How to invest

Along with the site design, I updated many of the pages and one of them was the about me page. After four years, it needed an update to better reflect what the site stands to achieve.

So let’s take a short break from the regular investment posts and read about the past, present and future of old school value.

Short Background

My dad started “investing” when I was in school but has since turned to day trading in order to pick up daily profits. A profit each day was not guaranteed but I clearly remember the range of emotions he displayed when making and losing money.

Like many people, he acted on stock tips from friends, bought into story stocks and hoped for the lotto stocks.

A lot of our savings was poured in to fund his trading and having witnessed this while growing up, it was no wonder that I grew an incredible negative bias towards stocks.

Stocks were a gamble.

How I got started

But one day, I became an adult and left home. I got a job and started to think about retirement. I got a retirement account through my employer and didn’t know what to do. So I stuck my money in a random mutual fund that had the highest return over the past 3 years.

Around the same time, I also ended up signing up for variable life insurance and realized my returns were 0% while the insurance sales agent collected all the fees and commissions.

I forfeited my $3,000 account and decided to manage my own money.

How Old School Value got started

Without having ever taken a finance, accounting or economics class, I didn’t know where to start, so I started  by reading books. The Intelligent Investor was the first investment book I read, and to be honest, I found it to be the driest, most boring book I have ever read.

But I kept at it and read more books. Finally, it came to a point where I needed a way to record and apply everything I had read. That’s where Old School Value comes in. It started out as a journal to keep track and to share what I had learned.

Old School Value stands for the old school methodologies of value investing. I have no interest in over leveraging, using complicated option strategies or using margin.

Old School Value Today

Old School Value is now in its fourth year.

Over the years, this site has evolved into a value investing service by offering free and paid stock analysis tools, stock screens and a forum for people to share ideas.

However, Old School Value continues to offer timeless educational material in order to bring as many people into the world of value investing.

The focus here is to keep the quality as high as possible. Rather than publish several articles a week with little substance, I prefer to keep quiet if it is of little importance. This way, I won’t be overloading you with information and you can go through the articles at your own pace.

This is the same for the tools I offer. If something is not worth selling, then it is not worth giving away.

Keeping it Real

I am just a regular person. This site is not some second persona where I try to make myself look like a stock picking genius. I’m not.

What I hope people get out of this site is to become open to new ideas, learn new concepts and methods, and then to share it with others. At the same time, I hope people continue to challenge my very own views.

Too many investment sites lack honesty and candidness. If I make a mistake, I will own up to it before anyone else. You will hear about my successes as well as my failures.

My returns are not inflated or displayed in a way to make it seem better than it really is. Being independent, open, honest, transparent and approachable are vital keys for my own development as an investor.

Ethical Investing

Investing in stocks is investing in businesses, and there are certain types of businesses that I do not wish to support in real life which I apply to my investing. The temptation is always there to make money regardless of industry or company, but I believe investing requires social responsibility.

For this reason, I do not invest in any of the following:

• Gambling stocks
• Alcohol stocks
• Tobacco stocks
• Adult entertainment stocks

My Mission

In case you have not read the footer, my crazy goal one day is to help sponsor 1,000 children around the world. Currently I do this through a Christian organization called Compassion

The experience of having visited three of the children I sponsor in Colombia, really opened my eyes and heart to what is important. My goal could always be to make more money, but there is more to life than self satisfaction and living comfortably.

I’m not a philanthropist or somebody seeking to change the world. Nor am I am better person than anybody else. I just happen to be moved by helping less fortunate people, while other people are moved by different things.

Through Old School Value, I aim to offer quality tools, articles and information for the small investors. On a personal level, I hope to become independent so that I can focus on giving back as much as possible.

You’ve read my background, you’ve read the objective and you’ve read the mission. That’s what old school value is about and me.

Written by

Jae Jun

Time Does NOT Equal Money

How much is your time worth? $10 per hour? $20?

I know that it is worth much more than that because time does not equal money.

Money is a commodity, while time is a precious limited resource. You may be able to gain money in all sorts of ways, but you will never gain time once spent.

With such hectic lives we live, 24 hours doesn’t seem enough. But seeing how that is all that we have, here is a list ways I operate while having a full time job, running this site and investing with only a couple of hours max to spare each day.

