Investment in Stocks

Posts Tagged ‘benjamin graham’

In 1999, Warren Buffett openly said, “I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”

In 2005, A University of Kansas student asked Buffett about this:

“Question: According to a business week report published in 1999, you were quoted as saying: “It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”…would you say the same thing today?”

Here’s Buffett’s answer:

“Yes, I would still say the same thing today. In fact, we are still earning those types of returns on some of our smaller investments. The best decade was the 1950s; I was earning 50% plus returns with small amounts of capital. I could do the same thing today with smaller amounts. It would perhaps even be easier to make that much money in today’s environment because information is easier to access.

If you are reading this blog right now, it goes to show that you have the ability to search for information and this means that you too, can make 50% a year.

And what is 50%? What can it do?

50% a year means you can turn an investment of $50,000 into $1.2million in 8 years.

And using that $1.2 milli0n you now have, you can make a passive income return of $600,ooo per year.

That is $50,ooo per month.

Would $50,000 per month be a good income for you?

The million dollar question is, “How to get 50% per year?”

The Answer, “Using the Proven Methods of Value Investing to Find Businesses that gives you 50%!”

During our free workshop, we share the concept and the steps of Value Investing. It surprises the participants how easy it can be. Once you learn how to look at stocks as businesses, learn what businesses to buy and learn what price to buy them at, you can achieve the kind of returns Value Investors like Buffett, Graham, Town, Templeton even many less known persons like the $70million USP man.

The key is to know how to do it, and then…. do it!

Do come and join us for our free workshop show you how to do it and do it with you together so you too can have the returns that you want!

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah

Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffet Way
http://www.investment-in-stocks.com

When choosing businesses to buy, one of the ratios we look at will be the Return on Equity.

Return on Equity measures the rate of return on business owner’s interest or equity.

Return on Equity =        Net Income

Share Holder’s Equity

Each time a business makes profits, it can use it in a few ways.

1. Issue profits out as dividends
2. Retain the profits which adds to the Shareholder’s Equity
3. Reinvest in itself by either expanding or buying back its own shares.
   
   

In other words, the profits which the business has made can either be issued to us, or kept by the business for continued operations or investments. If the business is keeping the profits, it is kept mainly as part of the owner’s equity and we want to know that this amount of money is put to efficient use. Return on Equity tells us how well this amount of money has been used.

For example, ABC company makes $100,000 this year and the amount of share holder’s equity it is holding is $5,000,000.

Return on Equity =        $100,000 = 2%

$5,000,000

What?! We put or keep $5million with ABC company and it only made 2% or $100,000 out of it. That is simply not efficient and thus ABC company does not seem like a good place to put our money in. As a gauge, we should look for companies that have a consistent average ROE of 15%.

ROE is only one of the ratios we look at when we are checking a business’ track records. It is important to look at a few figures as a cross check to make sure that these numbers are not manipulated to fool investors.

Do come and join us for our free workshop as we run through some items to check to avoid the pitfalls of investors who simply do not know where to look. Be an intelligent investor and join us at our workshop.

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah

Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffet Way
http://www.investment-in-stocks.com

Hi,

Today I would like to share my experience regarding “Hyped Up” advertisements! Fortunately or not, i do not yet have the ability to display my feelings through my writing, otherwise, you will be able to feel my anger, frustration, compassion and disappointment.

For those who have read my book, “Winning the Money Game”, you would have read on the part where I started venturing into the stock market after one of my friend, Suffian, showed 6 of us that it is possible to make money from stocks. After our talk with Suffian, I began searching.

To my excitement, I found many courses that promised me that I can get rich quick, quit my job, be a full time trader etc etc…

I paid about $5,000 (i think), joined the course and became confident. I traded some money and won. My confidence grew, so the next step i did was to be a nice kind person and asked 2 of my good friends if they want to make money as well. They said yes, so i took their money and graciously lost about 50% for them. I never forget the feeling.

But i didn’t give up. I attended more courses and lost more money. The funny thing during the time i was trading was this – I identified myself as a Trader. I began to feel good about trading. I read books, attended courses, traded every night. I honestly want to find the “magic” system, strategy… whatever.

Years later, I have arrived at a stage where i began to understand the stock market much better so much so that i can make consistent profits… interestingly, not using any of the techniques taught by me from the courses i attended, but through some guidance from some personal mentors, some books and some practice.

Looking back, i do not think it is fair to say that those course I have attended are fraud, scam etc etc. These course do teach the participants certain amount of skills and i think for beginners, if you need guidance in Trading, it is probably a good idea to get someone to help you get started.

BUT! What ANGERS me is the HYPE in all the marketing!

“I made 700% in my first trade”; “After attending the course, I made my first 3 trades and  make $75,000!”

HYPEsss! I hate to wake you up from your dreams…. In fact those of you who attended such courses probably already woke up!

