Category — Investing Perspective

This is a guest post by Barel Karsen, a blog focused on finding 50c dollars. The blog is filled with good information, analysis and chapter by chapter book reviews. You can subscribe to his feed here. Continue reading Focusing on 50c Dollars >>

Most of you may have noticed that I usually write about small companies. Although I’m vested in United Health, which is the largest company I own, I don’t bother writing my own analysis on them. There are already too many analysts and individual investors writing about the company that I just don’t feel the need.

I assume no one wants to take on additional risk. The word is so often used to describe the market and companies that even a kid (when I was 15) believed that the market was “risky”.But what is risk and how do we reduce it?

Recently, as I continue to analyze my investing habits, I’ve noticed a couple of things I was and was not doing. One aspect that I had always adhered to was to “always invest in businesses that you understand”. Some where along my investing journey, I slowly started to morph the philosophy to a new meaning; “don’t invest in anything unless you know everything”.

Here is why I am wrong.

In my recommended reading post on Old School Value, I recommended people to read Ronald R Redfield’s notes on Seth Klarman’s book Margin of Safety - Risk Averse Value Investing Strategies for the Thoughtful Investor.

Charlie Munger stated it quite clearly. Intelligent investing = value investing.
By value investing, the general population tends to think of it as bottom feeding and being cheap, but such a statement only holds true in a town called Speculatown.

Do you invest in mutual funds? In your main acocunt, 401k or IRA? Do you diversify your funds? If so, have you thought about the following?

Joe asked me a very good question and as I was answering it, it started getting long so I felt it should be discussed in a post rather than buried in the comments. (Joe, I apologise if you didn’t want your question to become a topic.) Here I answer the question and more.

I don’t like mutual funds. Not because of the excessive fees and not because 95% (or more) underperform the market. I don’t like or invest in mutual funds mainly because I don’t have the temperament for them and I can’t stand their sleight of hand.

Forbes recently held its first virtual investor conference on May 22. Instead of a reading list this week, I am recommending people to register for free and listen to many of the great speakers such as Steve Forbes whom I greatly admire.