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ValuePicksOnly (82.62)

10 Tips To Invest Better in 2008 (And After)

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8

February 07, 2008 – Comments (2)

Tip 1: Focus on company's, not on stockprices.

Tip 2: Know your company. Can you explain within 2 minutes what the company does to an eight year old kid? No? Go look for a different company!

Tip 3: Investigate profitability. Does the company have a structural high return on equity and investments?

Tip 4: Look at growth potential. Can the company take advantage of an important trend?

Tip 5: Look at management. Do they handle in the interest of shareholders?

Tip 6: Don't waste time on technical analyses! Do you know a single technical analyst who has made it to the Forbes rich-list? Right...me neither.

Tip 7: Don't pay a lot of attention to hard-to-predict macro-economic factors. Check if your company is the strongest in it's sector. If circumstances worsen, then the weaker company's will suffer badly, but the stronger ones will be able to increase their market share.

Tip 8: Try to make an as accurate as possible estimate of the company's intrinsic value. But remember: It's still only an estimate.

Tip 9: Only buy shares of researched company's at prices way below your estimated intrinsic value. Sell when the stock price catches up to your estimated intrinsic value.

Tip 10: Read the above tips again!

 

Disclaimer: I am not responsible for any losses of money or the like because of the usage of the above mentioned methods and tips. You hold full responsibility over your own actions.

2 Comments – Post Your Own

#1) On February 09, 2008 at 12:46 AM, jjun0366 (< 20) wrote:

Great tips from the investment greats. Not just for value investors but for any investor.

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#2) On February 28, 2008 at 1:23 AM, boylevalue (94.32) wrote:

This is a good list. One question about #9 though; one regret I read from some of the great investors is that they make the mistake of selling too early. Do you think that when you find an undervalued company which stock price eventually reaches its intrinsic value, and the investment thesis still holds, shouldn't we wait to see if the Mr. Market grows manic and starts to purchase at the top (thus irrationally driving the price up) as he typically does? Or do you think a humble (yet highly profitable) exit should be the rule of thumb. I think its interesting that an early exit is a common regret of some of the greats.

Thanks for the post.

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