The Best Method To Overcome Uncertainty It To Embrace It

The Best Method To Overcome Uncertainty It To Embrace It

Investors currently have to grapple with one of the most uncertain investing environments in recent history.  There are so many things going on right now it’s challenging to figure out which is the most pressing, especially from an investment perspective. The coronavirus is a global health emergency, and it has caused untold economic pain around the world.  Brexit is also on the agenda once again. It’s looking increasingly likely that the UK and EU will fail to reach an agreement…

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Mohnish Pabrai: Avoid Stocks You Don’t Understand

Mohnish Pabrai: Avoid Stocks You Don’t Understand

The highly successful growth investor Peter Lynch once advised investors to “buy what you know.” Another way to interpret this is to buy what you understand. Lynch isn’t the only successful investor that has recommend the principle of sticking to companies you understand. Warren Buffett, Charlie Munger, Seth Klarman and Mohnish Pabrai have all stated that this one of the essential principles in the world of finance. Warren Buffett calls his sphere of understanding his circle of competence. He will…

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Lessons from Wall Street’s Four Great Bottoms

Lessons from Wall Street’s Four Great Bottoms

Professor Russell Napier spends most of his time studying financial markets. Author of The Solid Ground investment report for institutional investors and co-founder of the investment research portal ERIC, Russell has been writing global macro strategy for institutional investors since 1995. He’s also a student of financial mistakes. He set up the not-for-profit Library of Mistakes in 2014, a library dedicated to avoiding mistakes. The professor set the Libary up with the simple goal of educating the financial world about…

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When Is The Right Time To Start Buying Stocks?

When Is The Right Time To Start Buying Stocks?

At the time of writing, the MSCI World Index is up around 21% from its March low. This performance has stunned analysts and investors around the world. It seems to me this is one of the most hated stock market rallies of all time. It is easy to see why analysts are skeptical. The global economy is reeling from the coronavirus crisis. While governments are doing everything they can to help businesses survive, surging levels of unemployment, rising corporate failures,…

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How Phil Fisher’s “Common Stocks and Uncommon Profits” Changed Warren Buffett’s View Of Investing

How Phil Fisher’s “Common Stocks and Uncommon Profits” Changed Warren Buffett’s View Of Investing

Warren Buffett was taught how to invest by Benjamin Graham, who is considered to be the Godfather of value investing. In the early years of his career, Buffett followed Graham’s style of investing closely. He concentrated his efforts on finding so-called “cigar-butts,” stocks trading at bargain-basement valuations due to structural issues.  Here’s Buffett explaining the approach in his 1989 letter to Berkshire Hathaway shareholders:  “If you buy a stock at a sufficiently low price, there will usually be some hiccup…

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What Warren Buffett’s See’s Candies Can Teach Us About Business

What Warren Buffett’s See’s Candies Can Teach Us About Business

Many business owners and managers believe that growth is the single most crucial factor in defining a company’s success. Nowhere is this trend more evident than the tech sector. Companies like Uber and WeWork have filled the past few years spending tens of billions of investors’ capital growing their top lines without any prospect of a positive return on this investment. These are not the only companies spending billions without any visible return. Companies of all shapes and sizes regular…

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The Best Investors Only Act On Their Best Ideas

The Best Investors Only Act On Their Best Ideas

According to Investopedia, 630,000 companies are traded publically on stock exchanges around the world.  Of these, less than 5,000 trade on US exchanges and 2,080 are listed on the London Stock Exchange, which claims to be the world’s most international of global exchanges. With so many options out there, investors are spoilt for choice when it comes to choosing investments. But this level of choice is not necessarily a good thing.  Most companies underperform Of the thousands of public companies…

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Warren Buffett’s Advice On How To Value A Business

Warren Buffett’s Advice On How To Value A Business

Warren Buffett has been investing in stocks since his teenage years. Over the past seven decades, he’s bought and sold thousands of stocks across sectors and industries accumulating hundreds of billions of dollars in value for himself and his investors along the way. During his lengthy career, Buffett has become skilled at calculating intrinsic value, the underlying value of a business based on its fundamentals. Warren Buffett: Starting with the cash flow statement The exact process Buffett uses varies from…

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4 Rules For Becoming A Bad Investor

4 Rules For Becoming A Bad Investor

I recently re-read one of Charlie Munger speeches from 1986 to students of the Harvard Westlake business school. In the speech, Munger laid out his rules for living a miserable life, in an attempt to warn students away from these actions.  The full speech is published in Munger’s unofficial biography, Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger. It is well worth seeking out if you’re interested.  After reading Munger’s words, I’ve been inspired to create my…

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A Case Study Of Why Warren Buffett Bought Disney In 1966

A Case Study Of Why Warren Buffett Bought Disney In 1966

A few weeks ago I wrote an article for GuruFocus outlining one of Warren Buffett’s biggest mistakes of all time; selling Disney.  Buffett first noticed Disney back in 1966. The company at the time was selling for $80 million in the market with a debt-free balance sheet, significantly below what Buffett’s estimate of intrinsic value for the business. Smelling a bargain, Buffett invested $4 million of his partners’ money to buy a 5% stake. A year later, he sold this…

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