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Common Cents Investment GroupOctober, 2012
Agenda
Today in the Market Picking a Stock Berkshire Hathaway Our personal Investment Strategies
Common Cents Investment GroupOctober, 2012
Today in the Market
Google…having a bad week… Did not reach earnings http://www.firstcoastnews.com/video/
default.aspx?bctid=1911685171001&odyssey=mod|newswell|text|FRONTPAGE|featured
Common Cents Investment GroupOctober, 2012
Picking a Stock
Find a stock that has potential growth before others find it! Find an undervalued stock – Fundamental
Analysis Stock whose price currently reflects a trend
reversal – Technical Analysis
Nearly 3,000 companies on NYSE alone Not counting NASDAQ/AMEX/OTC/Pinks/etc..
How do we navigate this mess?
Common Cents Investment GroupOctober, 2012
Picking a Stock
Pick a market that makes sense to you.
Many play the market on gut I’m not comfortable buying shares of a
nuclear fusion business. Focus on sectors that you know and
understand! Cars, technology, clothes, insurance
Common Cents Investment GroupOctober, 2012
Picking a Stock
For now we focus on fundamentals Financial Ratios
Profitability, Leverage, Solvency, Liquidity, Efficiency
Comparison to other companies in the same industry Valuation modeling
Is the company’s equity more than its market cap?
Basically, you are looking for stocks with real intrinsic value
We will delve into ratio analysis very soon
Common Cents Investment GroupOctober, 2012
Picking a Stock
Intrinsic Value: The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors
http://www.investopedia.com/video/play/intrinsic-value/#axzz2A3z0FYcc
Common Cents Investment GroupOctober, 2012
Picking a Stock
Avoid Liabilities By this we mean serious ones… not
(necessarily) just accounts payable
Stay away from stocks that are in the news because of large and looming lawsuits. Legal problems can drag on for years, so
your best bet is to steer clear of companies that have these headaches.
Common Cents Investment GroupOctober, 2012
Picking a Stock
At the very least, make sure the majority of analysts are predicting stable or growth in earnings per share.
***Do not trust what a single analyst believes, but rather the majority. Still need to be defensive and take opinions with a grain of salt. The majority can still be wrong – i.e. housing bubble/bank fallout
Companies need to be profitable to stick around.
Common Cents Investment GroupOctober, 2012
Picking a Stock
Find a stock that is NOT popular You want to pick a stock that is not popular
today, yet could be popular tomorrow.
Stock that is being ignored by the market presently but has the future potential to pull out and up.
Common Cents Investment GroupOctober, 2012
Picking a Stock
Suggested websites to browse: We have talked about these before http://online.wsj.com/mdc/public/page/mar
ketsdata.html
http://finviz.com/
http://www.valueline.com/
Common Cents Investment GroupOctober, 2012
Picking a Stock
The only surefire way to find a stock is to SEARCH
The process WILL take some time!
The more practice, the faster you will become You tend to know what you want
Common Cents Investment GroupOctober, 2012
Warren Buffet
Arguably the most famous Value Investor
Age 82 Influenced by
Benjamin Graham Looks at the
Underlying investment
Common Cents Investment GroupOctober, 2012
Berkshire Hathaway
Holding Company: a company or firm that owns other companies' outstanding stock
Business Groups Insurance
Geico – 1995 General Re – Reinsurrance
Manufacturing, Retail, Etc. Fruit of the Loom – 2002 Benjamin Moore – 2000 The Pampered Chef – 2002 McLane – 2003
Common Cents Investment GroupOctober, 2012
Major Investments
Wesco Financial (100%) ComdisCo Holding Co (38.2%) Washington Post Co (20.46%) USG (16.6%) American Express (12.59%) Moody’s (12.13%) Coca-Cola (8.6%) Wells Fargo (6.41%)
Common Cents Investment GroupOctober, 2012
Stock Structure
Two Share Classes A Shares (BRK-A)
$132,609.00 Full Voting Rights Convertible to 1500 B Shares
B Shares (BRK-B) $88.51 1/10,000th of Voting Rights of the A Share
Rather than 1/1,500th of the vote Not Convertible
Common Cents Investment GroupOctober, 2012
Performance
Overall Gain 1964-2008 Berkshire: 362,319% S & P 500: 4,276%
Compounded Annual Gain 1965-2008 Berkshire: 20.3% S & P 500: 8.9%
2008 Berkshire: -9.6% S & P 500: -37%
Common Cents Investment GroupOctober, 2012
Buffet Quotes
“Price is what you pay. Value is what you get.”
“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.”
“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”
“If you're an investor, you're looking on what the asset is going to do, if you're a speculator, you're commonly focusing on what the price of the object is going to do, and that's not our game.”
Common Cents Investment GroupOctober, 2012
Membership
Cost is only $20 for the whole year! Benefits:
Member of a very beneficial and informative club that will inevitably be valuable in your future
A network of friends who share a similar interest in investing and personal finance
A virtual portfolio challenge that will strengthen your confidence in investing
Common Cents Investment GroupOctober, 2012
Membership
Make sure to check out our website for the presentations Monday night | ccig.osu.edu
Get on our Facebook page and like us!www.facebook.com/ccigosu