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If you're interested in digging into this I'd highly recommend Financial Shenanigans: How to Detect Accounting Gimmicks and Fraud in Financial Reports.

Nice job linking these two concepts from Buffett and Thiel, smart analysis and I agree. To respond to your questions: Yes of course, if you can invest in a de facto monopoly business at a reasonable price that offers essentially certain future cash flows that would be a great methodology for investing. Hahaha. But it is not exactly "simple and profitable". The first problem is "reasonable price" and finding these opportunities. Many newbies to investing read Ben Graham and then they go try to apply the ideas they just read in The Intelligent Investor book to today's market for real and get a rude awakening; markets have changed, pricing has changed, things are expensive (Buffett has complained of this too and he has the added problem of dealing with a your mama sized book and there is even less available once you play with big money). There are opportunities, just fewer and not as ignored/underpriced as in the old days.

The second problem is the classic "horse carriages and cars problem", imagine a hundred years ago you dug through financials and discovered an awesome horse carriage manufacturer with a de facto monopoly, a solid moat and cash that flowed forth as consistently as Janet Yellen's ums and ahs. Well that might have all the hallmarks of a great investment if you didn't factor in cars were being invented and about to take over. You still have to predict the future and that is hard! TL;DR thinking of moats and monopolies and PV of CFs is still one of the best ways to invest but it is not as so simple or profitable as one might think, especially when you factor in time and opportunity cost to find these things and for your thesis to play out and the other places your money could be.

Imho, the best book about valuation is Greenwald's "Value Investing: From Graham to Buffett and Beyond". He talks about the pitfalls of DCF valuation, and suggests to use a combination of three valuation methods, the reproduction cost of assets, the earnings power value, and the value of growth. In practice, I've noticed that investors are used to value companies using multiples (EV/EBITDA in particular) because of their experience and expertise, but the basics lie in the aforementioned valuation methods. However, I'd suggest to use UNCONVENTIONAL metrics (e.g. some specific KPIs for a certain industry) if you really want to find value gaps. As Howard Marks always points out, you have to be a "second level thinker".

>"There are more...palatable ways to learn this though.

Daniel Kahneman's relatively recent book, Thinking, Fast and Slow identifies many of the things Charlie Munger nailed years ago with his Psychology of Human Misjudgement.

To ignore any knowledge or wisdom that Martin Shkreli might have to offer on the basis of him being a loathsome person fits right in with human foibles that both Kahneman and Munger identify. Munger, I believe, says it more succinctly in what he calls the bias from disliking distortion, or the tendency not to learn appropriately from someone disliked.

Although I agree that Martin Shkreli has many unpalatable aspects to his being, that's no reason to disregard the videos if he is imparting knowledge and/or wisdom that adds value to our endeavors.

He was actually strongly recommended by his son and his confidants (including Katharine Graham of WP) to not accept the post, and just allow his SB investment to fail. I forgot why he eventually accepted the job, but I recall it was out of principle. You can read more about it in Roger Lowenstein's biography of Buffett, which is the best book bar none on his career: https://www.amazon.com/Buffett-American-Capitalist-Roger-Lowenstein/dp/0812979273

It is a dangerous short. Their business model is predicated on copying other successful companies from around the world (with special emphasis on what Silicon Valley is doing).

Why do I call it dangerous? In essence by running these businesses and taking them international (Europe, Asia, Africa etc). When the original company expands (assuming they are sufficiently successful) they need to take a long hard look at competing against the RocketCopy or just buying the RocketCopy out. In essence, Rocket is like a company holding a portfolio of options, at anytime during the short sale process you're in essence writing a call option on their entire portfolio (even a medium level sale can cause significant momentum to turn in their direction).

If you've ever read Peter Thiel's Zero to One. The Samwer brothers are masters of 1 to N.

Finally, they don't just run e-commerce businesses so you're initial thesis is a little off. The real concern is liquidity of investments (how quickly can they exit their investments and at what valuation) and cash-flow (most of their firms are still loss-making/cash draining). Obviously, there are operational (technology risk being doubled down with emerging/frontier market risk) and overall business model concerns (moral outrage from Silicon Valley could tip such that all large VC funds refuse to endorse any RocketCopy acquisition)

EDIT: Some engrish

Some amazing books there. The Intelligent Investor and One Up on Wall St should absolutely be on there though.

Seth Klarman's Margin of Safety is a great read.

I'm currently reading at varying pace Thinking, Fast and Slow; Fooled by Randomness; and The Most Important Thing (Illuminated).

Since you have some of Mauboussin's papers (and there are more, all great reads!), there are lots more articles/research papers written by great luminaries worth the read. Buffett's Superinvestors, Munger's Art of Stock Picking, Tweedy Browne on What's Worked, Klarman's MIT speech etc.

Thanks for this collection though. Downloaded the lot of them.

EDIT: Also, Winning the Loser's Game by Ellis. Great book.

It's not. It's just bullshit dressed up to sound smart. Every time a bubble comes along people start talking about "paradigm shifts" and "this time it'll be different" and "fundamental changes to market forces". And its all bullshit.

During the tech bubble in the 2000's people were saying the same thing, and people were publishing books titled "The Dow at 100000" and "P/E is dead". Same thing happened right before the S&L crisis, the Asian crisis, the Airline crisis in the 60's, the Railroad crisis, etc etc etc. And every single time people said of value investors that they were "shackled by their own ideologies". Right before it all came tumbling down.

If you're interested, famed economist Nouriel Roubini wrote an excellent book about it: https://www.amazon.com/Crisis-Economics-Course-Future-Finance/dp/014311963X

And Warren Buffett makes fun of these "paradigm shifts" in The Intelligent Investor: https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661/ref=sr_1_1?s=books&ie=UTF8&qid=1508952611&sr=1-1&keywords=intelligent+investor

Now we can all civilly disagree here, and I am sorry to have singled HurrDurr650 out here, but what irks me is the absolute certainty with which people proclaim that "this time is different". Every. Single. Time.

