I have got three book reviews today..because here at Crazy Steve's ValueBlogReview we stock them deep so we can sell them cheap....lol...I have been plodding along reading some books and I thought I would update you quickly on some of them..
I read this book
As I have said previosuly when talking about the book on Charlie Munger
the author Janet Lowe has carved out a nice niche for herself doing bio's on famous investors/business people.
This book is obviously about Benjamin Graham. For those of you who want a little more background on Graham this is a good book.
Like the Munger book this book was not that great of a read (defined as not wanting to out the book down while reading and lookign foward to the turn of the page), but it was worth reading because it gives you a little bit of history of who Graham was.
The best part of the book from apurley how to invest better point of view comes in chapter 7...where Lowe provides a 14 point check list of what Graham's ideas are all about. I think the summary is a good overview of the main ideas of Graham and helpful if you are trying to figure out what Graham is writing about in some of his books.
The next book I read is
As I mentioned before this book starts out slow...and actually gets a little slower...but that doe not mean it is not a good book to read...just a little hard to make good headway on..took me about two weeks to read it. Essentially this book is a history of speculation..as the title states.
It does a good job of teling how time after time...human beings get excited about a new idea or industry and allow emotion to take over in their investing... simply put they allow thier emotionns to convinve them that stock prives have no connection or need for underlying value...and thats what gets people hurt when prices crash...
the title of the book "devil take the hindmost" is a phrase that means basically that the devil will catch the slowest person...with regards to speculation it means that the person who loses is the last one to realize that the bubble has burst and the music has stopped...
the book also makes an interesting point about "intrinsic value" being an oxymoron...pointing out that "intrinsic" is an internal measurment while "value" is external...which is why Graham said that stocks are short term popular votes but long term weighed....
One of the best things about this book is that it gets me thinking about stock ownership...I mean if I buy one share of a company am I an owner of course..but if the company has 10 billion shares outstanding like MSFT...what does one share really mean in the grand scheme of things...as an owner...thats why understanding the value of a company with regard to its stock price is important...and understandoing that the stock price does not represet the true value of a company but rather the perception of its value by other investors...hence the oxymoron between intrinsic and value (a company is worth what it is worth...a stock price sels for what people believe it is worth).
Overall, the book was a bit long but well worth the read as I obviosuly learned something and thats all I ever want when I read a book.
The final book on the review today is
as many of you are aware Morningstar.com provides a lot of analysis of stocks as well as mutual funds...this book provides an overview of the methodology of how they review stocks.
The book has the standard way of describing how to read a financial statement...how to evaluate a company for a competitve advantage and how to do a dicusounted cash flow analysis...if you follow morningstar.com at all than it is a good resource book to understand what they are doing..even if you dont follow them the book is a good overview fo stock evaluation...
The very best part of the book comes in the second half...the book breaksdown the 12-13 sectors that stocks are classified in...and discusses what performance indicators are importanrt to each industry...and how to compare them...banks hjave different metrics than a grocery store which is valud differnet than an insurance company which is valued different than etc...
simply put not every valuation technique works for every industry or sector and it is important to know that you cant just say well this company has the lowest price to book (p/b) so it must be the best...each sector or idustry will have its own p/b which must be compared first to the industry average before using to compare cross-sector....
I must point out that I subscribe to Morningstar's premium service and think it provides a good learning tool to understand the flow of the market...so reading this book helps me have a reference to quickly understand what it is morningstar is doing if I get a bit confused...
this does not mean this book is not uiseful to people who are not using morningstar at all or a little bit...just is a bit more relevant if you do.
Overall I think this is a book people should pick up and read to understand how to read a financial statement, value a company, perofrm a fair value analysis, and understand how sectors function.
Whew...thats all for reviews....actually I have been holding off on reviewing Phil Town's book...but will probably do it this week...
I am currently reading
and so far it is really great and I am looking forward to reviewing it...
hope you all have a good week
Sunday, April 30, 2006
I have got three book reviews today..because here at Crazy Steve's ValueBlogReview we stock them deep so we can sell them cheap....lol...I have been plodding along reading some books and I thought I would update you quickly on some of them..
Posted by Steven at 4/30/2006 10:55:00 AM
Saturday, April 29, 2006
I think one of the first things a new investor should really do before they start investing is figure out why they are investing, other than the obvious reason that they want more money tomorrow than they have today.
That way once you identified your goal you can figure out not only how to get to it (your way of investing), but also use that goal to reinforce your way of investing. In a very humble way I set forth my goals as an example:
I have not really talked baout myself much because I guess it is not really relevant and the whole idea of being specific and somethign so open as the internent sorta freaks me out. But in order to give you a little idea form where I speak...