1. Answering Short Emails on Smartphone

Phones have come a long way. I’m now using a Samsung Android phone which allows me to answer emails instantly. I can answer more emails than would be possible if I were to check everything in one go.

Emails are kept short and to the point. Other emails that I can get to later receive a star.

By answering emails while I’m in the elevator, waiting in line for a burger, waiting at the post office and other various places with 2-5 minutes to spare, I save 1 hour easily.

Be careful that you don’t overdo it though. Not at the dinner table please.

I also have a twitter application on my phone so I can quickly check whether there are any updates from people tweeting about stocks I own.

2. Writing Down Ideas on Paper

You will be shocked at how many ideas you come across in a day. The human brain is a huge ball of muscle throwing out ideas every second. A pen and paper is the only way catch it.

I’ve tried taking notes with my phone and other electronic devices, but they just don’t work like a good ol’ fashioned pen and paper.

I write down stocks I hear, read or see. Currently I have a PostIt next to me with 8 stocks I need to review.

Writing down points about a particular investments also makes it easier to organize thoughts and ideas. If I gather enough points, I can easily write an article in an hour or so, whereas it would take at least 3 hours to get everything together from scratch.

3. SpringPad App on Android

The exception to a pen and paper is an application called SpringPad on my phone. The beauty is that you create an account online and it syncs with your device.

It’s very much like other note taking applications exception SpringPad already has a list of categories which you can immediately add to.

Find a new value investing blog that you like? Add it to your SpringPad and you now have that URL on your account accessible from any computer.

4. Using Google Apps to Work From Anywhere

I’m a cloud computing nut and Google feeds it me. I use most of their services and I even go as far to pay for extra ones.

I forward all my outlook emails to a single gmail account so I do not have to worry about losing anything.

I also test a lot of spreadsheets and create draft versions on Google Docs. It’s great when you can log in from any computer and can just continue working.

With Google calendars, you can set up notifications to send to your phone or email for upcoming earnings dates and conference calls.

No more fiddling around with a desk calendar and being tied to your desk.

5. Storing Data on Cloud Services

Amazon S3 and Rackspace are both excellent ways to back up files on the cloud. I have accounts with both. If you had to choose one, go with Rackspace.

It’s faster, it’s web based and it’s easier to use.

The sign up process for Rackspace was the biggest hassle I have ever had but it is worth it in the end.

I use it to store and share pdf’s, ebooks, transcripts, annual reports and all sorts of random stuff.

6. Best Way to Backup Data Easily

SugarSync is the biggest change I’ve made in terms of operations.

It is a true cloud backup service for $5 a month which allows you to back up to 30GB of files. I have a 1TB backup drive at home, but I never use it because backing up daily or even weekly is such a hassle.

But after I experienced hard drive crashes and my laptop being stolen, this is a fantastic investment.

With the most basic account, I only receive 30GB so I do not back up photos and other media files. Those go into Rackspace.

The way SugarSync works is that after you have initially uploaded all your files, SugarSync only syncs files and folders (in the background) by detecting files that have been changed.

No more ugly backups taking up huge space and bandwidth.

Don’t regret losing years worth of work just to save $5 a month.

7. Working with Multiple Monitors

Using multiple computer monitors exponentially increases your work efficiency. I currently have 2 monitors set up. One is my laptop and the other is a 22inch widescreen LCD.

Monitors are so cheap these days. I wish I could get 4 monitors and then hook it all together neatly into a monitor mount.

Getting back to the point.

Bill Gates uses 3 monitors himself.

If you look at this office, there isn’t much paper in it. On my desk I have three screens, synchronized to form a single desktop. I can drag items from one screen to the next. Once you have that large display area, you’ll never go back, because it has a direct impact on productivity. -  Bill Gates

Same with Larry Page.

I have a weird setup in my office. I have one computer with three monitors: one flat-screen monitor and two regular ones. I have my browser on one screen, my schedule on another and my e-mail on another. I can drag things to different screens. I also have a projector. So if I’m talking with everyone in my office, I can move stuff onto a big screen. – Larry Page

If I had 3 monitors, one would have my intrinsic value spreadsheets open, the middle screen for researching and finding information, and the third monitor for the SEC website.

