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Showing posts from May, 2020

How To Mitigate Risks When Value Investing

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Fundamentals 03:  Risks differ depending on the type of assets and investment style.  This post looks at risk and risk mitigation from the perspective of a stock-picking value investor.   Revision date: 22 Aug 2020 "Risks come from not knowing what you are doing" Warren Buffett When you invest in equities, the goal is of course to get a better return compared to keeping monies in fixed deposits.  Unfortunately, the returns from equity investment are not guaranteed.  There will be times when you will make less than what you can from fixed deposits.  Worst still there will be times when you lose all your investments. The challenge is how to mitigate against them. There are 2 schools of thought when it comes to risks Those that treat risk as some form of variance Those that consider risk as permanent loss of capital This post is about how to mitigate against permanent loss of capital. This is because I look at investments from a long-term perspective. Any variance is a paper lo

An Introduction to Value Investing - confronting value traps

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Fundamentals 01: Originally published under "An Introduction to Investing in Listed Companies".  Cover issues to consider when investing.  Updated to include notes on how to analyze companies and other value investing tips. Note that there is a PowerPoint presentation of this article on SlideShare under " Baby steps in value investing ".  Revision date: 18 Oct 2020 "Investment is simple but not easy" Benjamin Graham If you want to invest in listed companies from a value investing perspective, but do not have the time or knowledge to analyze and value the companies, join me as I share my analysis and valuation of such companies. I hope to short cut your learning journey.  As a value investor, you would be investing when the price is at a significant discount to the intrinsic value. The question then is whether your assessment of intrinsic value is accurate. If your valuation is wrong, then the stock is really cheap for a reason and you have a value trap. Bu

Definitions

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Fundamentals 00: Definition of key terms used in the blog "Knowing what you don't know is more useful than being brilliant" Charlie Munger  While you don't need to be an accountant to understand my blog, there are some terms that I use throughout my analysis that are "technical jargon". Many terms come from different disciplines and may not be familiar even among accountants. That is why I have described them here. As a person with a quantitative analysis background, I am very comfortable working with numbers. This has proven to be a blessing in my investing journey as I don't' get hung up on the numbers but instead see them as part of a company's story. Along this line, I use many indicators and metrics that are computed based on information extracted from the company's' financial statements. The list below also provides an overview of the formula behind the various indicators and metrics. This list is not meant to be exhaustive. I don&#