NYU's Aswath Damodaran basically puts his entire class online, including podcasts and coursework. His website is full of information. He's a discounted cash flow / equity premium type of guy.

http://pages.stern.nyu.edu/~adamodar/

Just stay interested and follow what interests you. This industry has plenty rules of thumb, but also has many different approaches.

Warren Buffett's letters to shareholders are also highly recommended.

The Intelligent Investor (and maybe Security Analysis) would be a good read, mainly if you're interested in value investing and financial statement analysis.

Other than that, I'd say look into the CFA program. Even if you don't enroll, you could pick up a few of the program's books on Asset Valuation, Corp Fin etc. to get started.

List of about ~50 substacks/newsletters I've found valuable over the past year:

https://www.notion.so/dcfstate/Flows-Company-Analysis-b81e4c5a624d4583a2760ee3313f7b3c

Currently I learn a lot from analyzing Nintendo. It's a platform business, product cycle dependent, IP and cash rich which gives it growth opportunities difficult to value. You can see my slides here I plan to turn it into a case study or a note after I close the trade.

Quantitative Value has a decent portion covering financial manipulation, fraud and financial distress. No story like a lot of the other books recommended but sounds like you're looking for.

A couple research papers on the topic (I haven't read them but all related to what you are looking for):

The Detection of Earnings Manipulation - Beneish

Earnings Management and stock performance of reverse leveraged buyouts - Chou

Earnings Management, stock issues, and shareholder lawsuits - Ducharme

edit: sci-hub for papers, libgen for books

How much do you know about investing currently? I am also starting to read these kind of books, but I gave up Security Analysis after 50 pages or so. If you haven't read them, try reading A Random Walk down Wall Street and One Up on Wall Street to get your feet wet. They don't teach you detailed techniques, but I think the information is not less important. Jack Schwerger's interviews with stock traders also gave me valuable knowledge.

Lately Martin Skhreli's investing channel on Youtube seemed to be popular as well. He recommended a book titled Margin of Safety by Seth Klarman. He said Security Analysis is not as relevant today, but I haven't read both of them so I can't really tell. I hope this helps!

A few books that come to mind that definitely changed me as a person:

Thinking Fast and Slow by Daniel Kahneman - Can't recommend this book enough. Extensively covers how we make decisions, about the biases and irrational logic we use in our decision-making process.

Against the Gods: The Remarkable Story of Risk by Peter Bernstein

Meditations by Marcus Aurelius

Zero to One by Peter Thiel

Mastery by Robert Greene

A Short History of Nearly Everything by Bill Bryson

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That PDF threw this alert from my AV:

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BE CAREFUL HERE.

I like ASAP Utilities (http://www.asap-utilities.com/) for one feature in particular: the ability to convert ranges of cells to absolute references, and back again. Comes in handy when you need to link to a range of data and then transpose it.

This one was written in the 90s but Quality of Earnings by Thornton O'Glove isn't bad.

​

https://www.amazon.com/Quality-Earnings-Thornton-L-Oglove/dp/0684863758/ref=sr_1_1?keywords=Quality+of+Earnings&qid=1552326556&s=gateway&sr=8-1

I mostly googled the terms I didn't understand from that book when I first read it. As I was a complete beginner then, it probably took me around as much time reading about the terms presented in the book as it took me to actually read the book.

I'm still glad I started learning about investing through that book and through "The Intelligent Investor" though.

Try checking Investopedia.com as well for references.

https://www.docdroid.net/rnP5cA4/seth-baupost-q42018-letter-discussed-in-davos-summit-jan-23-2019.pdf

"You either get the idea in the first five minutes, or you don't get it at all", comments Warren Buffet in the epilogue of The Intelligent Investor.

There are no hard and fast rules to value investing. I dare say true value investors are distinguished in their investment philosophy and investment orientation. They may at the end of the day employ similar investment analysis tools as others, but it is the philosophy, the fearlessness in standing apart from the crowd and being contrarian, that sets apart value investors from everyone else.

After all everyone had the same knowledge as Buffett in 1990 when Wells Fargo was trading at 3x pre-tax earnings. Why did he go in, but not anyone else? Because everyone else ate from the same doomsday plate.

In rising markets, as Graham himself alluded to over half a century ago, value investing will lose its luster. But in middling or falling markets, value investing will shine, simply due to the system of establishing an adequate margin of safety.

Value investing is an art more than a science.

>. If it is possible (compounding at 50%) and would require tremendous attainable skills and effort, why the heck would anybody who can do this aim for anything else?

Opportunity cost is a thing.

Did you know that The Intelligent Investor, the book Buffet recommends the most, argues against this sort of thing? Instead of trying to beat the market, your main goal should be to minimize losing money while making satisfactory returns.

I know you think it's possible to make 50% annual returns, but I find it unlikely that anyone would be able to spot enough inefficiencies in the market to do that on a regular basis. The EMH might not be completely true, but even the book admits that the market as a whole is pretty good at pricing securities.

Here's a couple articles addressing various potential applications but there's certainly a bunch more.

https://medium.com/technology-nineleaps/blockchain-simplified-part-2-a42161e08762

https://www.fool.com/investing/2018/04/11/20-real-world-uses-for-blockchain-technology.aspx

Two that I think have a better chance of taking off are near-instant payments and supply chain management.

There are at least a few cryptocurrencies who have been implementing low cost or even free international payments. Three of the leaders in this area imo are ripple, nano, and stellar lumens.

I think supply chains also have massive potential because of the current widespread issues of fraud and how hard it is to know the true source since many companies are involvedfrom across the world. This applies to nearly every industry such as lumber, electronics, pharmaceuticals, food, etc. Some of the major players here imo are vechain, waltonchain, origintrail, and ambrosus.

Then you have platforms on which the majority of these dapps (decentralized apps) are running. The biggest is ethereum by far, and I would say neo and icon are positioned to be top contenders as well.

There's a ton more I could write about but I think this is a good enough intro

My single investment in 2017 is Nintendo (NTDOY). It's quite fun to put together a slide of analysis and track the development through the year. And distribute it on the internet! Slides here

Yeah, its also a double caveat. Most people don't think it's possible to just read a bunch and think (intellectual effort) and have it be worth so much because they don't perceive reading and thinking as valuable for some reason.

