One of the things essential to discovering your own investing strategy is discovering what people have tried before you. In the distant past, pre-web, people read books, because I am old fashioned, I still read them. And surprise, they are still valuable today. I have added a new section to Chroma Investing; A Value Investing […]
Value Investing is a mind set that guides you in your investing decisions. It does not involve technical analysis or trend following trading. Value Investing is fundamentally about buying a stock because you think the market has made a mistake and is undervaluing a company right now. The following is a simplified version of what […]
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 […]
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 […]
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”.
One of my favorite investing blogs was F Wallstreet, until Joe Ponzio stopped blogging because his hedge fund was taking up too much of his time. Joe has returned with analysis of Breitburn, a natural gas and oil company that Ponzio thinks has been overly beaten up. Check it out and let me know what you think. He has a four page analysis that is interesting. I have no conviction about commodities, as they seem a speculator’s market to me. That is not a slight. I am just not very good at speculating about the future.
Altman Z score has been around since the 1960’s and I have posted about it previously. Originally it was set up and measured the risk of bankruptcy among manufacturing firms. It turns out that in subsequent studies it was found that the original Altman Z score might be under reporting bankruptcies among non-manufacturing firms. Altman Z may be a great tool but it must be used correctly.
I am still working on an evaluation of a Net Net company that I have not invested in. But I started thinking. Do any of you have investing ideas that you would like to share? It doesn’t have to be a Net Net stock, or even a value investing stock. I am simply interested in hearing what readers of this blog have been looking at. You don’t even have to post an idea of something that you have actually invested in, yet.
]one of my reader’s, emailed me this tip as we commiserated about the lack of programs that helped Mac based investors. While this program also works on the Windows platform, it will be more useful for Mac users, since there are better programs for PC’s than this. The progam is called the Stock Investment Guide.
But I wanted to turn you on to an interesting site. It is essentially a list of Magic Formula stocks. The Magic Formula Investing isn’t new. Joel Greenblatt of Gotham Capital fame devised this system of essentially low P/E, High ROIC companies. He outlined the Magic Formula Investing Approach in his Little Book that Beats the Market.keep looking »