I am male...coming up on 35..married (June 05)....no kids yet...I like my job a lot..and actually do not ever seeing myself retired (although that is not to say that I will not work less the older I get, just that I will never not work)...
aside from the obvious benefit saving money has over spending it all now my goal is very simple...I wish to kick the bucket with enough money to leave behind so that my children/grandkids dont have to worry about the simple things I worried about at their age...(e.g. when I was 22-28 I woried about buying books for college/law school and making the tuition payment each semster...)
So my "time" horizon for investing is real simple...till the day I die... so if my string has been measured and cut at 75 than I got about 40 years to go...but who really knows (i figure I need at least until 55-60 to get to where I want to be..every thing else is gravy...lol)
I am thinking about investing as a multigenerational thing (i would love to have a grandkid born one week before I kick the bucket...so I can lock up some money in an irrevocable annuity trust payable when that kid is 65...think about the compounding)...a lot of people talk about Buffett...but forget that Buffett was taught how to invest since the day he was born by his father..not saying buffett was unique..just that he was the right mind born into the right family...
thata what I want to do if my kids are interested...start teaching them young about investing and how to think of money...so that they can take what I hopefully do...stand on my shoulders..and grow it for their kids...and so on...
how is that for long term investing...lol...
so thats my goal..every $1 I invest is not my money to me...it is my wife's money and my future brood's money... I am just the caretaker....and so when I think about whether I am making a decison to invest that $1...I check my self..and say...is this the right thing for them...will this get me to my goal of providing for them...divorcing myself mentally from an ownership interest helps me detach the emotion of investing...and reinforces my need to focus...
I might take a bigger risk with my own money...but if its my kids money I feel I have a bigger duty to manage their money better...it just gets me more focused to think that way...
does this sound cheezy? sure...but it works for me...do you have to have the same goal as me? nope...
my point is just that in order to follow any map you have to have some idea where you are going...an idea of what you wish to accomplish...if you do not know where you want to end up, how will you know which fork of the road to take no matter how detailed your map is?
being able to visualize where you want to be at the end of the journey is just as important as figuring out how your are going to get there...
to me...figuring out what your investment goal is and how long it will take you to get there...will help you navigate the short term problems that come up along the way..or ignore them completely as irrelevant to your current situation and goals (for instance and example...if you think through research and thought that MSFT is the place to be for the next 20 years...and your goal is 25 years off...the fact that it droped 11% yesterday 4/28/06 is irrelevant to you...cuz what happens in the short term of a day or week becasuse of what will happen next Q or next year is meaninless as long as the orginal 10- 20 year thesis is unchanged)
so thats my investing goal.
Posted by Steven at 4/29/2006 06:51:00 PM
For those of you who have been reading my blog up to this point...thanks..for those of you who are new..welcome...
As you can see from this blog..I go from book-to book revewing them and offering a quick take on the material...I also talk about other investing websites that might be of interest to you and why...
So far there has not been much orginization...probably because I have only been investing for about 5 months now...(and there has not been much correct spelling because I just like to get my thoughts out quickly in the limited time that I have....and the fact is I just dont spell good..actually I know that proper grammer requires I say I just do not spell well...but you get my poitn about time...lol)
My over all goal has been and continues to be to help new investors like myself figure out what is worth reading and thinking about and what is not (and by that I do not mean that there are things that are not worth reading period...I mean that at this point in my development there are things that may be better left for future reading as the material goes over my head).
Eventually I hope to construct a more sequential blog where I can set forth those thoughts I have had in a more linear fashion...
my ultimate fantsy is to construct an actual course where people who want to learn about investing can come and get recommendations about what to read at different points in their investing life...and than come back and read my blogs on what they are thinking and provide answers to the quesitons they like me are having...but obviously I need to read everything first before I do that.
So if you are knew like me (5 motnhs and counting) and reading this blog now than we can learn together and enjoy the process...
so be patient and bear with me...I may not blog in any particular pattern..but I have a vison of where I am going.
