The ultimate look at how to choose the best value investing course

Fundamentals 17: This article first looked at the various options available to learn value investing - self-taught vs formal courses, self-study vs classroom, general vs a specific formula or technique. It then discussed how you can go about identifying the best option.  
 
The ultimate look at how to choose the best value investing course
"The individual investor should act consistently as an investor and not as a speculator." Ben Graham

Does the following describe your current predicament?
  • You want to learn value investing and have started to search for value investing courses.
  • But there are so many courses. These ranged from those offered by bloggers to classroom-type courses.  You want to know which is the best course. 

If the above describes your situation, then read on. I will discuss how to assess the various courses and select the most appropriate one. 

I went through this predicament about 2 decades ago when I wanted to learn how to invest in the stock market. What I am about to share with you is based on my assessment journey. 

OK, I have tidied it up a bit so that it has a more logical flow. I have also incorporated my past 15 years of value investing experience. 

I hope it can help you choose your value investing course. 

Note that there are several sites that recommend the best course for you. For example, Investopedia has an article “The best investing course for 2021”. Such sites survey the courses available and then produce a recommended list based on their own criteria.

I am not surveying and/or recommending specific courses. Rather I am assuming that you are looking at the various courses and assessing them yourself. The approach applies to all categories of courses - boot camp, masterclass, investing 101, or advanced.

Contents

1. My journey to find an appropriate value investing course

2. Self-taught vs formal course?

3. Self-study or classroom setting?

4. General course vs formula course

5. What to assess

6. How to choose the best course?

7. Summary

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My journey to find the best value investing cours

1. My journey to find an appropriate value investing course

I first started to invest in the stock market in my 40s. Actually, with hindsight, it was more like dabbling as I had bought the stocks based on tips. Any analysis was superficial as I merely looked at PE. 

It was not a successful track record as over 10 to 15 years, I achieved the same return as saving my money with the bank. If I wanted to rationalize it, I could say that my investment went through the Asian Economic Crisis. At that point, the value of the Malaysian stock market declined by 50%. It took about 10 years for the market to recover to the pre-crisis level.

In my 50s, I wanted to “retire” from actively running companies yet didn’t want to remain idle. I thought investing would be a good option. 

I had read about Warren Buffet and was impressed that he compounded his wealth despite going through a number of economic crises. So, I wanted to follow his value investing approach. 

At that juncture, all I knew about value investing was that you had to buy companies at a discount. I knew that you had to differentiate between price and value. So, I started to look at the various value investing courses available.

You know the challenges. You are like a primary one student trying to figure out which is the best school if not the best teacher.

But, I had one advantage. I had conducted training courses before and even had some lecturing experience. I knew a bit about how to assess courses. 

I went through a sort of iterative process of finding out a bit about value investing and then surveying the various courses. Then I went back to get a bit more knowledge and combined it with the field survey to come up with some way to assess courses.

You will have to undergo a similar iterative process, but I will help you go about it in a more effective way. 

To make a long story short, I am today a self-taught value investor.

Self-taught or formal course?

2. Self-taught vs formal course?

Is there a difference between self-taught and self-study?

There are two main ways to learn:
  • Classroom setting. You join a group (can be online or physical room) that is led by a course leader (teacher, coach, or lecturer).  He can provide immediate feedback to questions that the class may have. There is a fixed schedule for the classes.
  • Self-study.  The main feature here is that you study on your own. You don’t join a group. There is still a list of subjects that you have to go through although most likely you decide on the pace.

Self-taught is part of self-study. In a self-taught programme, you chose the topics and compile all the learning materials yourself. You are the course leader and student all in one.

But in a formal course, the course materials and presentation format have been designed. There is a clear role between the student and the teacher.

I chose the self-taught route because 20 years ago, online courses and blogging were still in their infancy. It was tough looking for formal courses then in places like Malaysia. 

Today, there are many online courses. There are also value investing bloggers offering a combination of free and paid courses.

Today there are more materials for a self-taught programme.  At the same time, there are also many cost-effective self-study courses.  The latter may outweigh the hassle of compiling your own self-taught programme.

For someone who went through a self-taught programme, I will tell you that the learning process is not so smooth.  There is a very good chance that you will hop from topic to topic that is not in the best sequence. But it is not impossible to learn. It will take a bit more time.

If you don’t have basic business knowledge or know how to read financial statements, a self-taught programme is not the best.  It is better to follow a course where some expert has structured it with prepared the course materials.

Self-study vs formal classroom

3. Self-study or classroom setting?

Now that you have decided to follow a formal course, there are two aspects to consider:
  • How to learn ie classroom vs self-study as per the discussions in the previous section.
  • Course focus i.e. whether you follow a “formula” or learn about value investing in general. A formula here refers to a specific technique that is being marketed. You can think of this as a “copy and paste” investing strategy. This is opposed to learning about value investing in general. 

The chart below illustrates the 4 possible options formed by the combination of these 2 aspects.

