Holiday Edition
Access to over 200 Nuggets of Investing Wisdom
If you know anything about Canada you know it gets pretty miserable weatherwise in February. So, we are off to warmer climes for a month. Not to worry. There’s lots to read.
There are three ways to go at it with today’s post.
First, explore for subjects of interest. The links below operate like the table of contents in a book and will take you to posts on that broad subject:
In this Part we look at subjects like whether Stocks Beat Every Other Asset Class, Risk and Uncertainty, the Efficient Market Hypothesis, the Inefficient Market Hypothesis, Volatility and The Economy and the Stock Market – Cycles and Trends
Here we review the difficult subject of investment psychology. These posts describe the problems we face from our all too human frailties and suggest simple rules to overcome them. Readers are invited to start with Investment psychology explainer for Mr. Market – introduction This will give you a better understanding of some of the terms and ideas and give you links to other posts in the series.
The topics here are things like the aptitude investors need to succeed, The Right Stuff, Developing Expertise, Luck and Investing and Decision making under uncertainty.
This part is all about the investment process. We can think of this as the sine qua non of investing. You can be brilliant about everything else, but without a sound investment process you will flounder.
Here you will find posts about how much to allocate to stocks (my default is 100% stocks with the exception of bubbles), the fascinating and critical issue of Bubbles, crises, panics and crashes, and finally Cash Reserves
The subject here is stock picking which includes General Approach to Choosing Common Stocks, Sectors and Company Attributes to Avoid, Bottom Up and Various Qualities and Capital Structure, Strength and Economic Performance.
Here the topics include Diversification, Balance and Strategy, The Problem of Determining Intrinsic Value, Use of Ratios to Value Shares, How to go about Finding and studying companies to invest in, things to be leery of like Pundits, market explanations and forecasts, Buying, Uses and misconceptions about charts, Monitoring your Portfolio, and Selling.
There is also a useful glossary of terms.
Second way to go at today’s post is through this list of great posts to read. Try picking one or two from the lists below as you have time.
Common stock investing basics – true investing
So called value stocks typically have low ratios because of limited corporate opportunities
The under-performance of value stocks explained
True investing is neither growth nor value
A common misperception about stocks
The majority of publicly traded U.S. stocks underperform Treasury bills. But that doesn’t mean you have to identify the next Magnificent Seven. The vast majority of wealth creation comes from a reasonably sized cohort of successful companies.
Tapping into the wealth created by stock market investing
Finding the right company to invest in
How to distinguish a superb value creator from an also ran
How to identify companies that make lots of money for shareholders
We want great companies at bargain prices – Valuing the companies
The dangers and benefits of using Discounted Cash Flow analysis reports
The problem with analysts’ target prices
How to deal with uncertainty
Investment decision making in face of uncertainty
The Age of Intangibles
The world is always changing. The biggest change in the world of business in the last forty years has been the shift in company capital investment away from tangible assets and towards intangible assets. This has had a major impact on metrics such as earnings, price/earnings, book value of equity, ROC, ROE, CAPE and several others. Here are some posts that address the issue:
The emergence of a new model of capitalism
Stock valuation in an age of intangible assets
Is the price earnings ratio (P/E) obsolete?
Financial strength – the debt equity ratio has serious shortcomings
The fading usefulness of book value
Be wary of using Return on Capital (ROC)
The stock market is closer to the Madness of Crowds than the Wisdom of Crowds
Does Wisdom of Crowds apply to earnings estimates, price targets, value estimates and stock prices?
The best performance is produced by a person and not by a committee
Buying and selling common stocks
In some ways the art of buying is easier than the art of selling. But both have to be done right.
Buying tactics for common stocks
19 Cardinal rules on selling stocks
Charts can lie through their teeth.
I would estimate that more than half of all charts we see in news, commentators and analysts’ reports about stocks and finance are fundamentally flawed and potentially seriously misleading.
Chart distortions that drive me crazy
The third way to go at today’s post it to look through the tags index on the home page to find a topic of interest. This will give you access to over 200 timeless posts on everything from the subtleties of intangible assets to Warren Buffett’s concept of economic goodwill vs Accounting Goodwill.
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You can reach me by email at rodney@investingmotherlode.com
I’m also on Twitter @rodneylksmith
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Check out the Tags Index on the right side of the Home page that goes from ‘accounting goodwill’ to ‘wisdom of crowds’. This will give readers access to a host of useful topics.
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You can also use the word search feature on the right hand side of this page to find references in both blog posts and also in the Motherlode.
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There is also a Table of Contents for the whole Motherlode when you click on the Motherlode tab.
Want to dig deeper into the principles behind successful investing?
Click here for the Motherlode – introduction.
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