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This post is a timely reminder on value investing principles amid the worst credit crunch in 8 decades ! Apparently, the news just can't get any worse (or can it ?), and no prizes for guessing that someone will pop up every day to say "hey the worst ain't over yet". It is during such times that sticking to an investment philosophy helps to keep one focused and in tune with his financial objectives.
Below are 10 habits of value investors (highlighted and summarized, along with my own personal commentaries) adapted from the book "Value Investing for Dummies" by Peter J. Sander and Janet Haley (1st Ed.). Note that the second edition came out just after I bought the first one, so just my luck ! If someone has their hands on the 2nd (updated) edition, perhaps you can help point out if there are any changes to this section.
1) Do the Due Diligence
There is no substitute for hard work and nitty-gritty research, and every aspiring value investor has to get down on his knees and do the field work himself. Avoid relying too much on analysts or others who purport to have a view on a company or industry - best to do the legwork yourself to give yourself the required assurance.
2) Think Independently and Trust Yourself
Basically, avoid following the herd. The stampede can leave one bruised and somewhat crushed and it is never a good idea to behave in a lemming-like way. Make conclusions based on facts and objective data and do not be afraid to appear to deviate from common understanding. Sometimes views may be different purely because of a difference in time horizon (e.g. analysts are looking at a company with a 5-week view; but value investors use a 5-year view). Trusting yourself is a very important quality and having faith in one's ability is paramount in being successful in investing (and trust me naysayers jump at any chance to prove you wrong and shoot you down - people seem to enjoy the misfortune of others, especially so if they feel they are not alone in their misery).
3) Ignore the Market
This point cannot be over-emphasized. When you purchase shares, you are purchasing part-ownership of a company which sells products and services. The stock market is simply a venue for the transaction to be executed. We should thus ignore the noise and din the market is generating unless it is to our advantage to transact to own more of a piece of business. Read more...[caption id="attachment_1038" align="alignright" width="192" caption="Photo by yoppy"][/caption]
This post is a timely reminder on value investing principles amid the worst credit crunch in 8 decades ! Apparently, the news just can't get any worse (or can it ?), and no prizes for guessing that someone will pop up every day to say "hey the worst ain't over yet". It is during such times that sticking to an investment philosophy helps to keep one focused and in tune with his financial objectives.
Below are 10 habits of value investors (highlighted and summarized, along with my own personal commentaries) adapted from the book "Value Investing for Dummies" by Peter J. Sander and Janet Haley (1st Ed.). Note that the second edition came out just after I bought the first one, so just my luck ! If someone has their hands on the 2nd (updated) edition, perhaps you can help point out if there are any changes to this section.
1) Do the Due Diligence
There is no substitute for hard work and nitty-gritty research, and every aspiring value investor has to get down on his knees and do the field work himself. Avoid relying too much on analysts or others who purport to have a view on a company or industry - best to do the legwork yourself to give yourself the required assurance.
2) Think Independently and Trust Yourself
Basically, avoid following the herd. The stampede can leave one bruised and somewhat crushed and it is never a good idea to behave in a lemming-like way. Make conclusions based on facts and objective data and do not be afraid to appear to deviate from common understanding. Sometimes views may be different purely because of a difference in time horizon (e.g. analysts are looking at a company with a 5-week view; but value investors use a 5-year view). Trusting yourself is a very important quality and having faith in one's ability is paramount in being successful in investing (and trust me naysayers jump at any chance to prove you wrong and shoot you down - people seem to enjoy the misfortune of others, especially so if they feel they are not alone in their misery).
3) Ignore the Market
This point cannot be over-emphasized. When you purchase shares, you are purchasing part-ownership of a company which sells products and services. The stock market is simply a venue for the transaction to be executed. We should thus ignore the noise and din the market is generating unless it is to our advantage to transact to own more of a piece of business. Read more...
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This post is a timely reminder on value investing principles amid the worst credit crunch in 8 decades ! Apparently, the news just can't get any worse (or can it ?), and no prizes for guessing that someone will pop up every day to say "hey the worst ain't over yet". It is during such times that sticking to an investment philosophy helps to keep one focused and in tune with his financial objectives.
Below are 10 habits of value investors (highlighted and summarized, along with my own personal commentaries) adapted from the book "Value Investing for Dummies" by Peter J. Sander and Janet Haley (1st Ed.). Note that the second edition came out just after I bought the first one, so just my luck ! If someone has their hands on the 2nd (updated) edition, perhaps you can help point out if there are any changes to this section.
1) Do the Due Diligence
There is no substitute for hard work and nitty-gritty research, and every aspiring value investor has to get down on his knees and do the field work himself. Avoid relying too much on analysts or others who purport to have a view on a company or industry - best to do the legwork yourself to give yourself the required assurance.
2) Think Independently and Trust Yourself
Basically, avoid following the herd. The stampede can leave one bruised and somewhat crushed and it is never a good idea to behave in a lemming-like way. Make conclusions based on facts and objective data and do not be afraid to appear to deviate from common understanding. Sometimes views may be different purely because of a difference in time horizon (e.g. analysts are looking at a company with a 5-week view; but value investors use a 5-year view). Trusting yourself is a very important quality and having faith in one's ability is paramount in being successful in investing (and trust me naysayers jump at any chance to prove you wrong and shoot you down - people seem to enjoy the misfortune of others, especially so if they feel they are not alone in their misery).
3) Ignore the Market
This point cannot be over-emphasized. When you purchase shares, you are purchasing part-ownership of a company which sells products and services. The stock market is simply a venue for the transaction to be executed. We should thus ignore the noise and din the market is generating unless it is to our advantage to transact to own more of a piece of business. Read more...
