeting investors who are just starting out or small money investors. It has been my intention for a while to set up a separate chroma investing account and to use it as an example of how to and not to do things. I have always invested my own cash in every investment idea I suggested.keep looking »