Building Wordly Wisdom, What I’ve Been Doing, And What I Am Doing

What I’ve Been Doing

As you may have noticed over the past several weeks/months I haven’t posted any company analysis articles.  Since finishing up and publishing the book in September I have been back searching for companies to write articles about and potentially to invest in.  Up to this point I have only been able to add companies to my watch list because everything I have found has been either crap or if it has been a company I want to invest in (some even with some substantial competitive advantages) have all been overvalued.  I have searched in countries around the world, on the OTC markets, at higher market caps than I usually look at, spin offs, ADR’s, etc and here are my observations thus far.  The following does not mean that I think the market will crash anytime soon.

  1. Every single company I have found that I want to invest in is overvalued.  Most just marginally but I did find a company in Japan that I estimated to be worth AT BEST $20 a share and it was selling for more than $100 a share.  Companies with some kind of competitve advantages that I have found and want to invest in are overvalued in comparison to the other cigar butt type companies that I will mention next
  2. The cigar butt type companies with high cash, low debt, marginal to poor profitability, no moats that I would invest in if they were undervalued enough have been up to this point generally fairly valued in my opinion.
  3. The companies that I have found to be undervalued enough for me to invest in have all been terrible companies with very low to no cash, high debt, severely declining businesses, unprofitable, Chinese companies, etc that I will likely never touch.
  4. Markets, or at least individual companies, around the world are in my estimation fairly valued or overvalued at least at the micro level.  I have searched in the US, Europe, Asia, and South America for companies to invest in and the companies around the world have all fit into one of the three above categories.  Most in the fairly valued to slightly overvalued range.

As you know if you have read this blog for any amount of time I like to put my money where my mouth is, buy the companies I find to be good investments, and write analysis pieces about them.  I haven’t even found any particularly egregious or interesting companies to write negative articles about either like I did with Wendy’s in 2012, and Koss last year.  The Japanese company I found and alluded to above was a very well run company that I would possibly invest in if it weren’t so overvalued so I didn’t feel a need to write negatively about them.

The reasons above are why I have not been writing more on this blog which I frankly hate to not be able to do but I will not write half-hearted, vague, non quality company analysis articles just to keep the flow of content going.  I also will not write my thoughts on other general investing, the process of investing, and other value investing topics because people like Oddball Stocks, Wexboy, CSInvesting, The Red Corner Blog, and others write much better than I can about those kinds of things.

Building Wordly Wisdom and What I Am Doing

In December I decided that I needed to stop banging my head against the proverbial valuation wall since I have now built up a watch list of around 25 companies.  Far more than I ever would invest in at one time and already far more than I want to keep track of at one time.  For the past two years I have spent nearly 100% of my time either learning about investing or writing the book.  Since December I have decided to spend about 50% of my time searching for companies, adding and discarding companies from my current watch list, so that only the best companies are on there when valuations do become better.  The other 50% of the time I have caught up on some much needed reading that I severely neglected over the last two years while I was building my value investing knowledge, investment processes, and writing the book.

The below has been done in the last three weeks and is an example of what I will continue to do while awaiting a market crash and investment opportunities.

4 books read:

  1. Poor Charlie’s Almanack
  2. Guns, Germs, and Steel
  3. Only The Paranoid Survive
  4. Tulipomania

~500 companies evaluated at at least a minor level, vast majority discarded as only 2% of companies I decided to do further research into.

10 company annual reports and financials read

5 companies valued.

4 companies added to watch list

The above list does not contain anything like articles that I have read on the internet.

In addition to this blog being about company analysis, teaching, and learning about value investing, it is also a bit of a journal so that I can keep track of things that I have done, learned from, and to look back to see where I could have improved.  In that vein I periodically plan to update the list above of things I have done to keep track of where I have been.

