There are a lot of different factors to take into account as a value investor. The articles below cover many of the most important, including diversification, debt levels, valuation ideas and more. A constant theme is the need to focus on the long term and the facts surrounding a company, rather than short term news and rumours.
Once you step away from the cosy world of fixed rate investments it becomes much more difficult to tell if you’re an investor or if you’ve become a gambler. For fixed rate investors the difference is clear. They save money into an account and the value of each pound saved never changes. The account...
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The overall process of investing is simple: Buy – Hold – Sell. Unless you’re a buy-and-forget investor it makes sense to periodically check on the difference between the price of your investment and your estimation of its intrinsic value. One small complication in this process is the fact that the intrinsic value of every...
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The way I see it there are three sources of risk when investing. The first is the company whose shares you’re buying, the second is Mr Market and the third is you. Company/Business risk This is the risk that the company either doesn’t pan out the way you thought, or it goes bust or...
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Forgive me for sounding somewhat Zen, but the more I learn about investing the more I realise just how much there is that I do not know, and more importantly, the more I realise how much there is that I cannot know. Investing, like many worthwhile pursuits, always gives you ten new problems for...
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I must be getting old. In fact, having recently turned 40 I have hard proof that I am (in the shape of the cards, socks and pants that I received). It’s not turning 40 that’s making me feel like an old curmudgeon though, it’s my approach to risk. Having written about the need for...
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When I started out as a value investor my original plan was to hold 10 companies. I thought that this would be enough diversification to reduce volatility by a sufficient amount such that I would be able to sleep well enough to stick with the investment program. At the time my approach involved fairly...
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It’s that time of year again where everything starts to slow down in preparation for some excessive consumption of mince pies and all things tasty and fattening. It’s also a time to reflect on the year’s achievements (if there were any!) and draw out some lessons. In my case, 2011 has been the year...
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Having share prices in your face 24/7 is like having a giant red sign on top of your house constantly flashing the price that everyone else (on average) thinks your house is worth. Do you want grey hair? Just go outside and watch the price on that sign as it ticks up and down...
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I’ve made my fair share of investing mistakes and I’m sure that, despite my best efforts, I’ll continue to make them. The trick is to be honest with yourself and learn from them and learn to recognise them before you make the same ones again. For me, the biggest offender is overconfidence. Overconfidence can...
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As a stock picker I’m investing to beat the market over the long term. Of course by ‘beat’ the market I mean that the value of my portfolio goes up more than the value of the market, including re-invested dividends. But where will these gains come from? If my Vodafone shares are worth £1.70 each today,...
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