Chroma Investing

Value Investing for beginning & small time investors and the value investing strategies of Graham & Klarman

Getting Warren Buffett sized returns by avoiding investing like Buffett

The title of this post may seem paradoxical. But it is not. There is a qualifier to the statement. The title should actually be “if you want to earn the amazing returns that Warren Buffett earned in the 1950’s you can’t invest like Buffett does today.” The reason is simple: he is a victim of […]

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 […]

Zecco vs. ChoiceTrade – Which is better?

As I narrowed my choice for the Small Investor Portfolio‘s broker, I decided I would set up an account at both Zecco and Choice Trade. One would be for the Small Investor’s Portfolio and the other for the 80-20 portfolio. I have my impressions of setting up accounts at both companies. Choice Trade- The first […]

Best Online Broker for Penny Stocks and the Small Value Investor

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 […]

The Chroma Investing Small Investor Portfolio

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.

Investing 101 for Small or Beginning Investors – Let’s Start

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.

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”.

Audiovox (VOXX) a Net Net – Buy

What is Audiovox? According to their latest 10Q it, “is a recognized leader in the marketing of automotive entertainment, vehicle security and remote start systems, consumer electronics products and consumer electronics accessories. The company is number one in mobile video and places in the top ten of almost every category that it sells.”

Solitron Devices (OTC:SODI) A Net Net Stock added to Portfolio

Today I bought 1500 shares of Solitron Devices (OTC:SODI) at $2.22/share with a $4.95 brokerage fee for a total of $3334.95 investment. For someone maintaining a small portfolio this is a large investment.

VaxGen (VXGN) Closed Position

I have sold my position in VaxGen at $.64/share. I originally opened my position in VXGN in August for $.54share because it was a Net Net stock whose potential was actually in the $.78-$.90 share range. Actually I sold out on November 18th, using a limit order at $.64 my return was about 18% in a little over three months.

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