How to learn vs course focus matrix
Table 1

I must admit that 2 decades ago, there were not that many online courses. Most of the courses were formal classroom types. These were not suitable for me as I had a very tight work schedule. 

To a great extent, this influenced my decision to self-study rather than attend a formal class. 

Today there are online courses that are self-study focussed. However, the issue of whether it is self-study or online class still boils down to whether you study at your own time or join a group based on a timetable.

I would still have chosen self-study as a fixed schedule would still be a problem for me.

I suspect that the majority of you are likely to be working. And then you may have other family and social commitments. If so, go for the self-study route. 

This is because learning value investing is not something that you complete in one week or month. Be prepared for a least one year of learning. As such you want a course that gives you flexibility over your time.

You will of course lose the classroom cum teacher interaction with self-study. But there are ways to make up for this.

General vs formal course

4. General course vs formula course

Think of the following analogy when it comes to thinking about learning value investing in general or taking a formula course.

If you want to open up a burger restaurant, one option is to buy the kitchen equipment, tables, chairs, utensils and develop your own burger recipe. Alternatively, you could be a franchisee to a burger chain.

The former is learning value investing in general.  You will have to compile your own course material and even establish your own investment process. 

The latter is following a formula that the vendor has developed and tested. I call this a cut-and-paste approach.

Value investing requires a certain amount of knowledge about how to read financial statements and how business works. Some business experience would be helpful. You also need to be numerate as you need to value companies.

If these are challenges, you should start off with a formula course. Usually, these are techniques that have been developed by the vendor.  They target people who do not have quantitative and business skills. A common marketing point here is that you can quickly learn to invest. 

After you have mastered the “cut-and-paste” course, you always have the option to learn about value investing in general. By then you don’t start from zero as the formula course would have covered most of the common value investing concepts.

But, if you have a business background and are numerate, you go for the general course.

From what I could see, the general courses are cheaper. At the same time, you could invest via indexing while learning. Then by the time you are ready to set up your own investment process, you can switch over from indexing to your own approach.

I opted to learn about value investing in general because I have a strong business background. Secondly, I am numerate and also able to read financial statements. 

Thirdly (and this is with hindsight), you will come across free formulae when learning about value investing in general. For example, you will learn about Graham's Net-Net process. There is also the Magic Formula and Dogs of the Dow. So why pay for a formula when there are free ones?

My recommendation?

If you have fears about financial statements, business analysis, or quantitative techniques, go for the formula course.  Your goal is to develop your investment skills and you want to start with something that you can learn and use. 

But if you don’t have such fears, go for the general course. It is much cheaper and you have the indexing option to make money while learning. This indexing option will negate the advantage claimed by the formula course ie you can start to invest quickly.

What to assess

5. What to assess

I have in the post “The ultimate look at how to learn value investing” pointed out that there are 4 steps to become a value investor.
  • Learn the concepts - knowledge acquisition.
  • Develop the skills - applying the knowledge.
  • Cultivate the right habits - behavioral/soft skills.
  • Establish your own process - SOP

Refer to the post if you want more details.

Accordingly, the assessment of any value investing course should be based on how well it delivers these 4 items. You actually need to assess them on several criteria:
  • Do they cover all the concepts and skills required?
  • How comprehensive is the course material?
  • How much hand-holding do they provide?

These criteria apply to all the various combinations of courses as per Table 1. 

The challenge with assessing any course is that before you sign up for a course, you only have access to the marketing materials. If you are lucky, you may find a sample podcast or video.

Effectively you are trying to compare courses based on limited information. The checklist I have provided has been developed with this constraint in mind.

Checklist for concepts/skills

5.1 Checklist for the basic concepts/skills that you need to develop.

You have to run through all the materials presented by the course to be able to see whether the following are part of the course content. Be prepared to do some guesswork based on the course description. 
  • Value investing - Margin of safety, Mr market, Buying at a discount.
  • Understanding financial statements (only for the general course) - Ratio analysis. 
  • Business analysis - moats, risks, management performance.
  • Valuation - discount rates, free cash flows, DCF, relative valuation.
  • Portfolio - number of stocks, position sizing.
  • Risk mitigation - diversification, behavioral biases.

A general value investing course should cover all the above topics.

A formula course will leave out the part about understanding financial statements, business analysis, and portfolio part. They will substitute these with their “formula".

Checklist for course materials

5.2 Checklist for the course materials

The aim is to relate the way the course is presented to your learning preference. I am more of a textbook person while you may be better at watching videos. You gauge whether the course is text-based or more focused on podcasts or videos in relation to your learning style. 

This is not as critical today because most courses have a combination of reading materials, podcasts, and videos. 

It is more important to see how the course delivers the numerical analysis part of the course. As a beginner, you want to see worked examples and ready spreadsheet templates. This is especially if it is a self-study course.  

Do you remember how you learned your arithmetic in school? The teacher showed the example on the board and then you learn by doing the exercises.  When it comes to the quantitative part, check that the course has a similar approach. 

Learning to invest is like learning how to drive. While there are concepts to learn, the key is practice. You become a good driver by spending more time driving than learning traffic codes.  This applies to investing. You want to spend most of the time analyzing and valuing companies.

