Showing posts from October, 2021

What are my first steps? (The easy way to get started)

The global pool of publicly traded companies is enormous and as value investors we are always chasing that “wonderful business”. I’ve found a way to quickly scan if I should continue investigating if a company (within my circle of competence) is worth continuing building a case on or if I should put it in my “too hard” box. I’m referring to a tray that Warren Buffett, the most successful investor of all time, has on his desk in his office in the Berkshire Hathaway headquarters in Omaha Nebraska. Yes, the most successful investor with a rate of return of 19 percent over 50 years have a tray in his office, where he archives companies that are too hard for him to understand. So, when the most successful investor has companies that are too hard to understand it would be good for us too to acknowledge if something is too hard. And now I’m going to share my method. The easy way to get started When I was a new investor, I would find a wonderful business by compiling a list of products or serv

Are Share Buybacks Good for Investors or Not?

If you’ve been following news about the stock market you might have seen headlines about “stock buy-backs” or “stock repurchase plans”. In this article I’ll describe what it is, how it benefits investors, and what we as investors should watch out for. Buy backs means that companies buy back their own stock. Why would companies buy their own shares? and what do they do with those shares? might be some of the questions that pops up for you and I’ll answer these questions below. Examples of companies that buy back shares are Apple, Alphabet (Google), Facebook, Oracle, Microsoft, Berkshire Hathaway, and many more. Why would companies buy their own shares? There are several reasons why companies would buy back their own shares. Good Examples: The company has an extraordinarily large amount of cash and even after investing in growth initiatives and potentially paying dividends, there’s cash left to buy back shares. Further, the stock price is very cheap, compared the company’s real value. Wi

Eight Excellent Books for a New Investor

I've updated the article with some new links because I have the opportunity to help a young, bright man with his college payments, and it's a son of a friend. I'm so happy I can support this way. So, if you click the links and maybe even buy one of the books using the links, you're helping a young person pay for college. Phil Town, Payback Time As you can see in the photo, my copy of Payback Time is full of bookmarks, because this book is packed with quality information about investing strategies. The book content of Payback Time and Phil Town's first book Rule One , is pretty much the same. I recommend both of the books but rather than reading them one after another, use one as a refresher several months after the first.   Guy Spier, The Education of a Value Investor This book is a story about how Guy Spier discovered value investing and how the journey shaped his life. You'll learn about the values in this honest, and inspirational book. If you prefer audio

How Can You Tell if a Company is Well Managed?

In this article I will be diving into what performance indicators we would like to see from management in a wonderful business. This is article 2 out of 2 about Management. You don’t have to read the first article to dive into this one – both articles are stand-alone – but here the link: How do you know if you can trust the management? As value investors we have 4 parameters we’re always looking into (the “Warren Buffett way”). We want a company that we’re able to understand , and once we’re over that hurdle we want it to have management we can trust, a large competitive advantage , and then we want to buy it at a reasonable price . Now let’s dive deeper into management and how you can track their performance. Does the CEO communicate the Strategy? A company’s strategy is an extremely important component for investors. With this strategy we know where the company is headed, and we can track how well they’re doing year on year – if the CEO shares their strategy! Because it’s far from ev

How do you know if you can trust the management?

Warren Buffett - one of the most successful investors of all times - have three parameters he is looking for before he invests in a business. The company must be within his circle of competence , it must have a durable  competitive advantage and then he wants management that he can trust. Today is the first article out of two about management. In the first one we'll get to know the managers and in the next article, I'll dive into how to spot a great management performance. Click here to read about management performanc e . You'll also find management performance numbers in my free checklist . “In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don't have the first, the other two will kill you.” Warren Buffett When we talk about management of a business, we usually specifically mean the CEO - Chief Executive Office and sometimes this person is the founder of the business but in many public companies it's an