Posted by Steven at 4/29/2006 06:35:00 PM
A few days ago I posted on a blog that talks about special situations (special situations are best described in this book
I got an email from George over at http://www.fatpitchfinancials.com/ regarding the recent post about his blog, in part George says:
"I noticed you mentioned 10 percent returns from special situations in your article. I wouldn't underestimate special situations. My real money port has a 23.5% APY since inception. See today's post at http://www.fatpitchfinancials.com/283/special-situations-real-money-port-update-2/"
I just wanted everyone to know that in using my 10% number I was merely trying to make the point that for those people who need help in leaving their long term investments alone...special situations might provide a way to to that. And that even if you only got 10% a year...if special situaitons stopped you from doing something stupid that cost you money (and by preventing that increased your return on a long term investment by 5, 15, or 25%) than special situations pay for themsleves even earning 10% more or less...
obviously George is doing way better than that...and if by doing so George has avoided messing with his long term investments...special situaitons have probably made him more than 24%.
as I learn to invest...I am thinking more and more about how you make more money by not doing something stupid than you do by doing something right (I think Buffett often mentions that early in his career he put 25% of his net worth in a local gas station...which did not turn out as good as other investments...and if he had not done that..and instead held on to that money for other things...the money would have compounded to $800 million)...
so I guess I am just saying that avoiding mistakes makes you money...and whatever helps you avoid mistakes..is acutally making you money...(if I pay someone $100 to tell me not to invest in XYZ..and that advice saves me $10,000....was the advice worth $100...what I paid...or $10,000...what I saved...well to me the advice was an "investment" that returned a net of $9,900...and lets say i at the same time took the $9,900 and put it in an investment (whic had nothing to do with the advice form the ther guy) that at the end of one year was worth $15,000....was the orginal advice worth $100, $9,900, or $14,900
well to me it was worth $14,900...it saved me $9,900 I would have lost...and I was able to take the money saved and grow it...
so my point is...when you lose $1 you have not lost a dollar...you have lost several hundreds of dollars 10 years or 20 years form now as compounded each year...
Buffett is quoted (I did not mean to post this much so I did not have my cites handy...will follow up one day with more) as once being sorta upset when his late wife speant 10k-15k on new fuirnishings..not becaus ehe is so cheap that he did not want new furniture...but because he knew what he could do with 10k over the next 10-20 years...compound it at 20-50% and grow it into several hundreds if not millions of dollars...
so whether it is special situations...or anything else...thinking in terms of how much something might save you money is as imporatant as how much something might make you money...
it is funny how I can statrt out on one thing and just flow into something else...
Here at Valueblogreview (speaking in the third person is so cool...as if Valueblogreview is soemthing more than my brain and a keyboard...lol...) our goal (mine and the mouse in my pocket....lol) is to simply learn...and help others to learn while we learn...so if I ever write anything about your blog, a book you have read, or anything...and you feel that you can add to the discussion, by clarificaiton, correction, or comment, please do so.
I am humble enough to know that mine is not the last word on any subject...and while I take pride in what I write .....my pride is not more important than being right. So feel free to add you thoughts whenever you have them, either by emailing them to me or leaving a comment on the blog.
Posted by Steven at 4/29/2006 05:55:00 PM
Thursday, April 27, 2006
In this day and age it is pretty easy to get a 10-K with the internet and all...either direct from the company or a facsimile from an online service like EDGAR, yahoo, etc...
But a cool website that I found that lets you order a lot of 10-K's from companies all at once is
Here is a quick blurb about who they are:
****The Public Register's Annual Report Service (PRARS).
PRARS, is America's largest annual report service. Company financials, including annual reports, prospectuses or 10k's on over 3,600 public companies are available without charge to the investing public. ****
They dont have every company...but a lot of them they do and they really are free..(I guess companies pay for them tp attract investment).
Anyway the Company has been around for a few decades...so it probably was really help[ful pre-internet...but it is still a good time saver...
Also one of the more current relevant functions is that it will automatically send you current annual reports as soon as they become available.
So if you were wondering how to get an annual report..there you go.
Posted by Steven at 4/27/2006 05:16:00 PM
A blog that I have been reading since I first started 6 months ago is George at
I think it is a great blog for new investor like me. I especially like the weekend reading posts where George will suggest some reading material for the weekend.
One of the things George has is a paid subscription to analysis of special situations (going private transactions, odd lot tenders, mergers, etc…if your are not familiar with the terms used I recommend reading up at George’s website…or buying Joel Greenblatt’s first book I have linked on the right here…also http://www.gannononinvesting.com/2006/04/
just posted on specials situations).
I think this part of George's blog provides a lot of value to new investors.
This is not to say that I feel you need to pay for the paid service (although I think it is worth it) my point is that thinking about special situations is a good think…here is why from my point of view.
