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For anyone who wants to learn about value investing, I discovered an easy to read book.
The message I got is that value investing is easy enough but most people do not have the patience for it.
"Patience is sometimes the hardest part of using the value approach. When I find a stock that sells for 50 per cent of what I have determined it is worth, my job is basically done. Now it is up to the stock. It may move up toward its real worth today, next week, or next year. It may trade sideways for five years and then quadruple in price. There is simply no way to know when a particular stock will appreciate, or if, in fact, it will."
Of course, there are many ways to make money from the stock market and value investing is probably one of the best known, if not the most popular.
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"Buying stocks that have fallen in price and yet still offer a margin of safety has resulted in successful investments."
I enjoyed the book which I feel is a well written primer on the subject of value investing. It is also inexpensive which makes it a value for money read as well.
Related post:
Warren Buffet: The world's greatest money maker.
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13 comments:
Hi AK,
Yup. Patience is really key in investing.
When Starhub was at 2.80, people told me to sell. When it was 3.50 people told me to sell. When it was 3.90, people also told me to sell.
But I persevere and held on for over 3 years. While waiting, I also collected handsome dividends.
The same can be applied to REITs, they reward us for being patient. ^^
Happy CNY to you and your family! :)
Hi DW,
Of course, some would argue that Starhub and REITs are not what value investors would invest in. ;)
Warren Buffet frowns upon debt and we know that Starhub's debt level is quite high. As for REITs, well, enough has been said.
As long as we know what we are invested in, the reason for being invested and the risks involved, we should be OK if we have contingency plans in place.
Unless we are invested in companies with a durable competitive advantage, what is a good investment today could turn bad tomorrow.
Starhub and REITs are doing well in a yield hungry world weary of the low interest rate environment. This could change one day.
On that cheerful note, I wish you and your family a happy CNY. :)
Hi Ak,
I actually ordered two books from betterworldbooks.com on 26th Jan 2013.
It stated shipped on the account page. will the status be further updated as i have yet to receive the books :)
Thanks
Jimmy
Hi Jimmy,
I always opt for free shipping which takes about 14 days, more if there are holidays in between. Unfortunately, with the free shipping option, there is no tracking service.
Taking into account that you placed your order on a Saturday and the Chinese New Year holidays here in Singapore, I think you will receive your books either late this week or early next week.
I sound like I am a CSO in BetterWorldBooks. Hahahaha... ;p
Actually, I wouldn't mind. They are doing good. :)
I disagree - value investing is not the most popular nor the best known, in fact I think trading and punting are more popular methods used to "win" money from the stock market. This is from my personal observation. The reason for this? Patience as you aptly mentioned in this post.
Admittedly, it takes more than just patience to practice successful value investing. I've read about a whole list of attributes which can seem daunting to the retail investor; but then again who said making money consistently was easy? Three key qualities - patience, fortitude and conviction; are required.
Happy Lunar New Year!
Hi MW,
I guess we finance bloggers can do our bit to help propagate the good ideas of value investing.
Won't you consider blogging again but perhaps less actively which would leave you time for your other pursuits? ;)
Thanks AK71,
will get this once I'm done with the two that's on the way ;)
Hi Jimmy,
Hope the books arrive sooner than later. :)
Anyway, I just checked and found that the 3 pre-owned copies were sold within hours of my blog post. A couple of readers had to buy new instead at US$20.50 a book.
So, if you don't mind, by the time you are done reading the incoming books, the store could have stock of pre-owned copies again. :)
Hi AK & readers,
Here's wishing all a healthy, prosperous & happy CNY.
I totally agree that value investing (VI), while not the most popular, is the proper way to invest in companies (stocks). And because I regard the knowledge of VI & its practice as a lifeskill, I like to highlight VI to youths. Well, over CNY break, I did to 2 nephews (juz graduated) & a bro-in-law. Thankfully, one young nephew was already sold on the idea bc his group of university mates are into VI rather than trading (smart youths with good foresight). The other who is starting to read up on stock investment (unfortunately, it tends to be trading & options trading among the young 'uns), has not heard about VI, so is interested to learn more.
As an aside, I would like to recommend a really good VI book "The 5 rules for successful stock investing, Morningstar's Guide to building wealth & winning in the market" by Pat Dorsey. This book helps me alot to understand VI as a newbie and work out a framework with which to assess stocks using fundamental analysis. I highly recommend this book to all who want to learn about VI but are disheartened with & discouraged by the advanced VI classics. After digesting Dorsey's book, you can re-read the classics. Am sure you will understand better the 2nd time round.
Hi jojo,
Thanks for sharing your thoughts and experience. Much appreciated. I will style a new blog post based on your recommendation so as to reach out to more readers. :)
Hi AK71,
I cannot continue to blog due to personal reasons.
Anyhow, I feel that the public in general does not appreciate value investing or the proper way to invest. This is through my interaction with many, many people over the course of the last 5-6 years. One interesting thing I realized - most lack the patience to hold on to a good company even if they have the knowledge, analytical skill and conviction that it is a good company. I've always found this strange - why kill the goose which lays the golden eggs?
Thanks,
Musicwhiz
Hi MW,
I know what you mean. There could come a day when I might stop blogging too. We only have 24 hours in a day. :)
As for killing the goose that lays the golden eggs, is it just because we lack patience? I wonder. ;)
Sometimes, we might decide that it is time to let go of an investment because it is no longer the good investment that we think it was only to see its share price going even higher over time.
I am sure everyone who has been in the market long enough would have had such an experience. :)
Hi,
Just starting to read your blog, thanks for sharing. Most of the investors, including fund managers are limited by their behavior which is fear of losing. It takes a lot of confident for one to patient. DK
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