8. How to Download Earnings Calls

Adam from Value Uncovered has put together a neat How-To Guide for Downloading Earnings Calls.

Bruce Berkowitz says that he listened to the Bank of America conference call 8-9 times. Adam’s method makes things easier.

How do You Work Efficiently?

There are countless other methods and ideas of working efficiently. The purpose of all this is to help you save time so that when you actually sit down at your desk or computer, you get to work immediately on reading and writing investment related material. Not surfing or wasting time on social media.

So what is your tip to work efficiently?

I was interviewed by Mariusz Skonieczny of Classic Value Investors and the author of “Why are we so clueless about the stock market” back in January and the interview is now up.

If you want to get some history on Old School Value and a feel for how I think when it comes to investing, be sure to check out the interview.

I’m no Buffett, Klarman, Ackman or Berkowitz but I tried to answer as best as I can

Read the interview.

Jae Jun

How to Invest in the Stock Market: Part 1 | Part 2 | Part 3 | Part 4 | Part 5

To conclude this series on learning to invest in stocks, I originally planned to list up some sites, blogs and other resources but figured the investing blogroll I have up already is sufficient.

Rather, I would like to close out this series with 10 points on my reflections from investing and what it has done for me over my short investment period.

Reflections on Investing

If you have followed this series from the beginning, you’ll know I started with nothing. No knowledge and close to no money. I was biased that the market was equivalent to gambling and believed that working hard and going up the corporate ladder was the only method to success since I had no interest in economics, finance and business. I had laser tunnel vision in trying to do well at work. The fact that I have an engineering background and my thought process was wired to be analytical didn’t make it easier for me to “look around”.

1. Investing broadened my mind

I love the process of investing and I also have a thirst for knowledge. The resulting proceeds is the icing on the cake. My friend (probably reading this) tells me I should teach since I seem to be better at teaching people what to pick rather than doing it out myself.

Investing has broadened my mind by forcing me to think in different ways and to look at a situation from different angles and perspectives. It broke the mold that many engineers have of straight line and top-bottom thinking.

2. Investing proved I was wrong

I was the type of person you hate to get into arguments with because I always had to be right and I would always find some way to prove it. If I didn’t have the facts with me at that point in time, I would gather it later and let you know why I was right again. When I first started this blog, it started off with a bang by receiving negative comments from people because the methods I use were “hideous” to them. I would spend as much time on a comment as I would on an article just to point out every single detail. You get the idea.

Investing has shown me that I am wrong. People leaving comments have proven that I am wrong and then the market nails that fact in. The more important thing now is that I don’t care whether I am wrong. I like to be told constructively that I am wrong. I listen to why people believe I am wrong. I ponder their points and if what they say is true, I now admit my mistake, learn and move on to more lessons.

3. Investing has helped me to ignore noise

Investing has helped me in determining what was real useful information and what was noise. It has helped me to become efficient in processing data and to ignore the noise that fills the world today.

4. Investing taught me about businesses

I would never have dreamed on wanting my own business. Investing and looking at stocks as pieces of businesses has placed a desire to start my own business and I am in the process of doing so. The things I have learnt by reading annual and quarterly reports, financial statements and books have all been beneficial in how to approach starting and running a business.

5. Investing has made me responsible

I would probably still be spending my cash on gadgets, toys and other useless things to satisfy my hobbies rather than working towards the things that were important. I’ve dropped the hobbies that were time wasters and concentrated on helping my wife feel secure by managing our finances properly.

6. Investing reminds me of my purpose

I don’t invest to purely just accumulate wealth. That isn’t something I believe in. I have a purpose and reason for why I invest and it isn’t to get rich or retire comfortably. This helps to prevent me from getting over greedy. Do you have a purpose or is it just to get rich?

7. Investing has made me part of a social community

I was never into the whole internet friend/community thing. Just never bothered, but I realized that interacting with like minded and driven people was stimulating in so many good ways.

8. Investing makes me want to help others

You’ve heard horror stories of people losing their entire wealth in the market and going bankrupt. They bring devastation not only to themselves but to their family and other close relationships. I don’t want this happening to anyone so at any given chance I enjoy discussing financial issues to help others.

