Philosophy

November 27, 2008 | Read Now

Here I outline the philosophy I take in my valuations and what you will expect to find and not find. […]

  • Dear Sir:

    I am a young woman in my twenties.

    I know nothing much of stocks or investing, and have only limited time available to peruse multiple sites in hopes of discovering the material I need to understand both the obvious as well as the esoteric matters needed to invest wisely in the stock market.

    What you seem to be saying, I think, is that, since everyone else is providing basic information regarding the important issues in the marketplace, you will not be discussing these, and would like persons like myself to find analyses of the most practical issues elsewhere.

    I would surely love to discover one source of information in which to invest my complete confidence and loyalty.

    However, I am not receiving the impression that reading your well considered material will help someone like me who needs to know what is going on in the marketplace at both the obvious and esoteric levels.

    Without that, the site will not be of value to me or my situation.

    I realize that it may not be terribly interesting for you to discuss the entire market and its immediate trends, and the things that the best and smartest money managers convey, but speaking for those who I know are in my situation (that is most of the working public) our need is for the “esoteric” to be the gravy upon the meal, but the meal must be present.

    I do hope that my impression of the material to be found here is in error.

    There would be nothing more pleasant than to find a person willing to base esoteric “conclusions” on publicly analyzed positions. Someone who is willing to share the information that is backed by both intellect and personal investment decisions. That is, knowing that when you favorably discuss a stock, you yourself have had the confidence and courage to place part of your personal financial future at stake as we your readers will be doing, since this is the only reason your readers would be interested in allocating time to read your analyses in the first instance.

    Twice you have said that in order for your readers to understand the part of the market that is most important to them, to go elsewhere, that anything obviously important or significant in terms of understanding the marketplace on a day to day basis, you are not interested in discussing since the assumption is that your readers will be able to find whatever is most obviously needed in places undisclosed.

    If you have recommendations regarding who would be willing to weave the relevant with the esoteric for a person not able to allocate more than a few minutes per day to stay abreast of the issues, I would be pleased for the recommendation.

    Thank you for the time you take to respond to this concern.

    Hopefully you will not use your response as a place to request that I leave the room.

    Sarah (Sally) Thompson

  • Hello Sally,

    First of all, thank you for leaving your thoughts and I completely understand what you are saying. The problem is that this blog has always been targeted towards the intermediate plus audiences as it is a reflection of my investing theories.

    Just as there are beginner to advanced classes in school, this is the same in the investing and blogging world. I too have never found a site that taught everything from the basics and up but that doesn’t mean you and I cannot learn.

    Investopedia.com and fool.com will teach you everything you need to know about the basics, but again, these sites will never educate you on how to manage your own portfolio. The information laid out on these two sites alone clearly clarify all the important and basic concepts. For me to write it again would merely be a cheapened copy.

    Regarding current events and markets. This is something too many “normal” people misunderstand. Theoretically, current events and market movements should have no effect on investor behaviors. This part of the market you are trying to understand is really quite useless and irrelevant as I, and fellow readers, concentrate on the business and think in terms of owning a business.
    The media makes it seem like a big deal, but the truth is, it is just noise. I think the readers of this blog enjoy the fact that I bring up topics that filter out all the noise of the market. I used to spend a lot of time reading the type of information you seek, but from experience, it was a waste of time and it didn’t help in my learning or understanding.

    The price of gold or whether the fed is cutting interest rates does not affect our choice to go to McDonalds to get a burger or buy a Coca Cola.

    I literally read my first “how to invest” article on fool.com in Sep 2007. Since then, I have spent at a minimum 2-3 hours everyday reading books, magazines, textbooks, blogs, newspapers trying to understand concepts and how businesses operate.

    I’m sorry if what you read has put you off in any way, but I am more than willing to answer questions and provide helpful websites and materials through email.

  • Jim

    Sally, I’d like to quickly reply to your inquiry. Warren Buffett who is the best investor in the world has stated that he does not know what the market will do when he wakes up in the morning and to make day to day assumptions is a waste of time. Most value investors feel this way. Therefore rather than focusing on macro and microeconomic conditions, we like to keep things simple and focus strictly on the company. What kind of people are running the business, how profitable are they, what they do with those profits, how honest are they with their shareholders, etc. Who you deem as being the best in determining where the market will end up isn’t the best for the value investor. If we are to measure the best by how many dollars have been generated, then Warren Buffett is clearly the leader of the pack. The value investors mindset is that a company is worth what its business is worth. Jae presents that theory in very good form here. What the price of tea in China ultimately has no bearing on whether Company A is trading for $X.XX per share. This is the concept of the value investor and why we are not over indulged in the micro and macroeconomic environment. They are environments too large to take on the task of analysis and most often the result ends up in being a guess at best.

  • Good advice Jim. I couldn’t have said it any better.

  • Insider Trading

    I have a few sites I go to, but the quality is always the best here!

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