My sister is a computer programmer who exerts intellectual effort and gets paid well for it and most people in society will nod their head and think she is smart.

As soon as you tell people that all you do is read and think about businesses critically, suddenly they think that isn't worth as much or at all because they think they can do the same thing easily.

The key dilemma here is that they think they can think like a good investor when they can't nor do they exert the necessary effort. I'm sure some do, but they put in the effort to get better as B Graham discussed in "The Intelligent Investor".

I don't think any other job allows you to do this and it's awesome. Sophmore year of college I had to make a very difficult decision doctor vs. investor. I'm very glad I didn't become a doctor esp after researching the medical industry later on (my sister who is a ICU nurse at UCLA told me doctors are the most miserable people she has ever met and convinced me to do something I am passionate about i.e. stock market stuff) I just reconnected with one of my suitemates who was going to become a doctor too. He is going to be a psychiatrist soon and he admits he thinks he made the wrong decision. I actually think he is suicidal so I have been trying to communicate with him often because he talked about how he doesn't know if he is going to be able to do medicine for a life. Another one actually made it, but he had always wanted to be a surgeon so I'm sure he is happy about it.

In gist: life's nuts yo.

Sidebar -> Reading List -> Value Investing -> <em>The Manual of Ideas</em>

My Review of <em>The Manual of Ideas</em>

The argument that Graham's original teachings are out of date is only partially incorrect. On one hand, yes, searching for net-nets through the valuation of railroad bonds and the like is incredibly out of date, but I think anyone who doesn't automatically pick that up while reading The Intelligent Investor or Security Analysis lacks common sense. On the other hand, is using Mr. Market's overreactions to your advantage and buying a company at a discount to its intrinsic value out of date? Absolutely not. What you should take away from Graham's works isn't literal examples of how to value companies, or any sort of A-Z investment checklist, but the philosophy and state of mind that will allow you to achieve contrarian and unconventional results.

I personally believe a concentrated investment strategy is the best way to go, because I just don't think its possible to know more than 20 companies to the expert degree you should before making an investment. Who ever made the majority of their money betting on their 25th or 26th best idea? Who even has 25 best ideas? However, because the time requirement is so great to adequately do the required research to get over that hurdle I definitely agree that the majority of people are better off using passive investment strategies. But for those who do have the time, there's really only three questions you need to answer: what are the true economics of the business? do the true economics match with the reported and expected future earnings? and are the interests of the decision makers line up with shareholders? If you can answer all of those with confidence you shouldn't have many problems.

I do agree, I do not think someone should start and read all of them in a short period of time. I think if they read The Intelligent Investor first it will give a fairly good introduction as to what value investing is all about.

I've used it. It's pretty useful for accredited/HNW investors who are looking for hedge funds. You can see historical performance data and can request fund documents to download (information sheets describing strategy, partnership documents, forms etc.) If you like what you see you can get contact info for the funds and/or subscribe through the marketplace.

There was an article about it here a while back which explains more and looks at a few of 2015's top performing new funds: http://seekingalpha.com/article/3959330-secrets-2015s-top-3-new-hedge-funds-interactive-brokers-hedge-fund-marketplace

Not sure on this. He doesn't justify "fair price," especially since he doesn't include the share price. Comparing it to AXP and V at a cursory level shows that its numbers, while good, do not outshine its competitors. The reliance on earnings estimates is nonsense; Graham repeatedly dismisses future predictions in TII. Value is about finding a company that can weather a storm based on past data, which is certain unlike future data. Its PE is higher than its competitors, and there's no decomposition as to why its 273.13 @ 18x is justified. Any stock can be overpriced no matter how good the company. This seems like buying at high/normal price and hoping for it to go higher.

They sell material based on "The 7 Habits of Highly Effective People," a self-help book, i.e. with no actual science.

The guy who wrote it has (maybe I should say had) a cultish following from people who want to get ahead in life, much like people who are willing to pay $10k to attend Tony Robbin's "business seminars."

Anyways, they've been able to sell this bullshit for a while, but sales are going down (because who the fuck actually uses this shit). Management comes up with a great idea of structuring their courses as subscriptions, so they can keep collecting fees after the initial sale. Plus while they "ramp up" their model they can explain away the shitty sales while giving the street a nice ARR number that they can jerk off too.

In a sense they are like HLF. They both have borderline useless products, except FC isn't making money.

I second The Intelligent Investor as a starting point. Then find articles on Google that modernize the strategies laid out by the Intelligent Investor. Keep in mind it was written almost a century ago so a lot of the steps to finding undervalued companies in the book need to be brought up to date to modern day standards.

On a related note, I've been listening through the Master's in Business podcast and have compiled some of the book recommendations. Most fall into historical fiction and lean towards entertainment, while staying relevant in some (sometimes abstract way) to investing.

• The Wright Brothers
• 1776
• Thinking in Time: The Uses of History for Decision-Makers
• Endurance: Shackleton's Incredible Voyage
• Against the Gods: The Remarkable Story of Risk
• Sapiens: A Brief History of Humankind
• Linchpin: Are You Indispensable?
• Flash Boys: A Wall Street Revolt
• Devil Take the Hindmost: A History of Financial Speculation
• When Genius Failed: The Rise and Fall of Long-Term Capital Management
• The Great Crash 1929
• Lords of Finance: The Bankers Who Broke the World
• Meditations by Aurelius, Marcus
• Warfighting
• The Loudest Voice in the Room: How the Brilliant, Bombastic Roger Ailes Built Fox News--and Divided a Country
• Last Train to Memphis: The Rise of Elvis Presley
• The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
• The Wealthy Barber, Updated 3rd Edition: Everyone's Commonsense Guide to Becoming Financially Independent
• The Art of Execution: How the world's best investors get it wrong and still make millions
• Where Are the Customers' Yachts?: or A Good Hard Look at Wall Street
• All the Light We Cannot See

Michael Lewis and David McCullough seem to be favorited among Wall St insiders.

Screening has been covered a few times in past posts. Also, The Manual of Ideas (listed in the Reading List on the Sidebar) is the quintessential book about screening.