So, you want course materials that can help you analyze and value companies. They should have worked examples, case studies, and spreadsheet templates.

Finally, besides the course materials, you should see whether there is a library of resources that you can access as a student.  Yet, today this is not really critical as there are many free online materials on value investing.

5.3 Checklist for hand-holding

I have already emphasized the importance of practice. This is where hand-holding is helpful. There are 2 sources of guidance here: 
  • Coaching by the teacher/lecturer.
  • Peer interaction.

When I first started to learn, only classroom settings can provide both. However today with social media, this no longer applies. I have seen self-study courses where there is some mechanism to connect students so that you can benefit from peer interaction. 

So, you can still have a self-study course where there is some access to coaching and peer interaction. 

But the challenge is not whether these are available. The difficulty is assessing the quality of the help.

If you attend a Business School MBA course, not only will you have good lecturers, but you will interact with more experienced students. This is different from attending an investment course full of teenagers.

Unfortunately, you do not have the ability to assess the quality of the hand-holding at the pre-buying stage.  One way to assess the quality is to look at the past student comments and ratings if these are available. 

I would also check the credentials of the person presenting the course. Look at his qualifications and experience and judge whether he can provide practical answers to questions you may have.

Checking the validity of a "formula" course

5.4 How to assess the validity of the formula course

When it comes to formula courses, there are two selling points:
  • It is a successful formula that will enable you to make money.
  • You can start value investing immediately. 

The issue is then assessing the validity of the formula.

This is a tough one because the vendors would have done their best to convince you that they have a secret formula that has been tested. I am sure that the vendor would be presenting his track record and you can only take his word for this. 

You can only check his authority indirectly:
  • At the pre-buying stage, you only have the past student comments and ratings to work on. One metric that I had used was to look at the number of past students. Unfortunately, not all sites provide this information.
  • Another metric is to look at how long the course has been offered. The older courses could mean that they had enough interest to continue with the course. I know this is not ideal.
  • You could also look at market share ie the comparative number of past students. You are of course equating popularity with the validity of the formula.
How to choose the best course

6. How to choose the best course?

The most important thing to remember is not to do the assessment mechanically. Only compare the course characteristics with the checklist after understanding the checklist criteria.

It may sound ironic, but before you assess any course, do get some overview of what is value investing. There are many value investing sites that offer free valuing investing 101 materials. Examples are
  • Morningstar
  • The Street 

Once you have an overview, then visit the site that focuses on comparing investing courses. Examples are

Some of them may not list their criteria for recommending the courses. The idea is not so much to understand the criteria, but rather to get a sense of how others are evaluating courses. 

Proceed only when you have some understanding of what value investing is all about and have seen how others have assessed the course.  

Remember my analogy? You are a primary student trying to choose the best teacher and/or school. By getting a bit of knowledge first and seeing how others have chosen will help to move beyond this primary student level.

Furthermore, separate the qualitative analysis from the pricing. What you want is to identify the top 3 to 5 courses based on your qualitative assessment. 

Only after then do you compare prices.  By then you would have a workable number of courses to analyze the trade-off between price and assessment factors. 

In terms of the qualitative assessment, you are comparing:
  • Course content. Check that it covers all the basic concepts and skills.
  • Learning style. Look at the course materials and whether the presentation format fits your learning style.
  • Support provided. Look at hold-holding as well as access to resources. 

You will realize that the various trade-offs are not sequential choices. You may start off choosing a self-study instead of a classroom programme. But, when you look at what is offered in a formula course vs a general one, you may opt for a classroom course. 

I actually went through the iterative process. I only came to the decision to be a self-taught value investor after going through the whole assessment process as described. 

I would not be surprised if you have to go through the same iterative process before you come to a final decision.  

Summary

7. Summary

The process of choosing the best value investment course for you involves a number of trade-offs;
  • Self-taught vs a formal course.
  • Self-study vs classroom setting for a formal course.
  • A general value investing course vs a formula course.

This article is about choosing a formal course. The factors to be considered in choosing a course are:
  • Do they cover all the concepts and skills required?
  • How comprehensive is the course material?
  • How much hand-holding do they provide?

To effectively evaluate the course, you have to:
  • Go through all the course descriptions.
  • Check on the credibility of the course leader/teacher.
  • Review past student comments and ratings.

I suggest that you separate the qualitative assessment from the price assessment. Shortlist 3 to 5 courses and then only decide on the trade-off between content and price. 

Of course, you may finally decide that it is too troublesome to learn how to invest. One way out is to then rely on third parties to do the fundamental analysis for you.

There are several financial advisers who provide such analyses. 

Those who do this well include people like The Motley Fool. Click the link for some free stock advice. If you subscribe to their services, you can tap into their business analysis and valuation.


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Disclaimer & Disclosure
I am not an investment adviser, security analyst, or stockbroker.  The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies.   Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them. 

The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such. 

I may have equity interests in some of the companies featured.

This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.





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