or More random items about what this blog is about than you really wanted to know This is a reworked article that I posted back when Chroma first started, but no one read it, so it is new information to anyone hanging out now. What is this Value Investing Blog about anyway? Since you are […]
Although this site is largely geared toward individual stocks, it seems to me, to better serve the beginning investors I need to address the more passive investment strategies that may be attractive to individual investors without much time on their hands to investigate individual companies but want to understand their investments. ETF Defined An Exchange […]
The Super Investors of Graham and Doddsville was a famous article written by Warren Buffett in the 1980’s describing value investors, in the Ben Graham tradition, who disproved the efficient market theory. In that tradition, I am pointing the way to a free newsletter entitled: Graham and Doddsville that is produced by the students of […]
The Value Investing Congress is being held in New York on October 17 & 18th. It is a great value investing conference to learn from experienced investors with different approaches some general philosophical and some actionable. My readers are entitled to a $1900 discount if you purchase your pass by July 29th. I am very […]
Ben at Inoculated Investor has posted his terrific notes on the Final Westco Conversation With Charlie Munger. These are Ben’s notes, not mine, so if you have praise, go to his website and thank him. Charlie Munger is, in his own way, an investing rock star, like his partner in Berkshire Hathaway, Warren Buffett. But […]
One of the ways you develop an edge is continuing to refine your investing chops. One of the best ways, apart from reading this blog, is to learn from masters, investors who have the skill and experience to help you develop insight into the process of value investing. What if I told you could do […]
Warren Buffett has often said how much he likes companies that buy back their own shares. He has said this in comparison to dividends. The theoretical reason is clear. Dividends are taxed, best case at 15% where as the effect of share buy backs is untaxed. The effect of buying back shares, in the optimal […]
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.
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 »