Dear Friends, I hope you are mentally prepared to receive the No.1 secret to Value Investing. If you have watched Kung Fu Panda movie, there is this secret scroll, but the cool news is that the Secret is that…. there is No Secret. And please don’t quote me on this, you can choose to quote someone who is so established, Legendary investor Seth Klarman. Seth Klarman says, ” The …
Read MoreWhen to buy a Great Business that is Overvalued?
Dear friends, I have shared on a number of ways to valuate a business and the textbook answer is to buy businesses when they are undervalued. But what if we found a business we really like and it is overvalued at the point of time we are looking at it? Of course again, the “correct answer” is to wait for the price to drop and when Mr Market give us …
Read MoreSTOCK MARKET 102 – CIRCLE OF COMPETENCE (Part 2 of 4)
Hi Friends, In the last article, we looked at investing from a business perspective. In this article, we will look at something called the “Circle of Competence”. The famous Warren Buffett wouldn’t go near a company with a ten-foot pole if he cannot understand what business it is involved in. For example, in 2000, he avoided technology stocks even though the stocks were going through the roof. He did not …
Read MoreSTOCK MARKET 102 – BUYING STOCKS FROM A BUSINESS PERSPECTIVE (Part 1 of 4)
Hi Friends, In the last four articles, we looked at what the stock market is, why companies list, how stocks trade in the stock market and why we need to invest in the first place. The next four articles, including today’s, will concentrate on looking at investing from a business perspective, among others. When you flip open the “Money” section of the Straits Times, you can find the previous day’s …
Read MorePE RATIO & PEG RATIO IN VALUE INVESTING
Hi Friends I remembered years ago when I encounter with the uncles and aunties who got themselves in the stock market though many of them are speculating, they will be looking at charts, talking about the past prices of stocks, their intuition and gut feel and so on. The only thing that is probably close to the fundamentals that they talk about is P/E Ratio. I am going to explain …
Read MoreThe Greatest Investment Checklist in the World!
Warren Buffett, the greatest investor is said to be highly influenced by this one man other than Benjamin Graham and Philip Fisher: This man is none other than his partner, Charlie Munger. In the book, Poor Charlie’s Almanack, the investing principles are highlighted. We would like to share it with you below: 1. Risk – All investment evaluations should begin by measuring risk, especially reputational. Incorporate an appropriate margin of safety …
Read MoreA piece of consumer’s mind – how important is it really?
Warren Buffett had mentioned that when a company’s product and service owns a piece of e consumer’s mind, it may likely have an economic moat that can potentially translate to long term, sustainable earnings. When we think of fast food, brand names such as Mac Donald probably come to mind. How about soft drinks, we likely think Coke or Pepsi. For these businesses, the results are obvious and we can …
Read MoreWhen do we sell a stock? – A Business & Buffett’s Perspective
Recently, I again asked the question of when should Value Investors sell a stock. Based on my research, i found out that the reason why Value Investors sell their stock is very closely tied into the reason of why they buy the stock in the first place. The key reasons why a Value Investor would buy a stock is because of the combination of these 2 reasons: 1) The business …
Read MoreWhy Inflation needs to be factored when assessing the Value of a Business
There are some fabulous stocks in the stock market that is very stable, but is no longer growing. So can we still assess the value? Let me give you an example. Say we are assessing a chicken rice business in a mature estate in Singapore. The chicken rice shop has regular customers in that estate so its net revenue (or sales of food) is very steady, but there is no …
Read MoreWhen a Company Buys back Shares (Repurchase)…
In this post, we will explore into a earnings management strategy that some businesses adopt. When a business earns profit, there are 3 main things it can do to the amount of cash it made. 1. Give out as dividends 2. Keep as retained earnings 3. Buy back shares Lets look into the effect of each of them for shareholders and see when each of them makes sense. …
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