Hello you wonderful and intelligent individuals that make up this forum, i sincerely hope you are having a good start to the week.
I have done a course online in relation to Value Investing, which i found very helpful. It took me through the process of evaluating stocks briefly, finding ones with high operating margins, low debt. Then doing calculations on strong stocks such as Enterprise Value to determine if the stock was undervalued. Then fully evaluating all public statements like Annual Reports and any red flags to look for. It was like a masterclass, with everything you need to become successful Value Investing. Since then i have read books such as Peter Lynch One Up One Wall Street and it seems to mention mostly everything i know, but a different slant on things such as looking for stocks that Wall Street might have missed such as Knife and Fork Manufacturers, Funeral service stocks etc.
I kindly wondered whether this further reading of investing books is now necessary as it seems to confuse things further. There is certain tips within the book however i found the Value Investing course the most helpful. Can i kindly please ask whether i should now continue practising my skills researching stocks and whether the further reading of books such as Peter Lynch would be necessary for my growth please? If anyone kindly had any thoughts on this i would be forever grateful and thankful for your support with this, it would mean the world to me.
Sending you lots of good wishes and i truly hope you become massively successful with your investing and have a wonderful life. Very best wishes.
I think you should answer this question for yourself. Does your current method give you confidence to make good choices? Are you satisfied with results? Or do you need to refine it further?
There isn’t a magical formula that works. It’s really what works for you?
Value investing is fundamental. Other methods should give you the same results and recommend the same stocks. That is an encouraging result.
Value investors go looking for stocks that others have decided not to buy. Its a good idea to understand why they made that choice. What are the future prospects for this stock? Mature company? Industry in decline?
You can usually buy out dated companies at a good price. Will they recover? Does management have a plan?
At some point its a judgement call. You learn that x is better than y, but that alone does not make x a winner.
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Read as much as you can by and about successful investors and take nothing as gospel. Hint, Warren Buffett learned a lot from Benjamin Graham, coauthor of the investing bible, Security Analysis (good read!) and later Buffett changed his mind about buying cigar butts, a Graham value recommendation.
Investing does not work like a machine with predetermined outcomes, it’s a complex system and I suggest you read about it starting with Complexity: The Emerging Science at the Edge of Order and Chaos. Maybe you can start here, 22 years ago
The Captain
BTW, one major problem with value investing is that it’s predicated on knowing the data to input into the formula which works perfectly with bonds where you have all the data, interest rate, expiration date, coupons, etc. All you really have to figure out is whether the issuer can pay the interest and return the capital which you can estimate from the issuer’s cash flows and other financial data. Specially for growth stocks these numbers are just wild arse guesses that output crap. GIGO!
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