Posted on March 13, 2010 - by musicwhiz

My Learning Curve In Value Investing

Photo by .Rohan

This post is a somewhat reflective one as I mull over my investing journey after switching over to value investing in late 2007. So far, it’s been a rough ride over the last two and a half years with turbulence rocking stock markets and a “lost decade” appearing for many countries, thus shaking the core of beliefs which many had on the stock market always giving a positive return over time.

For me, this journey is poignant as I slowly but surely learn more about investing, understanding companies, applying lessons learnt, reviewing mistakes and improving my fundamental analysis skills. Somehow, at this point in time, I still feel that I have so much more to learn from many veterans in the field of value investing about how to select good companies which are being offered by Mr. Market at reasonable prices. I have had my share of “hits” and also the painful “misses”, to illustrate to me that there is an almost infinite number of companies out there and one can only do so much with the amount of time he has on his hands. There is always going to be a constant trade-off between quality time with family and loved ones, and time being devoted to the careful and thorough analysis of companies and one’s shareholders and portfolio. It is a delicate balance which I do not wish to disrupt, as the dangers of getting too absorbed in analysis and investing can take a toll on one’s social life and psychological well-being. Life is more than just about making money!

Gentler Learning Curve

Over these 2 years, I have noticed that my learning curve for investing has become less steep, and knowledge acquisition is also less rapid. When I first started out on my journey, my mind was like a sponge and was eagerly soaking up all pertinent and relevant information about value investing. I had a voracious appetite for books on Warren Buffett beliefs and techniques, Benjamin Graham’s margin of safety, Peter Lynch’s classification of companies, Charlie Munger’s thought processes and frameworks and Phillip Fisher’s scuttlebutt, and would also trawl the Internet for bits of information to enhance my critical thinking and analytical skills. Read more…

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3. Investing With A Gambler’s Mentality