Chroma Investing

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

Simoleon Sense interviews James Montier

My friend Miguel at Simoleon Sense has conducted another one of his terrific interviews. This time it is with James Montier, who is always someone worth listening to. I have written previously about Montier’s perspectives before. You can check out Montier bitch slaps EFH or Good Decisions, Bad Outcomes. He hails from the behavioral Finance camp, which it is safe to say, the right team to be on.

Mistakes in Investing

As yesterdays post on TGAL shows you, we all make mistakes in investing. The question isn’t whether we will make mistakes but how we respond to the mistakes we make. My response was to sell by position in TGAL this morning. Yesterday’s press release with Q3 financials changed my valuation of the company substantially, from one having a comfortable margin of safety, to one with none. Given that TGAL was also losing money made selling at a loss a cinch. I sold at $1.20/share plus $4.95 commission for a loss of $85. Be clear. I am not saying the stock will continue to go down. But the valuation proposition changes so much that it no longer looked like a good investment. When that happens, even if it is only after a matter of days. I sell. I am not in market to hope a company recovers. I am about preservation of capital first, then appreciation of capital. The important thing is to move on.

MNDO – Mind C.T.I. Why you must mind the details

I was reviewing a stock, Mind C.T.I. Ltd (MNDO), because it came across a screener as a Net Net opportunity. I wondered why it had so recently turned up.

MNDO is an Israeli company that, “a leading provider of convergent end-to-end billing and customer care product based solutions for service providers as well as telecom expense management (call management) solutions.”

Is Diversification still Prudent?

I have never bought into the whole diversify across asset classes theory. It’s one of those dumb ideas that sounds good theoretically, but doesn’t pass the common sense rule, but I will get to that later. I am not much of an economist. Most of them use too much math in an inappropriate way, that does not reflect the real world that I live in.

Beginning Investor Terms – Discounted Cash Flow (DCF)

Discounted Cash Flow is a way of estimating the current value of an investment in today’s dollars based on assumptions of future growth of cash flows discounted back to the present. This is a vital concept to understand for valuing long term investments, not just in stocks but Real estate, businesses, etc. Once you have determined the value for an investment you compare it to the current price to help you decide whether it is worth investing in. One can easily mislead oneself with the incorrect use of DCF.

Discounted Cash Flow (DCF) Spreadsheet for Mac

Strangely, it never it occurred to me that anyone would be interested in a Mac spreadsheet for valuating a company based on DCF. I created my own because I could not find one on the internet, so I incorrectly figured no one really used a Mac in this world, but me. Where as the entertainment business is a Mac dominated industry, finance seems to be PC dominated industry and for good reason. Microsoft sucks ( I am not being harsh) at porting Office for Mac. It stripped out some of the most useful features in the excel version for Mac and has no intention of adding them in the future.

Exploring Premium Services – Opportunistic Investor

Anyone considering investing money in a premium investing service remember should be mindful of two things. For a beginning investor the important item is whether or not a service fits your investment philosophy. In makes little sense to pay money for technical trading tips if you are fundamental investor. Second, and this is important for the small money investor, make sure the service is worth the money

Free Cash Flow – Beginning Value Investor Terms

This is the latest in my on going series of Beginning Investor Terms. Free Cash Flow (FCF) is a similar concept to Warren Buffett’s idea of “owner earnings.” It is an important concept in value investing largely because it is often a preferred bit of a financial data to Earnings.

Checking your data before you Invest – Valuation

If you are going to invest in a company you need to collect data about the financial workings of the company.For the Excel users on the PC platform I recommend Old School Value’s free spreadsheet for Net Net’s and his premium (read not free, although a good value) Discounted Cash Flow spreadsheet

Investing 101, Not Running before you Walk. Start Here

If you are the kind of small time or beginning investor that I am hoping is reading this blog, then I didn’t just throw you into the deep end of the pool, I dropped you into the ocean. So consider this another swimming lesson. Investing 101. Beginning Investor class. More like a list of Investor tips.

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