I recently brought my 2 boys to a drum class. And without a single bit of biasness, they are excellent, had so much potential and talent… just like their dad. But even then, i am clear headed enough to know that they need more than a few drum sessions to make them professional. Being a Professional Trader is the same, it takes years…

I met a nice gentlemen at Philips Capital who used to be a Professional Institutional Trader. He traded millions, made and lost billions and he say that when he saw those claims from trading courses, he is wondering “why MAS is not doing anything to clamp these guys down.” (His exact words). He knew that it is not possible for anyone to make money consistently as claimed by these advertisements.

But even with this post, with all the newspapers journalist warning people, there will still be many people who “see and hear what they want to see and hear” – that is, How to Get rich Quick over night and how to be able to sack their boss 3 months from now….

If you want a real solid plan on your financial destiny, if you want to really learn how to invest- not get rich quick… then I am here to help you. Because i have been through the pain, I understand the feeling and frustration. I see many of my initial trading coursemates had a worse life because of the course we attended.

It is my appeal to you: To be a wise, Intelligent Investor, not a greedy blind mouse. Take a moment to pause and observe your feelings and be honest to yourself… Are you willing to take effort to learn and take time to… W.A.I.T. (Btw, W.A.I.T does not stand for anything, it just means wait, but i want to create the pause effect after each alphabet, just to make you wait…).

Ok, after all this, I do have good news. If you are able to just take time to learn, you can in fact “get rich quick”… in 2 to 5 years! And let me tell you a secret, 2 to 5 years is QUICK!

But that also depends on your starting capital, your needs and your effort. So you can either B – Buy Assets, and if you are starting out with huge cash, with the proper knowledge, you can buy so much cashflow into your life. I know a couple of people who started out with huge savings. After learning how to Invest properly (not trade… mind you), they become much richer, much faster.

I really do wish to share with you, but only if you are willing to be rationale, to learn and to use what you learn. Do join us at our free workshop where i share how to really avoid the hypes and how to have a real plan for a real future.

Click HERE to book a Free Investing Workshop.

To your dreams,

In the meantime, Don’t Let the HYPE Bite You!

Sean Seah
Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffet Way
http://www.investment-in-stocks.com

Once, i watched this simple yet powerful video, “what the Wealthy Buys on Payday”.

It is created by Tim Sales and it illustrates this wonderful concept of how to be Wealthy. It is not really the amount of income that a person makes which decides if this person becomes Wealthy, but rather, what he/she does with the income that comes in.

In summary,

1) The poor buys “stuff”, things people buy and do not really know why they buy it for.

2) The middle class buys “liabilities”, which are things that you will have to continue to finance out of your pocket once you buy it. E.g. are like cars, boats, houses, timeshare program, a the latest electronic gadget etc etc… which once you buy, you will have an increase in your monthly/ yearly expenses. That is why the middle class are the most ’stressed-up’ people, having tonnes of expenses and bills to pay every month. These people have the highest monthly expenses. Please do note that these can potentially become “assets” as well… if you know how to turn them into assets.

3) The wealthy buys Assets. Assets are things that put money in your pocket, as simple as that.

Some very common assets known to most people will be fixed deposits, annuities and bonds.

Once you buy these assets, money will be generated for you on a yearly/ monthly basis.

More savvy investors can make their money work harder. Compared to fixed deposits, annuities and bonds which typically gives a rate that does not even match inflation, stocks, real estates, land, commodities have a better track record at beating inflation and making your money work harder.

That being said, if you DO NOT have the Proper “Education” regarding these classes of Assests, i rather you delay your ACTION to buy them.

People who “anyhow” buy these assets may end up buying themselves sleepless nights and a dip in their investment/savings jar. So if you are ready to take Action – Invest in yourself first, by becoming more Financially Intelligent.

In this blog, i want to share what has created results for me. I understand that there are many different types of investments such as precious metals, wine, land, paintings etc etc, and i want to share with you those that I have created results in. Many years back when i was in the university business school, i was taught by Professors who never had businesses and do not invest. That is why i did not learn how to build businesses and how to invest from them. Subsequently, i had the good fortune of meeting real businessmen and real investors who had results and they mentored me.

Personally, the assets i buy (currently) are:

1. Stocks

2. Real Estate

3. Land banking

These assets have been working well for me and i enjoy the cashflow coming from each of these assets.

In our free workshop, we share a proven method to invest into stocks, Vaklue Investing!

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah
Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffet Way
http://www.investment-in-stocks.com

To your dreams,

Sean Seah

Recently, one of the peers in Value Investing Academy shared this wonderful article written by Warren Buffett himself. What is important to note is that when he look at stocks, he looks at them as businesses. If you invest in a stock, why do you invest in it? Because you think the price will shoot up, or is it because you KNOW that it will do well? Do read what Warren Buffett wrote and see how he look at stocks:

A Message from Warren E. Buffett

Chairman, Berkshire Hathaway Inc.