Long term "value" investing takes a lot of patience...I mean you find a mis-priced company with good fundamentals and see that it is going to be a great investment but it might take 4-6 years to reflect that in the stock price....human nature what it is you want to be able to see some near term result while you wait...as Buffett says that why there is no rush to value investing…it just goes against normal human thought of thinking in the relative short-term and receiving a reward sooner than later.
The pressure to perform and do something in the interim can best be described this way:
Year 1-- Wife: so how is the stock we bought doing? Steven: Good it’s at $10 and we bought at $9.90.
Year 2--- Wife: so how is the stock we bought doing? Steven: Good it’s at $10. Wife: HMMM you should sell.
Year 3--- Wife: so how is the stock we bought doing? Steven: Good it’s at $10.05. Wife: HMMMMMMMM..Why have you not sold like I told you???
Year 4--- Wife: So how is the stock we bought doing? Steven: Good it’s at $30 Wife: Finally!!!...good thing you did not sell like YOU wanted to.
But with special situations...the pressure to do something in the near term is blown off by doing something in the short term that carries with it a good return with acceptable risk...
Year 1 Q1 Wife: How are the stocks doing? Steven: Good we made $129.34 on a $1,500 investment. Wife: Cool...results.
Year 1 Q2 Wife: How are the stocks doing? Steven: Good we bought at $1k and made $89.26 Wife: Cool. Results.
Etc...You get the point. Pressure to do something both external and internal is the true enemy of the long term investor.
So even if you only get 10% a year (or more or less) from special situations...the true value is that they feed the human desire to demonstrate short term results....which saves you a lot of money by helping to prevent stupid decisions with the larger long term commitments.
Now some of us have the discipline and confidence to make a long term investment and roll with it…others do not. My point is for those people who need to do something in the short-term...special situations may provide a good way to do that. With that said they may not be right for everyone and might only compromise a small part of your portfolio. Read Gannon's blog on the subject. Geoff usually has a great rationale as to why or why not something makes sense when investing, not saying he is right or wrong, just that he makes you think which is all I am looking for.
If you need an easy way to think about special situations and how they might relate to long term value investing...try this...
Many of use can stand to lose some weight. ..and we know that if we eat right…and exercise…over the next 3-6 years we should be able to lose that unwanted 20 pounds…but the prospect of not having any chocolate cake (insert your weakness here) for two or more years is unrealistic because eventually human nature mean you will binge and eat a whole cake…lol you will revert to the mean...lol...
but if you allow yourself a little piece here or there. Than the odds of sticking to the overall goal increase…
Fro me that's long term value investing with special situations. Special situations help avoid the binge and purge that might affect long term goals. Are there pros and cons...sure...but I am talking with repsect to how it may help you with dealing with the emotinal component of investing (I have have seen my worst enemy.... and it is me).
Posted by Steven at 4/27/2006 11:09:00 AM
Tuesday, April 25, 2006
As many of you who have read my blog and posts know I really like Ganononinvesting.com; nodoodahs.com; and billcara.com; because I think those three websites do a good job of presenting bottom up, top down, and just about anyway you can get it ways to look at investing. Check out the links at right if you like...(and oh yeah dont forget George at fatpitch).
So I am crusin the web..and thanks to Bill at noodoodahs.com I found this website..
anyway so far it is a great website...I recommend it to you...but wait there is more...not only to I recommend it.. in keeping with the purpose of my blog.. which is to help new investors like me save time in finding out what is good...
I went ahead and created an index for you to navigate the blog better...
see Bob basically divides his blog up into three kinda of posts..
1..Stocks he likes
2. stocks he buys and sells
3...and his methodology...
with repsect to stocks he likes he will post on a few stocks everyweek that he likes...and then a few months or a year later he will review them and see how they might have done as a buy and hold investment....
with stocks Bob buys and sells he tells you what he buys and what he sells and why and how...
under both Bob does a great job of doing a bottom up analysis of the stocks and than talks about some TA factors...essentially Bob seems to be looking for value stocks...with good recent momentum...and strong Technicals...
what I call MO-FUND-TICLES...lol
but the hard part is the third kind of post. see bob as been bloggin for about three years now...
3-5 posts a week...well that is about 400-700 separate posts...in fact Bob has been so busy given us stock analysis he has not had time to sit down and give us an index of his methodology... so it can take some time to figure out what is whole system is about...and believe me he has a very strict system
(whether Bob's system his good or not is for every one to make up there mind....I don’t judge books or blogs on any thing other than on whether they provide me with things to think about...and Bob's blog…as well as the others to the right do that and that is why I recommend them).
so that is where I come in …unsolicited of course.
