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 [...]
Morningstar’s Opportunistic Investor – Review
Back in November I talked about trying out Premium Investing Services before committing your limited capital. One of the services I tried out was Morningstar’s Opportunistic Investor. I have explored the service and initially I thought it was worth the money. They describe themselves as a service that, ”seeks to uncover investment opportunities in no-moat stocks, deep cyclicals, arbitrage opportunities, spin-offs, bankruptcy reorganizations, and other special situations. We typically look for upside potential that is many times the downside risk, and prefer stocks with identifiable catalysts to unlock value. We will constantly adjust our portfolio to maintain the best possible risk-reward ratio.”
Top Ten Investment List for 2009
Everyone loves lists it seems for this time of year, so I have complied my own. They are not all the same type of items, just important things that came up this past year. They are certainly not all the best investment ideas I had.
Free Magic Formula Lists – Chroma Investment Links
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.
Value Investors Club
Valuehuntr one of the blogs that we follow has been accepted in to the Value Investors club. That is pretty cool. The value Investor’s club was started by the genius investor and writer Joel Greenblatt.
Beginning Investor Terms – Price Earnings Ratio (P/E)
P/E or Price Earnings Ratio is the single most discussed concept there is in stock investing. That doesn’t mean it is the most important. Because a mind numbing number of people discuss Paris Hilton doesn’t make her important. O.k. maybe I have gone too far. P/E is more important than Paris Hilton. It is just overused and its limitations are not always understood by novice investors.
What do Beginning Investors Need?
If you are a beginning investor what do you need to succeed? The short answer is perspective and patience. But the devil is in the details.
Perspective comes with time. But if you are starting out how can you possibly gain the perspective. Borrow someone else’s. There are gobs of great investors that will tell you how great they are on their websites. A few great investors have written books that are worth reading. Joel Greenblatt and Seth Klarmann come to mind. Spend some time reading and digesting the methodology. Pick it a part and decide what works for you and what doesn’t.
Spin offs – Good for Small Time Investors?
For the small time investor, or someone just beginning to invest for themselves, you have to remember to look to see where you have an advantage over other participants in the stock market. Odd lot purchases like the Zerba Systems (ZRBA) purchase are a good start. No mutual fund or hedge fund will waste their time with it, too small of a profit.
What other opportunities are there? The next type of special situation worth looking into are spin-offs. A spin off is when a company decides to split off a subsidiary or division and distribute the stock to its shareholders.