Please survey the resources available in this sub and make use of them.

Have you read "A Random Walk Down Wall Street" by Burton Malkiel? That's probably the best defense of a passive investment strategy I've heard of. I would venture that most people don't have time or the wherewithal to complete the diligence it takes to properly analyze securities. To quote Howard Marks, "If your behavior is conventional your performance will be conventional, good or bad. Only if your behavior is unconventional will your performance be unconventional. Even then, only if your insight is superior will you achieve above average results"

On the other hand, security analysis is a wonderful and engaging way to spend your time so I would absolutely recommend allocating a part of your portfolio to stocks that you believe are great buys. Best case you're right and they go up, worst case you learn something new and are a better analyst for it. Just make sure that you always do your homework.

I know that there are several very advanced investors on this site. However, for the everyday individual investor who is caught somewhere between a passive investor and active investor as defined by Graham, this site is a good quick reminder of the basics.

Of course some things are over simplified. But it seems to be a cliff notes to The Intelligent Investor.

The article was too long. TLDR?

What I got from it is that profit margins are too high to be sustainable, and once you correct for that the expected return on the sp500 is too low to be worth it. Is that an accurate assessment?

And if it is, I get the feeling that margins should be higher today than 30 years ago because the big tech companies are almost like monopolies in their markets, so I don't think margins should mean revert.

EDIT: adding a link to support my claim that margins shouldn't revert: http://seekingalpha.com/article/428181-debunking-s-and-p-500-profit-margin-anxiety

It reminded me of this story about Apple's IPO that I've written on Seeking Alpha. It's a 205x bagger, but you needed to sit through two 80% loss to ge it. And most of the gains is after Steve Job came back. http://seekingalpha.com/article/3960280-apple-computers-ipo

> National debt is the public surplus, a representation of the wealth of the nation.

LOFL

edit: i apologize for laughing, but the certainty in demonstrable ignorance on reddit never ceases to amaze me. you addressed nothing i posted. buffett's "charity" has been ridiculed at length by many many times before (see hypocrite miser: https://www.fool.com/investing/general/2011/04/06/buffett-hypocrite-miser-or-philanthropic-master.aspx). "the system" includes investment, you child and dolt. money isn't taken out of anything, what the government (and all democracies) do is promise endlessly, backscratch endlessly, and pile up obligations that are impossible to meet (take a look at the finances of Puerto Rico, IL, CT, MA, etc. and tell me how rich they are because of all that debt they can't pay off).

Just read this article a few minutes ago. It sounds like the bankruptcy filing was very unexpected. Haven't seen any postmortems yet, but I'd also be interested if anyone comes across one.

Here's a presentation he just gave at a small conference for short-sellers:

&quot;Short the whole fucking thing&quot;: Going Long Gold to be Short The Government's "System" and Why I Have No Faith in Monetary Policy in 15 Minutes or Less.

I'm not convinced

Thanks for checking out finbox.io meteorain. We're still in our "early access" period so your feedback is helpful in understanding how people are interpreting the content. I'm hoping it'll soon become more clear what we mean by fair value. We're just trying to provide a starting point for your research and not making a recommendation to buy or sell. It will soon look like this: https://cloudup.com/csXFjNDCGSu and give you how a build up of how we arrived at the value. From there you can edit any of the models and assumptions yourself. We hope that as the community grows, we'll be able to aggregate everyone's assumptions and use that as the starting point.

All the models on the platform are editable right from your browser so you can edit the discount rate ("acceptable rate of return") easily. Actually, you can edit any assumption and even download the full models for customization.

Here is an example - https://finbox.io/AAPL/models/dcf-growth-exit-5yr

Apologies - we need to do a much better job of explaining.

thanks for the insight. however, I don't think that's correct, as KO famously had an extremely high P/E when Buffett first looked at it. This article says it was a P/E of around 25-30: https://www.quora.com/What-was-the-P-E-Buffett-paid-for-Coca-Cola. So I don't know where he got the 59/100 figure from, which implies a P/E of less than 2.

Dalio has already kind of done this (at least for countries within the last 100 years). Not sure how much it'll help and the book is kinda fuzzy, but he details countries that have inflated away their debt (typically the onus for high inflation) over the past 100 or so years.

https://www.amazon.com/Big-Debt-Crises-Ray-Dalio/dp/1732689806

I was referring to the Maxwell book. Haven't seen the one you referenced.

Amazon Link

First - learn accounting: Ittelson - Financial Statements

Second - learn investment instruments (equities and bonds) as well as key drivers and basic valuation: Graham - Intelligent Investor Wachenheim- Common stocks and common sense Lynch - One Up on Wall Street

Then you can progress on to the other stuff. Nobody is going to even consider mentoring you until you can show you know the basics.

Interesting topic! Personally, my most recent read was Hiroshi Tsukakoshi's "Tree-Ring Management". I read it in Japanese, but English translations are available too.

As the title would suggest, it's intended to be a business management book. However, the author (CEO of Ina Foods in Japan) digs into discussions about a company's existential purpose, refers to business profits as poop that comes out of a healthy body, etc. Kind of an oddball, but Ina Foods has grown revenues & profits for 47 years straight (and then it declined once, and then got back on track) with this guy as CEO.

I haven't been doing much reading lately, but when I read books now, it's hardly ever about finance, investing, business, etc. I'm thinking about picking up Zen and the Art of Motorcycle Maintenance next. The Road Less Traveled by Scott Peck was a good non-business read that helped shape some of my thinking as well.