I went week by week and copied each individual date of a post that either had to do with how bob picks a stock, buys a stock, sells a stock, and responses to readers questions about stocks he was not looking at or his blog in general...
So if you read Bob's blog already...or are new to it...and wanted to read just those blogs that nail down Bob's posts on his methods…the wait his over....
Below are the relevant dates to blog posts by Bob on the above areas about methodology...
Bob has a clickable link week by week for the last three years...so Just find the week that the date below falls into...scroll until you find the post with the date or if there is more than one post for that date the post that deals with reader question or Bob's thought on his process...
I don’t know if someone else has done this...or I missed it on Bob's blog...but if I am the first...your welcome...
and hey if you like what I am doing than click on a book on the right and buy it...or search for a book and buy it...or buy anything from Amazon.com so I get a nickel...so I can buy more books to review for you...
see how the circle works...I read and review books to save you time...you buy books that sound good...I buy more books.. .I review books to save you time… etc...lol
without further delay…
the unofficial Stock Pick Bob index
(I have not read all the posts yet but the ones with asterisks look really good):
Friday, 31 October 2003
Sunday, 4 January 2004
Sunday, 22 February 2004
Sunday, 29 February 2004
Sunday, 11 April 2004
Thursday, 15 April 2004
Thursday, 22 April 2004
Friday, 23 April 2004
Friday, 30 April 2004
Sunday, 2 May 2004
Thursday, 6 May 2004
Sunday, 23 May 2004
Wednesday, 2 June 2004
Friday, 11 June 2004
Saturday, 3 July 2004
Saturday, 10 July 2004
Sunday, 11 July 2004
Sunday, 25 July 2004
Thursday, 12 August 2004
Tuesday, 17 August 2004
Wednesday, 24 November 2004
Wednesday, 1 December 2004
Sunday, 19 December 2004
Sunday, 2 January 2005 *
Tuesday, 4 January 2005
Friday, 21 January 2005
Sunday, 30 January 2005
Saturday, 26 February 2005
Sunday, 27 February 2005
Sunday, 6 March 2005
Saturday, 12 March 2005
Friday, 18 March 2005
Sunday, 20 March 2005
Friday, 25 March 2005
Monday, 11 April 2005
Friday, 15 April 2005
Saturday, 23 April 2005 *
Sunday, 24 April 2005
Friday, 29 April 2005
Friday, 13 May 2005
Saturday, 14 May 2005
Thursday, 19 May 2005
Saturday, 11 June 2005
Friday, 17 June 2005 *
Tuesday, 21 June 2005
Wednesday, 29 June 2005 *
Saturday, 2 July 2005
Friday, 8 July 2005
Wednesday, 13 July 2005
Thursday, 4 August 2005
Thursday, 11 August 2005
Friday, 19 August 2005
Saturday, 27 August 2005 *
Sunday, 28 August 2005
Thursday, 1 September 2005
Sunday, 11 September 2005
Saturday, 17 September 2005
Sunday, 25 September 2005 *
Saturday, 1 October 2005
Wednesday, 12 October 2005
Thursday, 13 October 2005
Thursday, 20 October 2005
Friday, 21 October 2005
Saturday, 29 October 2005
Friday, 4 November 2005
Monday, 7 November 2005
Sunday, 13 November 2005
Sunday, 20 November 2005
Saturday, 26 November 2005 *
Sunday, 27 November 2005
Friday, 2 December 2005
Saturday, 3 December 2005
Saturday, 31 December 2005
Saturday, 14 January 2006
Thursday, 2 February 2006
Sunday, 5 February 2006
Thursday, 9 February 2006
Saturday, 11 February 2006
Thursday, 16 February 2006
Sunday, 19 February 2006
Friday, 17 March 2006
Tuesday, 21 March 2006
Wednesday, 22 March 2006
Thursday, 6 April 2006
Sunday, 9 April 2006
Friday, 14 April 2006
Saturday, 15 April 2006
Sunday, 16 April 2006
Sunday, 23 April 2006
Monday, 24 April 2006
Oh yeah...I forgot...once I really get into all the posts myself over the next week or so...I willcome back and break them down a little more specifically between subjects...
Posted by Steven at 4/25/2006 05:53:00 PM
Friday, April 21, 2006
As I mentioned before I read this book a couple of weeks ago
One could spend a lot of time talking about how good this book is as far as getting to know Buffett from all aspects. I think if your goal is to understand Buffett's thought process in the specific (whether it is on management, investing, or life in general) you should read this book first. I think if you read this book first and get a overveiw of everything, it will make reading the more specific books on Buffett easier to read from an understanding point.
