FAQ (or Questions you might have)
Who should subscribe to davesvalueinvesting.com?
Anyone who is interested in saving for their future should take an interest in investing. You can invest in stocks (equities) on your own, directly, or invest using a mutual fund or in an ETF or stuff like “wealthsimple.” However, investing on your own takes time to research, and the patience and experience to know what and when to buy, in what amounts, and when to sell. Investing through Mutual Funds is costly as they take 2% (or more) for their own pockets each year. ETFs and other “hands-free” investing products such as Wealth Simple are good options, however, they will tend to track the market, at best. There is nothing wrong with tracking the market, so, ETFs are a decent option. I have, over the long-term, done better than the market; davesvalueinvesting.com allows you to follow on with the picks for a nominal fee.
What is value investing?
Value Investing is the idea that you can buy an asset for 75% (or lower) than what it is worth. In the stock market, this means I end up investing in businesses which are temporarily undervalued because
a) other investors aren’t interested in the company any longer but I still think there is life left in it and the company has the wearwithal to stick it out (they are not overly debt burdened or not loosing too much money)
b) other investors aren’t interested because the business is boring
c) other investors aren’t interested because the business has been losing money or made less this year than last
d) other investors aren’t interested because new regulations or business trends concern investors
As you can see, there is a pattern here…value investing usually means investing in businesses others aren’t that excited in. They zig, I zag.
Isn’t it impossible to beat the market?
No, it’s not.
Is it risky?
Oh yes, of course. Businesses go bankrupt. Bankruptcy almost always means you lose 100% of your investment. I remember buying $100,000 in stock and one month later it being down 80%. Sh*t happens. The key is diversifying and not making many mistakes. The investment mentioned above did recover. But still, you get the point. Any action you take will have a degree of risk.
How do I learn more about value investing?
You can watch some of Warren Buffet’s interviews on-line. Or read his annual reports in Berkshire Hathaway.
The guy is incredible.
You can buy books like:
The Intelligent Investor (Ben Graham)
Common Stocks and Uncommon Profits, Philip Fisher
Some great investors also share their insights regularly with Joe Blows like me:
So many great investors out there who if you simply follow what they do, you’ll be smarter and richer:
Warren Buffett, Charles Brandes, John Malone, David Einhorn, etc.
Diversification is important – do you diversify?
Yes, it is important, but, good ideas are not found in their hundreds. Good investing ideas are rare. I’d rather have 50% invested in 3 good ideas with the rest in cash. That’s how I manage risk. I don’t think it’s a good idea to have 100% of your money in the stock market. I don’t think any stock market account needs to be 100% invested in stocks. It’s best to have 0-80% invested. You always need dry powder for when that new opportunity appears (I’m not really a hunter, I just like the reference). I feel it is safer to have 20% invested in one stock which doubles (meaning a 20% return) than having 100% invested in 50 stocks, which , because of the larger number of stocks, will tend trend towards the mean and simply track the market.