9. Investing organizes my thoughts

I’m not a very good speaker as I tend to jump between points often. When performing research and writing on this blog, I am required to lay out my thoughts in an easy to follow and understandable manner which in turn helps me to see things clearer as well. If my writings were jumbled and all over the place, I’m sure you wouldn’t be here reading anything I had to say.

10. Investing has opened up different avenues of skills

The whole process of investing and this blog has taught me many new skills. I now understand web design platforms, some coding, graphic design, sales, marketing, SEO and other little bits and pieces that truly are valuable. How do I know this is valuable? Well, I’ve been able to use every piece of information accumulated for a personal business project I am currently undertaking.

Conclusion

Investing is more than just gaining money. The 1000+% return with VNDA sure would have been nice but investing opens up a pandora’s box. Some refer to it as a journey or a game but whatever you call it, have fun with it, don’t go wild or do crazy things.

One final important point I would like to make is that, if I can do it, so can you.

Jae Jun

This is part 3 of the How to Invest in the Stock Market series.

How to Invest in the Stock Market: Part 1 | Part 2 | Part 3 | Part 4 | Part 5

Advanced Level Investing – Well…Not Really

For lack of a better description, I’ve titled this stage as advanced.

Following on from Part 2, the next step I took was to try and understand how the financial statements provided a future view of the company. Financial statements only provide a snapshot of the company at the time of writing and there wasn’t any useful information that explained how to interpret each line to determine the ongoing business.

I was stranded on a frustrated plateau for many months until I got to reading The Art of Short Selling. Most books I’ve read tell you what to look for when buying a business. This book focuses purely on the warning signs of the business. Eventually I was able to understand statements better and wrote a series on analyzing and interpreting each financial statement.

An excellent advanced application of analyzing financial statements can also be found at Investopedia.

Special Situations

So after all the reading and studying, I’m now at a point where I can study the company and be fairly confident in my analysis approach. But buying and holding just didn’t cut it for me. I wanted to find opportunities in places people didn’t know about and somehow I came across my first merger involving Tribune and made a tidy profit of 10% in less than a month while the market was sliding down.

Something clicked.

I did a little searching and found that Greenblatt had written a book, You Can Be a Stock Market Genius, specifically on special situations after which I wrote a series on special situations involving merger arbitrage, spinoffs and tenders.

It was also around this time that Interactive Corp (IACI) spunoff 4 divisions. HSN Inc (HSNI), Ticketmaster (TKTM), Tree.com (TREE) and Interval Leisure Group (IILG). Too bad I didn’t purchase any of them because the volatility of the market got to me. I look back and kick myself for the 200%+ returns from HSNI and TREE and 30+% of the other two.

Ben Graham Cheap Cigar Butts

The only downside to special situations is that the profitable ones don’t appear so often. This led me to start going through Ben Graham’s screen to find many cheap distressed companies. These are the businesses that have one last puff remaining in them. Buffett referred to this as cigar butt investing.

Now that I am comfortable going through the financial statements of each business except financial institutions, I am now over the fear of the dreaded “penny stock”. A company that is undervalued at $1 or $100 have the same thing in common. They are both undervalued. So by focusing on the financials and operations of the business, great opportunities can be found where people fear to tread.

Take iGo Inc for example. It’s stock price is $0.62 with pretty good volume, yet the stock is rock solid. The company lost its biggest customer that accounts fo 42% of revenues but the stock dropped 0% on that news. That’s right, 0%. How many companies can boast the same thing?

Bankruptcies, Debt and Distressed Debt

Bankruptcies and distressed debt is a completely new field for me so I’m afraid I can’t elaborate. But I currently hold GGP and will definitely learn something from it.

Selling

Knowing when to sell is one of my biggest challenges. In a previous article on knowing when to sell, I mentioned the basics of selling.

• You made a mistake in judging the company
• The company fundamentals have changed
• A better value or opportunity comes along
• The need for emergency cash
• Too far above intrinsic value

What I should also include now is that when buying a company, an exit strategy must also exist. When you put in that trade order, someone is selling it to you. Why is that person selling? Only one person is right in the transaction.

I still have trouble selling some ideas which is all pschylogical and something that I am still working on.