Ihab Salloum[ad_1]
Invest In your Own Stock Market Education
Our Thesis: Success leaves footprints.
If you can read you can prosper by knowing the keys that made other investors successful. I am an advocate of having a growing library of stock market information.
In answer to your email requests here are a few of the books I recommend for your library
A) Analysis for Long Term Success
Security Analysis, Benjamin Graham, Dodd – learn from the Columbia School prof who taught Warren Buffett. Still regarded as the seminal book in research and valuation – updated in later editions.
This is a book that shows how strict fundamental analysis can be used to find undervalued situations. Graham believed that buying stocks that were markedly undervalued provided a margin of safety for investors. The present financial problems have a lot of investors going back to the basics about which Graham writes.
Graham stripped the accounts to the bare minimum to find which companies were severely undervalued in the market. He believed that this provided a “margin of safety” that could result in the long term safety of capital and then capital appreciation.
The chief elements of performance are:
1) Profitability – over the long term
2) Stability of earnings – over a ten year period
3) Growth – look for growth among low price/earnings
4) Financial position – low and manageable debt
5) Dividends – a history of continued and uninterrupted dividends.
B) Trading
How To Trade in Stocks, Jesse Livermore – updated by Richard Smitten
Start with the instructions of the famed Jesse Livermore who was so dominant on Wall street JP Morgan had to get his cooperation in order to stop a panic on Wall Street.
Interestingly, the lessons of the last century are applicable today.
Livermore wrote of his own experiences in Reminiscences of a Stock Operator under the nom de plume Edwin Lefevre.
Key elements:
1) Patience – wait for a clear trading signal
2) Cash on hand for use after a signal
3) Need for both a market trend and a sector trend
C) Commodity Forecast
The New Reality of Wall Street Donald Coxe
Don was a strategist for the Harris Bank before starting his commodity trust last year. A great overview of the market and a n intelligent world view of the market to come. He made the great call on commodities after a tour of the east and his personal observations of the growth of the new middle class – in their hundreds of millions.
Don Coxe now manages his own commodity fund (COX.UN). it is currently 30 % cash and he is a bull awaiting a return of a long term bull market in commodities. His thesis remains: The millions of persons moving into the middle class each year in the emerging markets will seek the consumer life of the west – and that means the manufacture of millions of homes, television sets etc. that take enormous quantities of basic materials.
D) Buy and Hold
Stocks for the Long Run, Jeremy Siegel
Data and history combined to strengthen the view that in the long term stocks are the superior asset class. The three keys – observation, research and analysis make this book far from a dry thesis -despite the impressive academic credentials of Prof. Siegel.
Ket Thesis – the long term analysis dictates a 70 % holding in equities for all portfolios having a 30 year time horizon. He also sets out valuation ratios to project future returns.
E) Mutual funds
What Works on Wall Street by James O’Shaugnnessy
A review of a great number of strategies to give you data and fact based conclusions as to their usefulness. The past does not guarantee the future will repeat the successful patterns – but I can assure you that if you refuse to learn what worked you are handicapped today.
Key Findings:
1) Short term results are useless
2) High price / earnings ratios are dangerous
3) Large caps are less volatile
4) Relative price strength is important ” winners Continue To Win ”
F) Hedge Funds
Hedge Hogging, Barton Biggs
Not only offers insight from the dean of hedge fund managers but done in a stylistic and entertaining fashion. Biggs was ranked one of the top strategists from 1996 – 2003.
Most interesting to me are the insights into the behavior and thinking of clients and their advisors. Even if you and I never “run money” for the moneyed classes the lessons are applicable to our personal accounts.
G) Your Buffett Library
These books are the latest in a small library of material on the “World’s Greatest Investor”
The Snowball – Warren Buffett and The Business of Life By Alice Schroeder
The candid and open access the author had to Buffett is the reason the book is so informative. Equally interesting is Buffett’s transition form Graham’s disciple to using Graham’s analysis but allowing for growth as a reason to pay more than Graham’s “margin of safety” would allow.
Another book I like is one by his former daughter-in-law that sets out his investment ideas in a brief and easy to read fashion:
The New Buffettology by Mary Buffett and David Clark focus on the Buffet Portfolio Stocks and what we can learn from each selection.
Key findings:
1) Seek a durable competitive advantage (a unique product or service and one that consumers will buy consistently)
2) Historical Date – this keeps Buffett out of new technologies
3) The market cycle (and herd mentality at tops and bottoms) offer great rewards for the patient investor
4) A consistent high rate of return on equity and capital signal long term profits and capital appreciation.
And a similar review of his investment strategies is detailed in The Warren Buffett Way by Robert Hagstrom
H) To develop your own portfolio
Building Your Apprentice Millionaire Portfolio By Jack A.. Bass
My personal favorite – The watch list system has 12 sectors and a good number of recommendations/top picks in each sector. It is not reasonable or advisable to buy all the selections – but the AMP system is to have a good number of recommendations that are on your radar screen for a time that the economy and sector dictate a particular sector and basket of stocks in that sector will do well.
For example:
In the chapter on Uranium / Nuclear Industry only Cameco has a current buy recommendation and that is on the basis of a view that the nuclear renaissance is still years away. A review of the current nuclear industry is set out and the thesis for sector investment given.
The chapter then discusses a series of junior producers and developers to be “watched” and purchased as the commodity price and industry revive.
It is designed for the investor with knowledge of the stock market and who wants a more structured approach to developing a portfolio. Available direct from The Apprentice Millionaire Program web site.
Knowledge Won’t Happen by Accident – Set Your Goals In Writing
Set a goal of reading a new book a month. In an age where people actually brag they don’t read you can acquire enough knowledge to be an expert in the space of a single year. Follow a schedule of reading for your own profit – in a time where people spend more time planning their Christmas card list then their portfolios.
I am also an advocate of daily reading of the financial press – but not for investment advice. The daily press will give you information about the economy. I believe the direction of the economy gives you a direction of the sectors that will prosper and the companies that will thrive in that environment. With the knowledge you acquire you can read the daily press, financial magazines, and books to develop a list of companies for your own due diligence and the components of your own successful portfolio.
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