I doubt this is the sort of response you were looking for. That said, a lot of good reading and experiences outside of business has helped me look at things from different angles. Maybe going beyond investment/business related books would help you look at your current routine reading material from a different angle, if that makes sense. At any rate, it's helped me some and I thought I'd share. I hope this is useful to you :)

I've read Power of Habit, Win Friends & Influence, and The Game. Totally agree about the last book, and I really recommend "Models" by Mark Manson as kind of an enhancement to that book, it's much better and less... gamey

Some other books that I have read that have value that I'll share back;

Mindset by Carol Dweck - Taught me growth mindset

Surely You're Joking Mr Feynman / What do you care what other's think by Richard Feynman - Gave me my favorite life hero and the power of asking why

World Order by Henry Kissinger - the world works in frameworks, countries are consistent with what they do in the past and have incentives to act the way they do

Endurance; Shackleton's Journey by Alfred Lansing - The will to survive is superhuman, the power of a leader is outsourcing confidence when others are terrified

Sapiens a Brief History of Humankind - Kind of tons of cool stuff, Love the thing about abstract thought leading us to help communicate in larger and larger groups

The Prophet by Gibran - Tons of little bits of wisdom.

There are so many other books, and I tend to gravitate towards biographies. Maybe misquoted but “Tell me who your heroes are and I’ll tell you how you’ll turn out to be.” - Warren Buffett

Common Stocks and Uncommon Profits, Conservative Investors Sleep Well by Philip Fisher. Get his combined works if possible. The text aren't just about what you're looking for but there are whole chapters about management.

I think it's supposed to be that way. Value investing is hard, that's why many people prefer technical analysis or stuff like that. I think The Intelligent Investor is particularly hard to read because Graham is such a smart guy that his wording and phrasing are so complex that it's hard for us to digest it (if you contrast it with Jason Zweig's commentary you can easily feel the difference).

I have also been looking for a one-stop solution kind of thing for learning value investing, but I guess in the end it's something you have to discover by yourself. Everybody's method differs, and even if you manage to replicate someone else's process it might not work out for you; that's why they say investing is an art.

Thank you! I am specifically looking for books written by very successful investors.

What do you guys recommend? I found these books very helpful already:

:

Security Analysis (2nd and 6th Edition) - Benjamin Graham

The Intelligent Investor - Benjamin Graham

Common Stocks and Uncommon Profits - Philip Fisher

Margin of Safety - Seth Klarman

The Essays of Warren Buffett - Warren Buffett

Warren Buffett Original Partnership Letters - Warren Buffett

Berkshire Hathaway Letters to Shareholders - Warren Buffett

The Dhandho Investor - Mohnish Pabrai

Beating The Street - Peter Lynch

One Up On Wall Street - Peter Lynch

The Little Book That Beats The Market - Joel Greenblatt

You Can Be A Stock Market Genius - Joel Greenblatt

The Most Important Thing - Howard Marks

The Education of a Value Investor - Guy Spier

How I Find Undervalued Stocks

In addition to what I wrote years ago, you should read <em>The Manual of Ideas</em>. It discusses what I wrote above and more in a clearer, more concise manner.

I believe so. I want to say it aired ~2.5 months back. I was burning through a bunch of audio on a long car drive; it could have also been Hedge Fund Market Wizards by Jack Schwager.

edit: actually, it was the latter: https://en.wikipedia.org/wiki/Cornwall_Capital

Depends on what kind of investor you want to be. I'd read Phil Fisher's "Common Stocks and Uncommon Profits", Klarman's "Margin of Safety", among others.

If you're in college, I'd look to take the CFA tests. For entry level positions, passing level one may give you a small leg up over the competition.

Look for a modeling course you can take in your free time.

I've really enjoyed Value Investing: From Graham to Buffett and Beyond by Greenwald, Kahn, Sonkin, and van Biema. It's a handbook on value investing. It's broader than just financial statements, but should be good enough.

The cool thing about this particular book is that it profiles eight value investors (e.g. Buffett and Gabelli), so you can see the different flavors of value investing.

I think your original request was framed incorrectly.

You should read The Manual of Ideas if you want to learn methods to find investment ideas. You can read my review of the book here.

I'd start reading.

Learning to value companies requires knowledge in Accounting, Competitive Strategy, and Corporate Finance. If you hope to apply valuation to your personal investments, These are the books I'd use if I taught a course on Value Investing and Valuation:

Accounting/Finance

• Financial Statements - Ittelson
• Analysis for Financial Management - Higgins
• Valuation: Measuring and Managing the Value of Companies - McKinsey
• Expectations Investing - Michael Mauboussin

Competitive Strategy

• Competitive Strategy - Michael Porter
• Competition Demystified - Bruce Greenwald

Value Investing Analysis

• Value Investing: Tools and Techniques for Intelligent Investment - Montier
• Value Investing: From Graham to Buffett and Beyond - Greenwald

Investment Search

• You Can Be A Stock Market Genius - Greenblatt
• The Manual of Ideas - John Mihaljevic

Value Investing Philosophy/Risk Management

• The Essays of Warren Buffett - Warren Buffett
• The Most Important Thing - Howard Marks
• The Value Investors: Lessons From the Worlds Top Hedge Fund Managers - Ronald Chan

I'd start by reading The Most Important Thing and Financial Statements. After you understand Accounting and Value Investing Philosophy, I'd move onto Competitive Strategy and Investment Analysis. The last thing I'd tackle is Investment Search.

If you thoroughly understand these books, have the right discipline and temperament, and maintain intellectual curiosity, you can become a great investor. Be patient as it will take time. Feel free to ask detailed questions in the subreddit if you get confused. There are other smart people out there that can help and others are probably confused about the same things.

What you save in not paying for trades every year, you lose in management fees and control. With deep discount brokers you can trade for just a couple dollars, all you need is to have a couple hundred dollar position to make it worth the trade.

All and all though, if you don't want to be an extremely active investor you should either a) follow the "defensive investor" rules strictly found throughout Ben Graham's The Intelligent Investor, or b) hire a firm or invest in a fund though this still requires you to do your due diligence on the firms past and make sure they keep doing well (see Chapter 10 of The Intelligent Investor titled The Intelligent Investor and his Advisors.). Either way you have to do some work.

Nope. You'll get the same value out of these lectures as ones during more current years. The lectures don't really change much year to year and he goes over the same case studies in Value Investing: From Graham to Buffett and Beyond. He doesn't post this class online a la Damodaran.

My econ prof in high school was this really awesome Dutch guy, the kind of teacher who really gets students interested in the subject matter (it's no surprise that 95% of his class ended up majoring in economics). He gave me a copy of The Intelligent Investor when I was 17 and that basically got me started on value investing.