What I want to briefly talk about today is one chapter of the book...Now it may seem odd that I am talking about one chapter in a book that currently has 299 chapters and over 1600 pages...but I am...
(now as I mentioned before I read the 1994 first edition of this book because that is what my library had...and I wanted to try before I buy...and believe me I will be buying the more recent edition just as soon as I finsih witht he books I am reading now...but I digress)
I believe the most recent edition still has the chapter I am going to talk about...it is I beleive Chapyter 181 pages 1143-1145...
in the 1994 edition (1st ed.) there is a chapter called "Generics" it is Chapter 32.
Now I can say without a doubt that I would be willing to pay the $35 for the whole 1600 page book just to get the 2 pages that this chapter covered. Heck I probably would paid more if I had to...
What you ask is so wonderful about two pages of a 16000 page book? what is so wonderful about two simple pages that I would be willig to spend $35 or $50 or possibly more...lean close and I will tell you...
I have found all that I need to know about investing...seriously.
those two pages discuss a response by Buffett to a sharehilder question at the 1993 annual meeting...the quesiton was in regards to "generics" being a threat to name brands...
and in those two pages Buffett sets forth a thought process that might take you one two or more years and thousands of dollars in school to learn.
basically Buffett says that no matter how strong your brand is if the generic can offer an adequate alternative at a signficant lower cost than what your brand needs to sell at to be succesful...your brand...your moat...is at risk.
what does that mean to me?
well lets say Coke sells for $5 for a 20 oz serving...and the local no name cola sells for .50 cents for a 20 oz serving...
now many would say "who would pay $5 for a coke" and I would say we all would...think about the last time you went to a sporting event..how much was the coke? well I went to the Dodogers/Cubs came wed and my coke was $4.50...did I think it was worth that..no but I wanted a cola...if there had been an alternative selling at the game for .50 cents would I have bought it..yes...because for most fmailies of four the difference between Coke and genric is not worth $18 bucks...
now lets take it to the supermarket...Coke sells for a few cents more than the genric..not ten times more...so coke might sell for .60 cents...over the genrics .50 cents...most people will go for the brand for .10 cents more...
and Coke's business model is highly profitable on selling servings for a few cents more than the generics...not ten times more...
but what if coke had to always sell coke for $5 to be succesful...and not be able to exclude competition like they do at the ballpark...than would they be in danger from generics?...
so no matter how storng a brand is...if the brand's business model depends on people willing to pay a sinficant premium over that of a genric product which can offer a adequate replacement at a signficant cost savings...you really have no brand...it is that simple...
I must qualify what I say by stating that I do not mean to imply that the secret to succesful investing can be summed up in two pages...investing does require lots of hard work and lots of time reading....and learning...but what I am talking about is an overiding framework and thought procees on thinking about what companies to invest in..
what I am saying is that if you take the two pages I am talking about...copy them down...stick them above the wall where you do your investing...and read the two pages before you click on a buy order....you probably will end up doing all right over the next 20 years with your stock picks...(assuming you have done the hard work of reading about the company)...
to sum it up...for me finding companies that have a strong brand that cannot both be 1) adequately replaced at 2) a signficant cost savings...is what I am trying to do...
of cousrse there are other ways to invest, i.e., truly undervalued companies, special situations...and I am interested in them...
but what I am talking about here is that part of my growing thought process that whats to find truly great companies that should be here 5, 10, 20 years down the road...and figuring out whether they are over or under price comes later...
So all I can say is buy or get the book and read the chapter.
Posted by Steven at 4/21/2006 11:38:00 AM
Thursday, April 13, 2006
All the books I have there on the right are books I have read, are reading, or intend to read. As I discover/read new books I will link to them and once read will provide a quick book review focusing on what I got out of the book as a new investor.
Essentially what I am trying to do over the next year or so is to develop an understanding of investing in general. Simply put I am sorta of creating a one year course on value investing. So far I am trying to focus on books that are general in nature, books about the stock market, bio's on investors, etc.
My next set of books I plan on reading will focus on how to find a good comapnies to buy, what to look for and what to watch out for.
Eventually once I feel I have read enough books to create a model of reading I will post a sequential book reading process.
I will most likely end up reading more books than I need to (good thing I like reading though) and so my ultimate goal is to help others focus in on what I feel are the essential books.
For now I will just put up books as I read them with some comments.
Right now I am reading this book
it is a very good book. I am about a 25% through it. Essentially this book covers the last 300 years and discusses periods where there was "mania" in the markets (essentially defining mania as the appreciation of stock prices with no connection to underlying value).
