how to not gamble and invest like a businessman ?

Discussion in 'Educational Resources' started by jjk2, Jan 10, 2008.

  1. jjk2


    everytime i pick out a stock, i feel uneasy. i am just buying undervalued stocks by market overreaction just based on intuition, which is very subjective.

    what i want to know is how others invest? what is the best way to quantitatively determine most of the tangible value of a company?

    i've heard about value investing, what is the future prospect on this technique? how do you correctly arrive @ the book value of a company ( i am reading security analysis by dodd)? how does mr. buffett do it ?

    what is your personal favorite approach to investing in stocks?

    question: should you be sweating in the process of finding a potentially undervalued company? must i be an expert in accounting ? how do you invest with a more business-like vision instead of "oh i think this stocks gonna be hot, *clicks buy"

    i guess the picture i have in mind is someone pouring over statements and scouring through piles of paperwork, then finding the potential investment.

    most importantly, how does the selective process begin? do most professional investors utilize some sort of mechanical filtering system that scans for certain ratios ? or do ppl like mr. buffett simply invest in areas that they know best? does he use bloombergs to find new stocks ?
  2. I sent u a PM
  3. Uh oh...
  4. Do you expect strangers on message boards to lay it out to you? Goto Amazon and order 1-2 books (don't go overboard, it's all the same stuff) and read up yourself:
  5. Warren Buffett writes:

    I buy what goes up and sell what goes down. I hold through big price fluctuations sometimes. I suspect Mr. Buffett also holds stocks through large price fluctuations.

    These are results of a trading simulation if I buy SPY (Standard and Poors 500 index tracking stock) when price value is greater than the value X days ago, and sell when the price value is less than the value X days ago. This simulation uses 3 % heat and 13.54 years of daily closing price data.

    X = 100 days
    Growth rate = 4.84 % / year

    X = 200 days
    Growth rate = 12.38 % / year

    X = 300 days
    Growth rate = 10.57 % / year

    X = 400 days
    Growth rate = 14.98 % / year

    I find trading simulation software useful for answering some of my questions about speculation.