COURSE UPDATED Sep 6, 2020
- Updated How to Value Stocks ebook with brand new images and examples
- Improved the Intrinsic Value spreadsheet that comes with this course
- Updated lesson 15 & 16 with hands-on examples of the latest tools to use
"An investment in knowledge pays the best interest." - Benjamin Franklin
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People interested in learning about investing drown in the never-ending waterfall of financial news and get-rich-quick schemes, they no longer know what works and what doesn't. This is why they miss focus and generally lose money.
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This investment course teaches you a powerful strategy which the greatest investors of our time, like Warren Buffett and Seth Klarman, use to earn billions on the stock market: Value Investing.
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Concepts are introduced gradually, so that even a beginner will be able to follow along and become a confident investor in no-time!
Value investing is a powerful, low-risk, proven strategy which allows you to consistently earn above-average returns. Upon successful completion of this course you will be able to:
✔ Understand all aspects of Value Investing, the strategy of the pros
✔ Calculate the "intrinsic value" of any stock
✔ Understand why the majority of investors lose money (and how you can avoid this!)
✔ Find and identify attractive investment opportunities
✔ Manage your own portfolio with confidence
✔ Discover the truth about risk versus reward
✔ Consistently earn above-average returns using a simple, low-risk, proven strategy
✔ Protect and grow your hard-earned savings with minimum effort
✔ Quickly know when to buy and when to sell
✔ Plus much more!
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I spent 10 years learning this stuff and months to compress all this knowledge into this course, it's really a steal! If this course helps you to buy just 1 good stock or avoid 1 bad stock, you'll already have earned your money back.
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- Investing in stocks yields the highest possible returns
- Stocks are parts of a business and not things that fluctuate in price
- Value investing is about buying great companies at discount prices
- Value investing is a low-risk, high reward strategy
- Value investing is a long term strategy
- Benjamin Graham is the father of Value Investing and Buffett’s mentor
- Stock prices can divert significantly from underlying business values
- Compounded interest is the key to exponential returns
- There is a structural conflict of interest between advisors and their clients (you)
- Advisors are primarily seeking to maximize commissions and fees
- Advisors focus on frequent rather than on profitable trading
- You should probably avoid even honest advisors, because they tend to earn you only mediocre returns
- The cause of this is a short term, relative performance orientation
- Value investors regularly underperform in the short run, but come out as the clear winners in the long run
- You don’t need an advisor, because you can quite easily do it yourself
- You can practice investing with zero risk involved by opening a virtual portfolio
- Just like advisors and professional money managers, individual investors suffer from a short term, relative performance bias
- Fear and greed are the primary drivers behind short term price movements
- Growing your wealth takes time, there is no shortcut
- Many investors buy on hype and sell on pessimism, which absolutely destroys their returns
- Ignoring most of the financial news is a great way to stay out of trouble
- Be indifferent to the stocks you want to own, let the numbers and facts determine your decisions instead
- Think for yourself and try not to get caught up in herd behavior
- A stock price should only be considered low relative to the value of the underlying company, not relative to the price on a previous point in time
- Frequent trading leads to high transaction costs, which has a huge impact on your total returns. So make infrequent, big investments rather than frequent, small investments
- It is crucial to have a clear understanding of what your investment goals are to be able to stick to your strategy
- Not many people earn a living through investing alone
- Avoiding losses is the most important prerequisite to investment success
- A loss interrupts the compounding process and is very hard to earn back
- Focus on minimizing downside risk, rather than on returns
- Over time the returns will come
- Clearly define why you want to invest and how much money you need to earn to reach those goals
- Don’t invest with borrowed money or money that you might need soon
- Invest 10% of your monthly income
- Check if your goals are realistic based on historical stock market returns, the money you plan to invest, your time frame, and the money you need to earn to reach your goals
- With value investing, risk and reward are inversely correlated
- Price is what you pay, value is what you get
- There are three types of value: relative, absolute, and perceived value
- Relative value examines what company is worth compared to its competitors
- Absolute value estimates what a company is realistically worth based on its performance and the things it owns
- Perceived value is the value people assign to something in their head
- Stock prices reflect investors’ perception of reality, not necessarily reality itself
- In the short run, a stock price says nothing about the value of the underlying company
- In the long run, stock prices will eventually reflect the absolute value of a company
- Benjamin Graham’s Mr. Market metaphor is a great way to think about investing and still applies in today’s world
- On average, financial experts perform worse than a monkey when it comes to picking stocks
- The Efficient M arket Hypothesis an outdated theory which states it is impossible to ever perform better than the market average
- Warren Buffett believes markets are efficient in the long run, but highly irrational in the short run and these irrational prices is what he exploits to consistently earn above average returns year after year
- Irrational prices are caused by emotions and cognitive biases which cloud our decision making process
- Behavioral Finance studies the effect of cognitive biases on our financial decisions
- The cumulative effect of countless of irrational investment decisions can cause financial bubbles and crises
- The best way to counter the effect of cognitive biases is by removing emotions from the equation by following the financial news less closely and by sticking to a strategy based purely on business facts
- In order to earn above average returns, you have to do things differently from the crowd
- Your emotions have the power to render your financial education and investment strategy completely useless, so having the right mindset is crucial to your investment success
- A catalyst of value realization is an event which has the potential to close the gap between price and value in an accelerated timescale.
- Catalysts reduce risk because they often lead to shorter holding periods and therefore have outcomes which can be predicted with more certainty.
- Examples of catalysts are liquidations, spinoffs, buybacks, takeovers, additions to an index, lawsuits, and investigations.
- Each of these events has its own unique way of stimulating an upward price movement
- Do not base your entire investment strategy on catalysts, but see them as a bonus
- Two ways to find out about catalysts are by setting up automatic email updates using Google Alerts and by reading through company filings on the SEC website
- Buying great companies at discount prices should remain the main focus of your investment strategy
- Even if a catalyst seems to exist, this is no guarantee that things will play out the way you expect
- Intrinsic value is simply a different word for absolute value
- Every investor must learn to calculate the value of a company in order to know a bargain when they see one
- There is no simple formula to precisely calculate the intrinsic value, it is always an estimate based on several assumptions, like future growth rates
- Being conservative in your estimates is the only way to protect yourself from major losses
- You might miss a few great opportunities by being conservative, but you will also avoid many mistakes this way
- There are several ways to calculate the intrinsic value of a stock, and none of them is perfect
- You should combine the results of the different valuation models and then lean towards the more conservative estimate
- Book value does not offer an accurate representation of the true value of a company’s assets
- One dollar today is worth more than one dollar in the future
- The present value of a future sum of money is called the Net Present Value
- The imaginary interest rate used to calculate the Net Present Value is called the discount rate
- Some companies are to complex or unpredictable to value with any degree of accuracy
- Spreadsheets are a great way to speed up intrinsic value calculations, but you should use them with care
- An open mind and the guts to do things differently from the crowd
- No prior knowledge about the stock market is required
- No materials required