I personally haven't read it so I can't comment on how helpful it is but in relation to The Intelligent Investor, you could use the Investopedia website(somewhere on the sidebar) as a source of reference for any words or terminology that you may not understand. Also Warren Buffets shareholder letters may be another good resource since they aren't really that technical.

The stock is trades under this symbol (OTCBB:PARR).

Par Petroleum was bankrupt most of last year. The important question is what is this company worth now that it is not?

You have to remember that financial statements are inherently backward looking documents that may not reflect a company's current earnings power or asset value. Moreover, significant changes to capital structure, competitive landscape, and cost structure often precede the rerating of equity values.

OP has managed to identify a company that is undergoing changes in all of these areas and should also have significant assets. This allows the asset value to mitigate downside values while waiting for the company's increased earnings power to express itself in the financial statements over the coming years. If you understand the unit economics of the business and value of the assets, you can make a decent estimate of how these changes increase or decrease the value of the company. By the time current earnings power is reflected in the financial statements, the margin of safety will most likely not be there.

This is the more expanded reason of why I have some reading to do this weekend.

A lot of it is the "intangible" value and "timeless principles", that aren't as heavily stressed in something like a CFA textbook. Such as scuttlebutt-type research, margin of safety, independent thinking, psychological biases, etc. Keep in mind also that CFA textbooks teach silly things like efficient markets and beta=risk. There's a wide chasm separating rote information download and pragmatic education.

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There's a reason people speak so highly of Ben Graham... In addition to these lectures I highly recommend his memoir. Studying any successful investor is fun/easy reading IMO, and can only help you. :)

It depends when you were looking at MNST. Their early margins were bad when they first launched the Monster Drink because they were accepting lower prices to get into a government program (can't recall which) to get into the max number of stores possible. They were also building their distribution channel which involved high costs. There was also a lot of A&P spending involved to get their brand out.

Once they had done all this for the first Monster Drink, their subsequent drinks could just piggyback on all the invested intangible investment and margins inflected. This was also only possible because the investments for the first Monster Drink actually bore fruit. Otherwise they would have had to repeat making those investments to yield the same results, with accompanying lower margins (e.g. A&P). I don't actually follow CELH, but since you drew a parallel to early MNST this could be the business risk.

Source: Capital Returns by Edward Chancellor

This might be what you're looking for:

https://www.amazon.com/Dark-Side-Valuation-paperback-2nd/dp/0134431189

I haven't read it (although I've been meaning to eventually), but Damodaran is kind of the pioneer in valuation for pre revenue and pre profit corporations.

You can also go through his valuation courses on YouTube for free here:

https://pages.stern.nyu.edu/~adamodar/New_Home_Page/onlineclass.htm

Depends on the inventory. A build up of raw materials and decline in finished goods is usually a good sign, and depleted raw materials but increase in finished goods is typically bearish. Not a fan of Motley Fool, but this article explains inventory divergence and the need to break down working capital into individual components.

https://www.docdroid.net/QOSKi33/a-framework-for-valuing-modern-business-models-a-datadog-study-pdf

Here's the framework we use with a walk through on Datadog.

I'm at the airport and not on my work computer, this is all I could search:

http://seekingalpha.com/article/3988958-this-defies-reason-wake-defaults-begun

But as you can see that's a few months old and it has gotten worse.

I'm positive that what I'm doing isn't speculating. I made sure I understood the company and its circumstances, as well as its field. I knew the stock was cheaper than it was worth because of the P/B value, the assets that they had, and the partnership they had with Glencore, which they were a subsidiary of in everything but name. It was, pound for pound, probably the cheapest company in its field. I've always found the processes of coming up with a single number to be a bit gimmicky, and I also lack the experience to come up with a certain multiple on earnings that I'd be willing to pay for the company as a result of that. But that is something I need to work on in the future.

Imagine a situation where I show you a Mercedes. And I let you examine the car and it's leather seats, engine, and smooth ride, etc. If I then offered it to you for $20K, even if you didn't know how much the car was worth, wouldn't you still know it was a bargain? That's the situation I found myself in.

I wrote a Seeking Alpha article on CENX a little while back. You can check it out: http://seekingalpha.com/article/3975387-reassessing-century-aluminum

You're right, they acquired Shaw Group about 2-3 years ago for $3B and received a lot of flack for how they accounted for the acquisition. They subsequently had a large writedown at the end of 2015 related to a nuclear project (inherited from Shaw as I understand it) with Southern company and Westinghouse where cost overruns led to a lawsuit.

From my research, I think CBI is a well run leader in energy infrastructure projects and their share price has been hammered by the creative acquisition accounting overhang which should now be behind them and depressed energy prices.

CBI and Exelon are joint owners in NET Power, a natural gas power plant technology that diverts CO2 into the ground instead of the atmosphere. The company is appealing even if this technology doesn't gain widespread adoption.

Full disclosure: I'm a shareholder.

http://seekingalpha.com/article/2272133-chicago-bridge-and-iron-acquisition-accounting-shenanigans-dramatically-inflate-profitability-prescience-point-initiates-at-strong-sell http://seekingalpha.com/article/3679856-chicago-bridge-and-iron-hidden-asset-will-drive-future-profits

Hi, I am currently trying to value American Eagle Outfitters using Aswath Damodaran's spreadsheet but I get a estimated value / share of $3549.19 while the stock is trading at $7.01 which has to be wrong so and I'm also getting a cost of equity of 3146.35 % which has to be wrong. When looking at the diagnostics I can't figure out what I did wrong. I would greatly appreciate if anybody could help me, thanks.
The spreadsheet: https://gofile.io/?c=OKH5GA

Hi, So apparently I'm not allowed to create a new thread for my question so I'll post it here and hope it will get found by someone. So I've recently started watching Aswath Damodaran's youtube channel after finding his blog so I tried to use his fcffsimpleginzu excel worksheet to try and value Procter and Gambe but I'm pretty sure I did something wrong since I got a share price of 13.22$ while the current price is around 119.67$ so the stock is incredibly overvalued but I really don't trust myself since this is the first valuation I've ever done so I must have done something wrong. I would appreciate it if someone could have a look at my valuation and help me, thanks.

https://gofile.io/?c=qtcspp

Elliot

https://www.docdroid.net/kfBxxVh/elliot-letter-april-162020-perspectives-paul-singer-elliott-pdf

Hey please remove the re-route to the zoho survey, it keeps triggering the spam filter. Just post the direct link to the docdroid or pdf.