What You Should Know About the Jewelry Business

You don’t need to understand the economics of a generating plant in order to intelligently buy electricity. If your neighbor is an expert on that subject and you are a neophyte, your electric rates will be identical.

But jewelry purchases are different. What you pay for an item vs. what your neighbor pays for a comparable item can be, and often is, widely different. Understanding the economics of the business will tell you why.

To begin with, all jewelers turn their inventory very slowly, and that ties up a lot of capital. A once-a-year turn is par for the course. The reason is simple: People buy jewelry infrequently, and when they do, they are making both a major and very individual purchase. Therefore, they want to view a wide selection of pieces before zeroing in on a single item.

Given that their turnover is low, a jeweler must obtain a relatively wide profit margin on sales in order to achieve even a mediocre return on their investment. In this respect, the jewelry business is just the opposite of the grocery business, in which rapid turnover of inventory allows good returns on investment though profit margins are low.

In order to establish a selling price for their merchandise, a jeweler must add to the price they pay for that merchandise, both their operating costs and desired profit margin. Operating costs seldom run less than 40% of sales and often exceed that level. This fact requires most jewelers to price their merchandise at double its cost to them or even more. The math is simple: Jewelers charge $1 for merchandise that has cost them 50 cents. Then, from their gross profit of 50 cents they typically pay 40 cents for operating costs, which leaves 10 cents of pre-tax earnings for every $1 of sales. Taking into account the massive investment in inventory, the 10-cent profit is adequate but far from exciting.

At Borsheim’s the equation is far different from what I have just described. Because of our single location and the huge volume we generate, our operating expense ratio is usually around 20% of sales. As a percentage of sales, our rent costs alone are fully five points below those of our typical competitor. Therefore, we can, and do, price our goods far below the prices charged by other jewelers. In fact, if they priced to match us, they would operate at very substantial losses. Moreover, in a virtuous circle, our low prices generate ever increasing sales, further driving down our expense ratio, which allows us to reduce prices still more.

How much difference does our cost advantage make? It varies by competitor but, by my calculation, what costs you $1,000 at Borsheim’s will, on average, cost you about $1,350 elsewhere. This is called the “Borsheim’s Price.” There are very few instances where we are unable to offer you those great savings due to restrictions, but you will always know upfront if an item is non-discountable.

Of course, price means nothing unless you are sure of the quality of what you are getting. When products are branded, such as watches and chinaware are, comparisons are simple. But jewelry is usually a “blind” item — and that puts virtually all purchasers at the mercy of the seller.

I can remember well how helpless I used to feel in a Fifth Avenue or Rodeo Drive jewelry store, where the only thing I knew for sure was that the operator had extraordinarily high overhead — and that they had to cover it in their sales price. I was also wary of the “upstairs” solo operator who operated on consignment merchandise, since that would have cost them more than merchandise bought outright, and would necessarily have inflated their retail price. And, finally, I always worried about the quality of what I was getting. I couldn’t tell the difference between an emerald or a diamond worth $10,000 and one whose value was $100,000. (I still can’t.)

My sense of helplessness led me to an obvious conclusion: “If you don’t know jewelry, know your jeweler.” For that reason, I made all of my jewelry purchases at Borsheim’s for many years before Berkshire Hathaway bought the company. I didn’t know stones, but I did know Ike Friedman, the retailing genius who had built the business from nothing into one of the nation’s largest independent jewelry stores. When I purchased Ike’s business, I did it without an audit but with full confidence that I was getting value received. And that’s just what I got — precisely as I had when I purchased a single piece of jewelry from him.

The main point of this letter is to tell you that you don’t have to live near Omaha to benefit from Borsheim’s. Our “shop-at-home” program brings Borsheim’s to our qualified customers. Simply contact Borsheim’s to describe what you’re looking for — to any degree of detail. We will assemble selections that best reflect your wishes and send them to you. Then, in the comfort of your own home or office, you can conveniently and leisurely select the item(s) you most prefer, or return the entire selection.

Our results from this “shop-at-home” program have been amazing. Customers have loved it and keep coming back for more. Each year, we send out several thousand packages, ranging in value from $100 to $500,000. Call us at 800-642-GIFT (4438) to learn how to qualify for Borsheim’s “shop-at-home” program.

At Borsheim’s the service will be exemplary, the price will be exceptional and the merchandise will always be what you are told that it is. You have my word.

Warren E. Buffett
Chairman of the Board

In my free workshop, we share how Buffett look at stocks and how you can to.

Click HERE to book a Free Investing Workshop.

To your dreams,

Sean Seah
Master Trainer (Value Investing Options Strategy)
Investment in Stocks Blog
Value Investing Academy – the Warren Buffet Way
http://www.investment-in-stocks.com