Investing

As an individual investor, your time horizon is considerably longer than a trader. Therefore, you should welcome price declines in the stocks of excellent companies such as Google. This gives you the opportunity to pick up shares at discounted prices.  Please note that this section and course is targeted to investors; this is a different methodology to financial trading.

What is Investing?
An Alternative Way of Looking at Investing in Stocks
Long Term Investing
– Investing: Ignoring the Short-Term
Incentivizing Wealth Creation
– Macro Factors that Affect Long Term Investment Returns
Do I need a Stock Broker?
MicroCap and Penny Shares
Benjamin Graham and David Dodd Value Investing Criteria
– Valuing Growth Shares
– Efficient Market Hypothesis
After Social Networks – What’s the Next Big Thing?
Exchange Traded Funds
Looking beyond Net Income and Earnings per Share: Some Frequently Asked Questions

Investing Course
– Setting Your Financial Goals
– Determining your Investing Style
– Understanding your Risk Tolerance
– When to Start Investing

Introduction to Investing
– Making an Online Trade
– Types of Investments & Their Rates of Return
– Risk versus Reward: Understanding the Tradeoff

Building Your Diversified Portfolio
– Basics of Building a Profitable Portfolio
– Investing in Technology Companies
– Investing in Pharmaceuticals and Health Care Stocks
– Making Money with Banks and Insurance Stocks
– Energy Shares and Companies
– Utility Stocks: Phone and Power Companies

Strategies for Reducing Risk
– Asset Allocation
– The Importance of Diversification
– Small Caps versus Large Caps
– Dollar Cost Averaging

Investing Basics & Mistakes to Avoid
– Buy and Hold versus Timing the Market
– Good or Bad Investment?
– Avoiding Ten Common Investing Mistakes
– Stock Exchanges Explained

How to Read Financial Statements
– How to Read a Balance Sheet
– How to Inspect Income Statements
– Analyzing Stocks

Economics
– How To Get Rich| The TurnKey Money Making Myth Busted
– Auction Winners pay over the Odds | The Winners Curse
– Herbalife The Great Pyramid Scheme
– Diamond vs Water | A Debate of Commodity Prices
– What affects house prices?
– China | The Advantage of Backwardness
– Inflation and why it affects us all
– Conspicuous Consumption
– Monopoly, Oligopoly and Cheese
– Commodity Booms since World War 2
– Second Hand Markets
– Recessions and Innovation
– Investing in Diamonds?
– Bubbles, Tulips and Gold
– Tesco and Monopolies
– Phillips Curve | Inflation and Unemployment
– Sell in May and Go Away??
– 20 Great Warren Buffett Quotes

Investing Principles
– Investing Tips
– Investing Books

An investor would look at the long- term (five to ten years down the road) prospects of a business and how stocks are currently priced relative to these prospects.

In particular if you look at individual companies you would do well to pay close attention to the level of economic profit that a company attains. You are looking for companies that can earn steady and predictable economic profit over the long-term.

Don’t worry about whether “new economy” stocks continue to suck money out of “old economy” stocks. Ten years from now, it will boil down to what companies are the ones who are making money. If a business keeps increasing its economic profit and the stock continues to sink, you should take advantage of the discounted prices that the market gives you. We believe the stock market is miserably inefficient in the short-term since fear and greed dominate. But over the long-term, the stocks that go up are the ones that continue to increase their business values year after year.

A note on interest rates. The stock market as a whole depends on the level of interest rates as well. Remember the value of a stock depends on the present value of all the cash that can be taken out of a company over its lifetime. As interest rates rise, the value of all stocks declines.