As in this link: https://www.docdroid.net/1WAZwlG/kingsoft-write-up-final.pdf

and not this one: https://survey.zohopublic.com/zs/IbCN0F

Thanks

I think this is the usual surge of money into strategies that have worked recently. However, I like this article as it introduces me to new activists I didn't previously know. I can research their previous campaigns to see what type of companies they target and see if that fits with how I invest. If so, I can follow them as a source of future ideas.

RMCF seems to have a lot of accounting issues according to this article I found on seeking alpha: http://seekingalpha.com/article/2886906-rocky-mountain-chocolate-factory-the-compounding-of-errors-with-needless-complexity

Might be good to keep an eye on though!

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And I'll reply to myself to say I mis-remembered the details. http://finance.yahoo.com/news/thompson-creek-prices-6-50-043300206.html explains the situation. Not nearly as drastic as I said before, but it will still significantly dilute shareholders when the tMEDS convert in 2015 (adding about 20% more shares total).

Their stock really has more than baked that news in at this point, though.

Hey thanks for bringing this up!

To your first part: it's a big concern definitely, especially in core Western markets (USA, Western Europe, and Canada). EXPE, whose customers are mainly from the USA and Canada, are far more at risk. Customers are always looking for what is most convenient (Figure 4), and Google definitely is that! Google Travel will continue to bite into online travel, however it is going to be a drawn-out theft of customers (they still benefit from OTA ad spend).

Your second part: I do believe Google are a threat - had a little check, "google" is mentioned 68 times (vs. 10 for Expedia) in their 2019 AR - but it's limited in the medium-term. In addition to direct visits, BKNG benefit from their global reach, particularly in Asia, and their ability to pivot.
A bit further insight. January 2020, monthly active users:

1. Booking.com (BKNG) | 507.5 million
2. TripAdvisor (TRIP) | 165.0 million
3. Expedia (EXPE) | 78.6 million
4. Agoda (BKNG)| 65.0 million
5. Hotels.com (EXPE) | 61.6 million

Of the top OTAs, Agoda is only Asian-focussed travel agency. Additionally, Booking.com itself has partnered with Indian TAs to enable access to this market. Investing in BKNG necessitates confidence in their Asian strategy, as their main Western markets carry big competitive risks. Currently, "meta-search" platforms, such as KAYAK (BKNG) and TripAdvisor, stand to lose the most as they have directly competing models. Yet, Google will compete on all fronts.

Admittedly, failure to compete could have been discussed as a long-term scenario for the company. Thanks for your point as it definitely is a BIG DEAL for Booking Holdings.

"Generating and visualizing alpha" https://www.elastic.co/blog/generating-and-visualizing-alpha-with-vectorspace-ai-datasets-and-canvas

Permanent solution would mean the use of a proper database and SQL, in that regard, I would advise you to use PostgreSQL, It's open-source, free and very powerful.
If you like the concept of pipeline of data, want to be ale to visualize your data flow and have a basic understanding of Javascript, I would advise you to have a look at node-red, you can do this sort of stuff. You can do a lot of things with NodeJs (Javascript server side) and don't need to learn Java. You could do it in Python, but unless you want to do machine-learning or data-science (and most of the time, you can do that in Javascript too), you don't need to learn another programming language.

Callon Petroleum Company Issues Statement Regarding Lone Star Value Management's Ill-Advised And Self-Serving Demands

More detail is provided on the situation in Thailand in the WDC earnings call. They are forecasting a 50-60% revenue hit in the December quarter and multiple quarters of impact (asset writedowns, constrained capacity, constrained component supply, damaged transportation infrastructure, etc.) before full recovery. The STX earnings call should shed additional light on how the rest of the industry if effected.

The question is if negative sentiment peaks now or after December quarter results. WDC has the option of "kitchen sinking" all writedowns and expenditures. I have some work to do, but I view this as a serious temporary disruption (a la BP Macondo well disaster) even though it will take years to fix.

Well they have been growing at ridiculous rates, and still have managed to almost match last years total revenue in just the first quarter of this year. Check out this graph on techcrunch. Eventually there will be slowdown in growth rate, but I believe that they can also start to be wildly profitable if they stop marketing as much as they do right now and keep their operating expenses in check.

Greenblatt maintains his own database of adjusted financials and then applies quantitative rules. So I guess his strategy is more of a hybrid instead of a strict quantitative strategy:

>Dasaro: Joel, your funds follow a systematic fundamental value weighting strategy. What do investors get when they pay for active management in your funds?

>Greenblatt: Well, we do fundamental research bottom-up in our long/short funds of roughly the 2,000, large and mid-cap range, or maybe the 2,000 largest companies, somewhere in that area. And we go through every balance sheet, income statement, and cash flow statement, making our adjustments as to what we think the difference between what their reporting and what economic reality is.

Then, we're ranking companies based on our measures of absolute relative value of companies. I have a partner, Rob Goldstein, who's been with me since 1989, and that's the only way we know how to value companies--measures of absolute and relative value--and we rank them from 1 to 2,000, based on their discount to our assessment of value.

Full Interview

The Schwab company reports are pretty decent. Also have lots of news feed sources.

Schwab Market research: https://www.schwab.com/public/schwab/investing/investment_help/investment_research/markets

Schwab stock research: https://www.schwab.com/public/schwab/investing/investment_help/investment_research/stock_research

The only thing I miss is having financial statement info downloadable as excel sheets.

That said, zacks is pretty good and you can access a lot of for free. Also JPM and Goldman research notes can be Google'd and found pretty easily. Using edgar for filings is a little inconvenient but not that bad.

What types of information are you looking for?

Disclosure: I'm a very happy Schwab client and former factset user.

