® Tony Gauvin, 2007 Value Investing Tony Gauvin. ® Tony Gauvin, 2007 Value investing Long-term growth Long term investing.xls Increases net worth over.

Slides:



Advertisements
Similar presentations
Security Analysis An examination and evaluation of the various factors affecting the value of a security.examinationevaluationfactors valuesecurity.
Advertisements

Notes from an interview on CNBC with Warren Buffet, the world’s second richest man who has donated $31 billion to charity. Following are some very interesting.
Warren Buffett - “the Sage of Omaha” Ping Hu Matt Neeve Olena Olenchuk Rachel Caldie Ping Hu Matt Neeve Olena Olenchuk Rachel Caldie.
Rising Sum Webinar Wednesday, 18 October 2012 Presenter Brian Kelly.
Yau Tat Kwan, Jacob  Warren E. Buffett  Jack Bogle  Bill Miller  Tony Measor.
Equity Valuation Models
What does it mean to own stock in a company? It means YOU are an OWNER of that company! You get to vote on company decisions like the members of the board.
The Third Quiz Review. What does “caveat emptor” mean?
Stocks and Their Valuation
Investment Strategy II Economics 98 / 198 DeCal Fall 2007 Lecture 7.
10/19/2009.  Definition: Investing in firm worth more than intrinsic value  Raises the question:  How do we know what a firm is worth?
Investment Styles. Growth Value Momentum Investing.
8. Stocks, Stock Markets, and Market Efficiency
Selecting Stocks Personal Finance. How hard is it to pick a stock? “ Everyone has the brain power to follow the stock market. If you made it through fifth-grade.
PART 4: MANAGING YOUR INVESTMENTS Chapter 13 Investing in Stocks.
Stocks and Their Valuation
1 Module 8 Ratio Analysis. 2 Module 8 - Learning Objectives Define key valuation ratios: price to earnings, PEG, price to sales, price to book, and price.
Financial Statements Economics 98 / 198 Fall 2007 Copyright 2007 Jason Lee.
Equity Valuation Models
Investing on Hope? Growth Investing & Small Cap Investing Aswath Damodaran.
A statement will be read. As a group, decide whether you believe the statement to be true or false. Hold up the card to indicate your answer when prompted.
Text Us:
Stock Market Success. “Success in the higher brackets of achievement is something that can be had only by taking others along with you.” Napolean Hill.
Lecture No.14 Chapter 4 Contemporary Engineering Economics Copyright © 2010 Contemporary Engineering Economics, 5th edition, © 2010.
Investment Strategy II Economics 98 / 198 DeCal Spring 2008 Lecture 7.
The Stock Market In this lesson, students will be able to identify characteristics of the stock market. Students will be able to identify and/or define.
Investment Options Part 1.
Chapter © 2010 South-Western, Cengage Learning Investing for the Future Basic Investing Concepts Making Investment Choices 11.
INVESTING BECAUSE I SAY SO. AND YOU COULD POTENTIALLY EARN YOURSELF A BUNCH OF MONEY…
Stocks, Bonds, and Futures Why Buy Stock? Gain a Profit Limit the Risk on their investment Become a part of a corporation Profit Potential Capital gain-
 Private Corporations – shares of stock are NOT openly traded in stock markets  Public Corporations – sells shares openly where anyone can buy them.
Business Contest 2013 Week IV The Stock Market Business Contest 2013.
Stocks and Bonds The Key to Retirement (and maybe getting rich)
© 2008 Pearson Education Canada7.1 Chapter 7 The Stock Market, the Theory of Rational Expectations, and the Efficient Markets Hypothesis.
 Stock: A share of ownership in a corp.  Shareholder: Partial business owner  Limited Liability- Can only lose up to what you invested!!  2 types of.
19-1 Financial Markets and Investment Strategies Chapter 19.
Interpreting securities tables
CHAPTER 47 International Opportunities. Cultivate Tolerance of Others  Open-minded and curious about other countries, cultures, and ways of life  Importing.
1 BM410: Investments Portfolio Construction 2: Market Anomalies and Portfolio Tilts.
CHAPTER 9 Stocks and Their Valuation
The Theory of Capital Markets Rational Expectations and Efficient Markets.
Practical Personal Investing 2 Online access is essential. While this course is a continuation of those offered in the winter and fall of 2014, it is open.
Copyright  2011 Pearson Canada Inc Chapter 7 The Stock Market, the Theory of Rational Expectations, and the Efficient Markets Hypothesis.
Market Efficiency. What is an efficient market? A market is efficient when it uses all available information to price assets.  Information is quickly.
What are Mutual Funds? Quick Fact: As of June 2014, an estimated 100 million individuals in 75 million U.S. households owned mutual funds.
Investment in Long term Securities Investment in Stocks.
Investment Options Part 1. Three reasons to invest Investing helps beat inflation Investing increases wealth Investing is fun and challenging –Opportunity.
BUSINESS AND PERSONAL FINANCE Chapter 18 Stocks & Stock Evaluation.
Personal Portfolio Management -in a turbulent market
Random Thoughts for Investing You can make money without gambling.
 Fundamental Analysis By Martin Brenner. What is Fundamental Analysis?  A method of evaluating a security that entails attempting to measure its intrinsic.
E. Napp The Stock Market In this lesson, students will be able to identify characteristics of the stock market. Students will be able to identify and/or.
Stock Market Valuation Valuing Individual Companies.
Strategies.  Theory ◦ Portfolio Management ◦ Risk Management  Market neutral ◦ Long short ◦ beta ◦ Alpha investors ◦ Smart beta  Different way to order.
Stock Market Terms What does everything mean?. 52-Week High The highest price for a stock during the past year.
© 2012 Cengage Learning. All Rights Reserved. May not scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter.
WARMUP 5/11: WRITE ON THE BACK OF THE LAST PAGE ON THE NOTES SHEET List at least 2 things that you know about the stock market. Then write 3 questions.
Copyright by Harrison Li, Ohio State University Investments: life changing decisions Harrison Li The Ohio State University
Oklahoma Securities Commission
Portfolio Update January 31, 2017 Jeffrey Lorden
Oklahoma Securities Commission
Stock Market 101 What are stocks? What is the stock market?
Using ratios to predict positive investment returns
Investing for the Future
Stock Basics Ms. Zucchero.
Basic of Stock Investment
Investing for the Future
Indirect Investing Chapter 3
Presentation transcript:

® Tony Gauvin, 2007 Value Investing Tony Gauvin

® Tony Gauvin, 2007 Value investing Long-term growth Long term investing.xls Increases net worth over time Based on techniques for estimating the “value” of a share of stick Many techniques Not all techniques work at any given time No technique works all the time The “heart” of value investing is research & discipline

® Tony Gauvin, 2007 Background Graham & Dodd (1934) Shares appear to be under priced based on some form of fundamental analysis Security Analysis High Dividend Yield Dividend yield greater than discount rate Low Price to earnings 1/pe > discount rate Low Price to Book PB < 1

® Tony Gauvin, 2007 Value investing as time progressed 1949 B. Graham wrote the Intelligent Investor Margin of safety Build a 15 Ton Bridge for a 10 Ton Truck “Mr. Market” Just because “Mr. Market” is irrational doesn’t mean you should be too 1954 Templeton Fund (15%APR) Warren Buffet becomes the second richest man in the world by practicing value investing

® Tony Gauvin, 2007 Mr Market Graham’s parable goes something like this. Think of yourself as owning a share in a business in partners with others. One of your partners, say Mr Market, is somewhat of a neurotic who on any given day will offer to buy your share or sell you his at a specific price. His moods can fluctuate anywhere between incredible optimism and overwhelming depression. One day he will nominate a higher price to buy or sell, the next day he might increase it, lower it, or even appear uninterested in whether he buys or sells. The point that Graham makes is that Mr Market’s judgment is formed more by mood swings that by rational thought and that this gives the wise investor buying and selling opportunities. If Mr Market’s price is unreasonably high, then wise investors have the opportunity to sell. On the other hand, if it is unreasonably low, then they have the opportunity to buy..

® Tony Gauvin, 2007 Oracle of Omaha Warren Buffet the essence of value investing is buying stocks at less than their intrinsic value. Discounted value of future earning/distribution/growth "finding an outstanding company at a sensible price" the nice thing about investing is that every day the pitcher throws you a ball and you don't have to swing. So you can wait for your pitch and then hit it out of the park. And that's the good news that is always true

® Tony Gauvin, 2007 Famous Warren Buffet quotes Wide diversification is only required when investors do not understand what they are doing. If a business does well, the stock eventually follows Our favorite holding period is forever. Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years The first rule is not to lose. The second rule is not to forget the first rule. If past history was all there was to the game, the richest people would be librarians

® Tony Gauvin, 2007 Things you should know Stock markets are Predator prey relationship To buy a stock someone must sell it Why would any one sell a stock that is worth more than that what they are getting?? For you to be right, someone else has to be wrong The currency of stock markets is not money but information Knowing something that no one else know is profitable That is why insider trading is illegal (ask Martha Stewart) Traders who harness information are Wolves, all else are sheep Get smart or get broke!

® Tony Gauvin, 2007 How it works (at least for me) 3 Steps Search Strategy 1.Find a pool of sticks to research Valuation strategy 1.IN or OUT 2.I pick I have elimination rules 1.Intangible assets! 2.“cooking the books” 3.Find a true value for the stock A disciplined approach to buying and selling If things are not working right change 1 or 2! Stick to the discipline!

® Tony Gauvin, 2007 Search Strategy Guidelines a pool of potential stocks Pick obscure stocks but not “penny stocks” or OTC Stocks that have “low visibility”, high visibility means no surprises Not too many analyst covering the stock < five for small cap < ten for mid cap Not too much institutional ownership I like 20-60% Use fundamentals to pare down list Go with what you know, limit your self to industry you have experience with

® Tony Gauvin, 2007 Search Using MSN Stock Screener Two Modes Deluxe Power searches Power Searches Fundamental screens Dogs of the dow Great Expectations GARP Righteous rockets Deluxe Low P/E < Industry Price/book <= 1.5 % institutional ownership > 10, < 60

® Tony Gauvin, 2007 Valuation Strategy There are too many to explain Best use forecasts of future growth (earning/dividend/equity) to develop current discount prices tockvalue.htmhttp:// tockvalue.htm Choice is pick a model someone has develop OR develop you own Either way do the analysis your self “True” value Hard look at the company

® Tony Gauvin, 2007 Discipline Buy when stocks are 30% below true valuation based on your model Sell based on periodic reevaluation of stock when stocks reaches 95% of the valuation your model predicts When stocks fall 10% below the price you bought them it redo your model Did you do something wrong? or is this a chance to buy more (greater vale) Don’t “stock watch” That’s for swing, momentum and day traders (graham’s Mr. Markets)

® Tony Gauvin, 2007 Best Rule to follow In a bear market buy, in a bull market sell The secret is knowing what to buy and what to sell