The book starts a bit slow mostly because it deals with markets from 300 years ago, but I expect that once it gets to more modern markets (last 150 years or so) it will prove more interesting because of the fact that this is the period of the modern stock market as well as better record keeping to illustrate the points.
Essentially I expect that the overriding value I will take from this book is that those individuals who can best divorce themselves form emotional impluses will be most succesful over the long term because they will avoid the loss of capital when the mania of a market subsides.
Once I finish with the book I will of course go into more detail (I am begining to get into the habit of marking parts of the book which may a interesting point so I will be able to provide better reviews than what I have provided to date.).
Posted by Steven at 4/13/2006 04:35:00 PM
Friday, April 07, 2006
A link I have over to the right is to fundalaram.com. I think this is a great website for people who own mutual funds. While I dont have any money in mutual funds (other than a position in CEF which is a closed-end non-stock precious metal fund) I like this site a lot, here's why:
As you know, simply put, you pick a fund in hopes that the people running the fund will do better than you could in picking investments. What's the easiest why to pick investments: buy all the stocks or all the stocks of a certain category. So what you want is a fund manager that can pick the above average stocks for any deifned category.
What fundalaram.com does is provide an easy way to see how your fund or a fund is doing on a 1, 3, 5 year basis as coimpared to the no-brainer investment, all the stocks.
Here is an example:
All mutual funds describe themselves and the type of stocks they invest in and why("blue-chip fund" "energy fund" etc)
lets say a fund manager (lets call him slick willie) wants to invest in stocks with a market cap of $500 mil or less...lets call it the slick willie small cap fund.
Well somewhere out there someone is tracking all the stocks that meet the criteria of market cap less than $500 million...thats called the index or benchmark...lets say there is 1,000 companies in the index...
so if you bought all the stocks in an index you would do no better or no worse than all stocks in that index...this is the no-brainer way to do it...if the index does 10% you get 10%...if it does less you get less...etc..thats why it is a no-brainer
but it is not really practicle to buy all the stocks in this index...and you actualy want to do better than the benchmark...you think your money and someone else brain can do better...
well slick willie comes along does some analysis and picks the 100 best stocks to buy in that index for the slick willie small cap fund...and you send your money to slick willie because you think he has some ability to make a difference...you are hoping that if the index does 10% slick willie can find the 100 best companies that will do 15%...
well now this is where fundalarm.com comes in....
Fund Alaram has a simple test/question on how your fund is doing: since we are paying slick willie to do better than the index benchmark, has slick willie done better over a 1, 3, 5 year period compared to the index.
To put it another way (as Munger says invert, invert) has slick willie added any value or would we have been better off just buying the whole damm index in the first place?
well false alarm uses a cute and easy color coded system to answer that quesiton...if your fund beats the index for the relevant period it gets a green block if it does not it goes red...if a fund goes all red (meaning it is underperforming the index the last 1, 3, 5, years) it is called a "three alarm fund" (get it three alarm fire--three alarm fund...lol)
now Fund alarm does not say you should sell a three alarm fund...but just gives you food for thought..that if you are paying someone like slick willie to do better than the no-brainer way (buying the whole index) and he cant beat the index not just the last 1 year or last three three years but for all 3 periods 1, 3, ,5...why pay him at all..
or to invert it if the index makes 10% and slick willie makes 6%..why would you pay a guy who's actual brain does worse than no-brain...this actually is best expalined by Munger and Buffett when they talk about Pascal and that the hardest thing to do is nothing...if slick willie cant beat the index in 1, 3, 5 years why cant he just say screw it and buy the whole index and do nothing...
so why we might laugh at slick willie cuz he is to stupid to beat the index...I would say that at least slick willie is paid to be sub average and that if you keep sending him the money..the true quesiton is why are you so actually foolish for doing so...
So Fund Alarm is a great way to check up on your fund or any fund to see how it is doing for the last 1, 3, 5 years against its benchmark...it is updated the first of every month...and if your fund is a three alarm fund...maybe its time to find a better place to put your money...
another great thing is that the guy running the website also updates manager changes at funds..and other relevant news related to funds...
So go check it out...type in your favortie fund and see how your own slick willie is doing...or actually see how YOU are doing cuz its your money.
Posted by Steven at 4/07/2006 09:44:00 AM
I just put up a link to Fat Pitch Financial's News website. The link provides the most recent headlines of articles submitted by individuals. A great to quickly scan some relevant news articles without having to spend time looking for them.
