Thoughts for the thoughtful investor

It is always good to remember key value investing principles.  Some of our greatest investors have expressed profound ideas in pithy sentences.  I need constantly to be reminded of “the right way”, to have my compass reset, so I enjoy reading these aphorisms again.  I hope you find some value in them.

Although it’s easy to forget it sometimes, a share of stock is not a lottery ticket.  It’s part ownership of a business

Peter Lynch

Do not look to the stock market as a place where you can lay bets buying equities in companies you barely understand in the hope that you might strike it lucky.

Always conduct thorough analysis of the business.  How would you think about it if it was the only company owned by your family?

Would you like to know about its financial situation in terms of debt levels and profits?  Would you like to know if it generates cash surplus to its requirement to maintain unit volume and invest in all value generating projects?

Would you like to know if has a good strategic position allowing a sustainably profitable gap between prices charged to customers and costs?

If you do not understand it, don’t buy it – stay within your circle of competence.

However attractive the earnings numbers we remain leery of businesses that never seem able to convert such pretty numbers into no-strings-attached cash. 

Warren Buffett (B.H. 1980)

There are so many ways in which directors can

………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Ltd. ADVFN Ltd does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

WHAT IS ADVFN?

ADVFN covers all things stock market.

From the news and opinion pieces on pages like this to share discussion forums, charting tools, financials, live share prices and Level 2, order book data

If you trade or invest ADVFN has the tools you need to make the right decisions.

• 

  101 Ways to Pick Stock Market Winners

  You need the number one bestselling investment guide, the definitive text for day traders, investors and stock pickers.

• 

  The Death of Wealth

  Dissecting the global economy and the financial markets, the book lays out the evidence for the next economic game changer: the Death of Wealth.

• 

  Susan Marmor

• 

  Lou Gutheil

• 

  Neil Woodfine

• 

  Anna Coulling