Case Studies

Focusing on the Investment Process

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“It is the basics. It is focusing on selection, low prices, and reliable, convenient, fast delivery. It’s the cumulative effect of having this approach for 14 years. I always tell people, if we have a good quarter it’s because of the work we did three, four, and five years ago. It’s not because we did a good job this quarter.” – Jeff Bezos, 2009 The new year is always a good time to review your investment process. The other day, […]

Case Studies

Focus on the Key Variables of an Investment

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Earlier this year I watched Lang Lang play Grieg’s Piano Concerto in A Minor—one of my all-time favorite pieces of music. The concerto is a monster—full of big octaves, virtuosity, excitement and power. It has around 30,000 notes, but the music is tied together with a simple 10 note melody that is repeated throughout the piece. I am currently working on a few different investment ideas that have numerous moving parts, but as I conduct my research, I continue coming back to […]

General Thoughts

A Few Miscellaneous Thoughts on Investment Process

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As I’ve mentioned before, I spend the vast majority of my time reading. My office is filled with piles of papers, notebooks, and annual reports. I have two computer monitors (yes, I know some value guys have no monitors on their desk… something I admire, but I find the internet’s resources too valuable to ignore… for example, I can access 15+ years’ worth of annual reports in seconds, that’s something Schloss, Graham, Buffett would have readily used if they grew […]

How to Improve Results

Quality Screens: Part 2

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In Part 1 of this post, I looked at some quality screens I look at occasionally to generate ideas. In this second part of the post, I thought I’d briefly review an industry specific screen that I put together more recently that I will make a point to review every month or so. I’m doing a lot of work on bank stocks lately, looking at a lot of cheap stocks selling for significantly less than their tangible book value. I’ll […]

How to Improve Results

Quality Screens: Part 1

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“(The Intelligent Investor) taught me how to think about a stock and the stock market. It taught me the market was there not to instruct me but to serve me. – Warren Buffett, 2013 Berkshire Hathaway Annual Meeting Ben Graham taught us that it is crucial to make Mr. Market our servant, not our master. Buffett once said if he taught a business school program on investing, he would have just two classes: How to Value a Business, and How […]

Books

How Warren Buffett Thinks About Risk

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“Rule #1: Don’t Lose Money….” The best book I’ve ever read on Buffett is Alice Schroeder’s Snowball. I remember picking up my copy about four years ago and literally not being able to put it down. I read it for hours at a time, all the while marking pages and circling things… and I often reference certain parts of the book when thinking about investments. The book goes much deeper into Buffett’s thought process than most of the other Buffett […]

How to Improve Results

How I Filter Investment Ideas

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My investment process can be divided into two main categories: Idea generation Investment research and due diligence These are the two areas that I spend the vast majority of my investment time (portfolio management and execution is a distant third). There is a lot of information in the value investing public domain on how to determine the quality or degree of undervaluation of various securities. There isn’t as much information on how to think about the actual search process. In […]

Bruce Berkowitz

Bruce Berkowitz Discusses His Financial Investments

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Bruce Berkowitz is one investor that I like to study. I like to run an adequately diversified portfolio, taking advantage of what I consider to be numerous high probability situations. I imagine certain probabilities with each investment, and I look at diversification in two ways: one is through the various positions I currently have, and one is through the positions I will hold in the future. The latter refers to my thesis that over time, buying undervalued stocks over and […]

Ben Graham

Thoughts on Finding Value When Stocks Are Making New Highs

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I’ve been traveling for the last two weeks, and thus the reason for the lack of posts. But I’ve been working and reading as usual, and actually have been active in making a few investments, despite the overall market climbing to new highs. I’ve mentioned this before, but it’s worth saying again… I put almost no emphasis on what the overall market is doing and where the indices are. I simply look for undervalued stocks. But regardless of the methods […]

Investment Philosophy

James East of Mercertus Capital on How He Achieved Big Returns

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One of the things I’ve discussed a lot on this blog is the investment process. Another thing I’ve discussed is some ideas I have on how to achieve significant results. As I’ve mentioned before, one of my favorite quotes is from John Templeton “If you want to have a better performance than the crowd, you must do things differently from the crowd.” I think that although the concept of being a contrarian is very familiar with most investors, it is […]