Showing posts from June, 2021

What are some competitive advantages in business?

Value Investors seek to find a company that have an intrinsic value which is durable and allows the company to not only compete against their competitors but play to win! Warren Buffett calls this competitive advantage a “moat”. A moat protects a castle and Buffett project this meaning to companies: the competitive advantage has to be like a moat. Buffett are particularly interested in these types of competitive advantages: A monopoly – for example a railway that’s hauling coal directly from the mines to the coal-burning power plants. Inflation resistant – like American Express which business model (the merchant payment fee structure) Buffett has mentioned to be “inflation resistant” A moat can be a “consumer monopoly” like Coca Cola, where customers are loyal to the brand’s products or Gillette, where consumers absolutely have to buy more in order to get a quality shave. Or an ecosystem network moat like Apple - once you’re in the eco-system, it’s difficult to leave. Other moats can i

What is the first step to start value investing?

Value Investors are looking to find a wonderful company at a fair price. Often times we first find a wonderful company and then we have to sit tight for a while to get it at a fair price. But as a new value investor you first need to find that wonderful company with product you love. Read my article on how to find your company . And the first step to start investing is read the company’s most recent annual report. An annual report is a report where the company reports the past year’s income/loss and expenses and where you can read about their future strategy and (hopefully, but surprisingly not always) about how they achieved their goals and delivered on strategy in the past year. In USA the annual report is called a 10K. A company has annual reports and quarterly reports.  The first time you read a report might be difficult because you have to get used to the language. But keep going because this is how you get to know about where the company have been in the past and where it wants t

Question: How do I decide on a trustworthy company to start with?

I asked a question on Instagram the other day, about the biggest challenges that people face when value investing. And one of the comments to a challenge that came back was "Deciding on a trustworthy company to start with..." Finding trust in an organisational structure like a company is definitely difficult because, at what point have we found the level of trust we need, to start investing in the company? It’s a difficult measure. What I would do in this situation is to ask myself about my values.  Values are the compass of our life – our true north. What are values I want to invest in?  What are some values that I want to avoid? Which value parametres does the company need to follow?  What parametres would it be nice it follows? Spending my money on shares in a company - what makes me feel like I'm making a difference in the world? I can use these answers as guiding stars. At the most recent annual meeting for Berkshire Hathaway, Warren Buffett's company, Warren

What is Your Circle of Competence?

Value investors want to invest in companies that are within our “circle of competence” - a zone or area of expertise, where we have a lot of knowledge. And how do we find out what is in our circle of competence or circle of knowledge? Typically, you have expertise within the area of your work and profession. You’ll know certain thing about the industry you’re in, that you can use to your advantage. A teacher might know certain educational programs that works really well or use a certain kind of computer or other equipment, that’s great to use for educational purposes. Note down the brand names for your “wonderful” inspiration list. To find out what is in your circle of competence is ask these questions and note the answers down: What do you work with/ how do you make money? On what and where do you spend money? What do you like to do when you’re off work? And what are some of your values that a company in the world needs to be aligned with in order for you to want to invest? By now yo

How the economic machine works

I want to point your attention to this incredible and eye-opening video you can watch for absolutely free on YouTube, where super investor Ray Dalio, Founder of Bridgewater Associates, explains “how the economic machine works”. Once you’ve watched it, you’ll be much more informed about how the world of money works. After you’ve watched the video, you might want to learn more about Ray Dalio’s thoughts and let me just tell you, once you start following Dalio you’ll find a treasure trove of valuable information. Dalio has been kind to share so much of the information his company Bridgewater has retrieved and if you want to know more about economic cycles and crashes Dalio has several (free!) articles you can dive deep into. For example on his LinkedIn

My Unconventional and Moneymaking birthday wish list

Last year for my birthday was the first time I wished for something outside of what would usually be on my wish list. Usually, my wish list would be full of material things. But now it’s about knowledge building and investing and you can make such a wish list too. Go from liabilities to assets on your wish lists. So here is – the ultimate investors gift guide (and in the comments please do add ideas to investor wishes that I should add to the list). 1 Trip to Berkshire Hathaway Annual Shareholder Meeting To take part in this event it requires that you’re an owner of at least one share in Berkshire Hathaway (BRK:B or BRK:A). It is the ultimate pilgrimage for value investors. I’ve never attended the meeting but before the pandemic changed our lives, I was planning on going – maybe 2022 will be my year!? 2 Coaching and Sparring I invest in mentors and coaches to leverage my growth, and I recommend getting sparring to get started investing or getting to a new level. There’s a wealth of opp