Extra Investing returns by Investing Like Warren Buffett
Overconfidence, Underreaction to Warren Buffett’s Investments is an interesting paper I saw at Simoleon Sense. To understand the all the details I suggest you read it yourself. You may derive different conclusions than I did. I had a few take aways. First, that despite all logic to the contrary, if you had followed Warren Buffett’s [...]
Investing Strategies for the Small Investor and 80-20 Portfolios
When you begin to invest you need to develop an investing strategy. Having a strategy is like a google map. It will help direct you down the right freeway and hopefully help you avoid the pitfalls, er traffic, and get to the destination you want. If you are at this website you know my overall [...]
Understanding Investing Risk
What is investment risk? Wikipedia says there are two types of investment riskless and risky. I will start by disagreeing. It is a subject I have written about before in Does a Risk Free Rate Exist? My answer to the posed question is no.
Margin of Safety – Beginning Investor Terms
Margin of Safety is a concept I write about a lot. It is the make or break for any investment. While I may fudge the amount from time to time, all investments have to have a margin of safety to be worth shelling out my cash. But what is a Margin of Safety?
The Problem with Back Testing Investing Strategies for Practical Investors
In surveying some of my favorite blogs recently, I have come upon something that hadn’t previously occurred to me, but could potentially alter how I invest. That is the problem with back testing Investing Strategies. Greenbackd posted an interesting starter piece on this subject called Walking the Walk, that led me back to the original blog from Aswath Damodaran called Transaction Costs and beating the Market. I have often thought there were practical problems with back testing, but I had not tried to articulate them until I read these posts. Both are excellent and worth reading. Damodaran, who is a Finance professor at NYU, and an author of Investment Fables (which I own), writes about the many ways to beat the market in general terms and then goes on to say, “Most of these beat-the-market approaches, and especially the well researched ones, are backed up by evidence from back testing, where the approach is tried on historical data and found to deliver “excess returns”.
Good Decisions, Bad Outcomes in Investing
One of my readers, Parker, pointed out in his comment on my post about Mistakes in Investing, that “one of the trickiest things about investing is determining when a bad result stems from a mistake (an oversight or error in process), or just from inevitable bad luck.” I felt that it was such an important distinction I would post about it.
Intrinsic Value – Beginning Investing Terms
Intrinsic value may be the most important concept in value investing. It is the foundation of everything else. Value Investors all agree that you start with the intrinsic value of a company. Now, how you arrive at that value is a different proposition, there you will have a lot of disagreement.
Investing Risks – What is Risk?
Looking at the risks of an investment is vital to understanding whether or not it is a sound investment. In a speech Alice Schroeder, author of Snowball, said that Warren Buffett starts his examination of a potential company by looking at the risks involved. If the risk is too high, he won’t go any further. We would be wise to follow this example.
Ben Graham’s Stock Selection Criteria – Value Investing Series
I found this idea in Tweedy Browne’s What Has Worked in Investing. And after a little more research I have included it in my Value Investing Series. In a “Test of Ben Graham’s Stock selection Criteria,” Henry Oppenheimer studied whether or not a set of Ben Graham’s investing criteria actually worked. Toward the end of Graham’s life he espoused a different, although related criteria to what he espoused in his master works Security Analysis and the Intelligent Investor.
Qiao Xing Universal Telephone (XING) – Update – Is anything going on?
I am not big on updates on Portfolio stocks for no reason. A little over a month ago I said I was purchasing XING a Chinese Net Net Stock. I purchased the stock at $1.91/share and in the last five weeks the stock has risen to $2.73/share or about 42% increase. I am not complaining but I found myself asking, Why?
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