Posted by Steven at 4/07/2006 09:39:00 AM
Thursday, April 06, 2006
My last post was a quick review of three books...being short on time I did not go into too much detail. One of the books,
I plan on doing a very indepth review of because I know it is popular and the hot thing right now, hopefully will have this fdone by the weekend.
But I wanted to talk about this book
a little more.
While as a book reader I did not think it was a great read, that does nt mean I did not learn anything or failed to take away ideas form the book. On the contrary several points in the book were actualy quite valuable, they just dont go into very much detail.
Charlie Munger is quoted several times in the book as setting forth why he exactly set out to invest or as some would say become rich. Mr. Munger simply said he did it so he could be independant,
or to put it more vulgar, he was looking for F-U money (this is the little known accounting term which is deifned has having enough money so that you can tell anybody F-U).
And I get what he is saying. If you think about some of the most succesful self made people in the world, they dont accumalate wealth for wealth's sake, they actually set out to do something they love. While the money is nice their passion and drive is fueled by some other motivation. In Mr. Munger's case his goal was to collect money so he could secure his freedom, so to speak.
So I think that it is a very important lesson, and one which I will elaborate on in more detail later on, as it forms a cornerstone of why I am investing.
But for now I will leave you with this thought, as a new investor I think that a good thing to ask before you invest, or at least invest large sums, is why exactly are you investing? other than the hope of having more money down the road than you have now.
because I think that if you have some sort of idea of why you are investing, then that will help you be more succesful because when you are deciding in what it is you wish to invest in, you can ask yourself, how does this investment fit with my goal and does it help me reach my goal? or better yet how does this investment put my goal at risk of not being reached? (as Munger/Buffett teache (from Einstein I believe) you must always invert).
So that is what I learned from this book. Like I said while I did not like the book as a book to read (for me a good book is one that you dont want to put down because you cant wait to see whats on the next page) I do recommend it because it does have a few key points from Munger which may help you better orient your investing mindset.
Posted by Steven at 4/06/2006 02:05:00 PM
Sunday, April 02, 2006
Well I have been offline for the last week or so mostly just reading regular books. So I will give a review of them now.
I finished this book
It is essentially a quick read bio of Charlie Munger. While there is nothing actually wrong with the book, it is more of a long article than it is an actual in depth study of munger form an investing prospective.
If you are looking for a book that will give you some insights on investing specifically this may not be the book for you, but if you want to study success in general than this book is fine. The author as created a niche where she has written several books on successful business persons and so the book just seemed as if it came form qa formula, a little bit of this and a little bit of that.
But I would recommend it because there just is not much out there on Mr. Munger.
I also read this book
I must say that this book was really excellent. Now unlike most books about Bufffet this book doe snot try to reduce Buffett to some quantative fomula where yo can pick a few criteria and come up wewith stocks to buy. Rather this book does a great job talking about Buffett's use of the circle of competence to make decisions, and that's the real secret to Buffett style investing. While I have read about the whole idea of circle of competence this book is great becaue ot actually provide a visual diagram to aid in understanding the concept.
The last part of the book is a bit long as it bogs down form an investors point view. But overall I feel that thios book is a definite must read.
I also read this book
I plan to do a in depth revire of this book and the blog that goes with it. The book basically takes a lot of what Buffett has written over the years in the annual report along with some of Grahams writings and breaks it all down in a very easy read. If you have not read Graham's
you should, but if you find Graham's book a little too much for just starting out than overall Mr. Town's book sets forth Grahama's and Buffett's principles an a way that are easy to understand. So while I will talk about this book in greater detail in the future I think that if you are new to investing you can get ag read handle on some key concepts form this book.
overall it is a good book for new investors to start learning.
The final book I have read is this one
actually i am about 80% through the first edition of the book from 1994 because it was available in my local library for free. This ios a really good book because it combines both a bio of Buffett as well as observations about how he invests. This book is over 600 pages (the most recent edition is I believe over 1000 pages)but it is a quick read as it is broken down into short chapters. IF you want the mpost comprehensible overview on Warren Buffett, a one stop shopping experience so to speak, than this is a great book. I think it actually is the best book for someone to read about Buffett before trying to figure out how to invest like him by reading other books on Buffett.
Well that's about it. I am slowly working on developing my theory on investing. Essentially what I mean is that I am developing a thought process on how to invest so that I may apply it to what to invest in. Ths is not to say that it is some type of investin gprogram, but more of a disciplined thought process.
I hope to be able to outline it for you in the next week or so.
Posted by Steven at 4/02/2006 10:31:00 PM