Meditation helped me a lot!

1. Ray Dalio is a strong advocate for Transcendental Meditation
2. Personally I like to use the headspace app on my phone (it is guided and is very effortless)

Meditation and frequent breaks help me a lot

Internal Growth Rate and Sustainable Growth Rate

• IGR represents the growth rate of a company in its current state without changing anything-- no new debt or equity... so reinvested earnings, existing capital asset appreciation, etc.

• SGR represents what the growth rate could be if it increased leverage but maintain a constant debt-equity ratio (does this mean optimize its capital structure?).

Edit: if this concept is new to you or anyone here, here's a PPT I found from UVM.Edu. Good primer. https://www.startpage.com/do/dsearch?query=SGR+vs+IGR&amp;cat=web&amp;pl=opensearch&amp;language=english

FYI, I am not an expert at all. I learn more from reading this sub than I ever could do to contribute.

I have this really cool extension that works in almost all news sites:

https://github.com/iamadamdev/bypass-paywalls-chrome

I just need to activate and refresh the site, and its like I payed the subsription.

I really think that the subscription its worth but I live in Europe and they are really expensive for us, especially when you are a student.

>They take inventory risk, correct? So you will have massive write downs in a downturn?

Zillow, Opendoor, Redfin, etc. will certainly assume inventory risk, especially in the early stages of the iBuyer market. As these companies reach scale, however, the inventory on a company's books at any given time gets smaller as a percentage of its overall iBuyer working capital. This lends me to believe iBuyer will be a race to scale and thus, a winner-take-all or winner-take-most market. Zillow is both well-capitalized and has a massive audience advantage in its marketplace, which creates a virtuous cycle that only makes the marketplace stronger.

&#x200B;

>At what scale can they start to lower % fees? As in, whats their margin target? What percentage of home sales are they turning around currently?

I'm really not sure. The margin target is 1-2% of the entire home transaction since the home sales is when revenue is recognized on the books but I'd think about the fee here as a lever Zillow or any other iBuyer can pull based on a number of factors including the overall housing market cycle, the local market, amount of inventory the company's books, and projected turn-around time. This fee will likely be dynamic much the same way Uber and Lyft leverage surge pricing.

&#x200B;

>What percentage of home sales are they turning around currently?

It is estimated that in 2018 iBuyers represented 0.2% of all home transactions in the US but more interestingly here's the market share of iBuyers in Phoenix(the most mature iBuyer market) in 2018.

&#x200B;

>For UK people - is this a purplebricks or a Rightmove?

Based on audience size here, the Zillow comp in UK is Rightmove (or Zoopla to a lesser extent) but neither has disclosed plans to move into the iBuyer market.

> Several organisations decided to ban or discourage use of Zoom.The company was also caught lying about having end-to-end encryption.

This is extremely understated and underestimated. Zoom has heavy ties to China and the CCP. The US Congress has a standing ban, the FBI has a issued a warning. This is an enemy state platform. Many people are only using it because they don't know or don't care and it's free. It will not be free forever and the cost of potential loss of business secrets and PII is immeasurable.

I read these forums and am an amateur investor, but I've work in IT and specifically in K-12. Zoom is a major security issue and business would be insane to use it. If grandma's book club meets there it doesn't matter as much, although still leaves a lot of avenues for attack open elsewhere.

There are also freeware OSS alternatives which you can host yourself (Jitsi being probably the foremost) but are not well known and many organizations have already bought the Microsoft ecosystem whole hog which includes Teams and Teams integration into everything else.

I know India has currently banned a lot Chinese specific things thanks to their border issues. I don't know if this is among them.

Frankly, I hope they die in a fire, and the rest of the CCP state sponsored malware platforms like from Tencent, for example, go with them.

This PDF is interesting

Link

‘Tirade of a dinosaur by Robert G. Kirby’

Use this free software you can download called Xmind. It's a mind map and allows you to track your thoughts in visual form. If you just jot down text, less like you'll remember off top of your head. Visuals stick better.

https://www.xmind.net/

> in it to get wealthy

I don't think I agree with you on derivatives. Certainly derivatives that are relatively simple and act as insurance are a great invention and do enable higher productivity and better use of capital. On the other hand what the OP is describing as over financialization really does seem to be what a great deal of the derivatives markets are about. To me a lot of derivative activity seems to be an act of outsmarting yourself or else the practice of dreaming up contracts to rip the faces off of your counterparties or at a minimum book fees disproportionate to the benefits you are arranging. I confess I am a layman in this area so what I know comes from sources like &quot;Traders Guns and Money&quot; and some book published by the Economist describing financial engineering from the pre GFC days. However it seems patently obvious that derivatives were instrumental in the creation of the GFC and are often pointless if not outright destructive.

I know this is well known. I bought the third edition years ago as a junior I banker and didn’t finish it. I still have it. Maybe I should sell it on Amazon.

No idea but might have something to do with this?

The Crisis of Crowding: Quant Copycats, Ugly Models, and the New Crash

Also, from what I've heard a lot of the "alt" data has now been so thoroughly mined it has lost most of it's value. Maybe back to basics?

$35 is not much via shopping expenses. Also, I don't think they want people ticky-tack ordering. Shipping isn't exactly cheap. You can always ship it to the store for free. Look at Amazon, they artificially raise the price on a lot of stuff, so you won't order it. Here's a 12 pack of Pepsi cans from Amazon for $19. https://www.amazon.com/Pepsi-Cola-Regular-Pack-Cans/dp/B000328VL0

Longshot but does anyone know if it's possible to find an affordable version of Li Lu's book Moving the Mountain: My Life in China ? All ones listed on Amazon are over $100

Hah, thanks man. No money needed, it's an obsession. Android version: https://play.google.com/store/apps/details?id=ai.jodie.mobile

IOS: https://apps.apple.com/us/app/jodie-insights/id1514919095

Any feedback on features that would help analysis would be helpful

Morgan Housel is all over the place right now because his book launched today (Sept. 8). He was on the Motley Fool Money and Masters in Business (Barry Ritholtz) podcasts last week, possibly others too.