Until the market crashes I will be doing the above, as Mr. Munger puts its, building my wordly wisdom, among other things like posting links that I have learned from, and depending on how long it takes for the market to crash go back to learning Mandarin again.   I have a couple ideas in mind of things that I can do to learn and practice in the meantime and will share any of those if they come to fruition. I will also be giving away some of the books I have read and will announce the first giveaway soon.

For now though I am going to get back to my current research list of OTC’s and ADR’s.

Excellent Links From When I Was Writing How To Value Invest Part 2

In Part 1 of this series I posted links about how Whopper Investments got into the Value Investors Club, Berkshire Hathaway, Moats, a fantastic new blog, and other links with excellent information.

Part 2 will contain a gold mine of information about and from Sanjay Bakshi (The Fundoo Professor), how to value gold mining companies, How Zynga went from a powerhouse to a has been, free Wharton Business School classes, and much more.

Value Investing The Sanjay Bakshi Way Part 1

Value Investing The Sanjay Bakshi Way Part 2

Value Investing The Sanjay Bakshi Way Part 3

Value Investing The Sanjay Bakshi Way Part 4

A list of nearly 50 articles, talks, and interviews from and about Sanjay Bakshi.

http://www.safalniveshak.com/  The entire blog is amazing and highly recommend that everyone goes back and looks through the whole blog.

The treasure trove of information above I got from John over at Shadowstock and is why it took me a little while longer than I thought it would to get back to researching companies.  There is so much good information on the sites above that it could take weeks or months to go through it.  Thanks a lot John as the information above is some of the best I have learned from in a long time and hope that you all will learn a lot from it too.

Gold Mining Case Studies from CSInvesting.

How Zynga Went From Social Gaming Powerhouse to Has-Been.  Long but excellent article from Arstechnica.

Wharton Puts Its First Year MBA Courses Online For Free.  I have not signed up for these and do not plan to take them but thought I would put them on here for anyone who may be interested.

The Buffett Formula On How To Get Smarter.  Another fantastic article from Farnam Street.

Excellent Links From When I Was Writing How To Value Invest Part 1

Excellent Links From When I Was Writing How To Value Invest Part 1

While I was writing How To Value Invest I did not do very much learning about value investing.  I did however save every link that I thought might contain some excellent information from those emails dating back to February, and plan to share what I think the very best links were from that time frame over the coming weeks while I am researching companies again.

Hedge Fund Letters – Shareholder letters from a bunch of different funds including Baupost, Fairholme, Berkshire, Fairfax, and many others.

Contrarian Investing In Quality Franchises – From Beyond Proxy and author Oliver Mihaljevic.

Walking Away From A Few Million Dollars Part 5 – This is from Ragnar is a Pirate and is the conclusion piece on a potential real estate investment and the potential pitfalls of investing in real estate.

How Morningstar Values Berkshire – Goes through multiple different valuation techniques and values Berkshire Hathaway.

How To Get Into The Value Investors Club by Whopper Investments who recently got accepted into VIC, something I have failed twice at thus far.  Hopefully I picked up some pointers from Whopper for my next attempt.

Punchcard Investing Blog – An excellent new blog which concentrates on companies with moats and competitive advantages.  I highly recommend going back and reading the entire blog.

What Was The Biggest Turning Point In Your Life?  Excellent article from BenPhilabaum.com about making small incremental changes every day instead of waiting for that one big break.

Quickly Master Any Skill The Tim Ferriss Way By Learning Out Of Order by Lifehacker.  This is a 24 minute video that is well worth your time if you want to learn things more efficiently.

Why Berkshire’s McLane Has A Moat and are There Similar Companies in Asia from Beyond Proxy.  Excellent piece on one of Berkshire’s subsidiaries, how to spot moats, what builds a moat, etc.

The Greatest Investment Book Ever Written from The Brooklyn Investor.  Not your typical investment book recommendation.

Buy How To Value Invest Right Here, Right Now!

Buy How To Value Invest Right Here Right Now!

After almost nearly a year of planning, writing, editing, marketing, etc the book has now launched and is available in several languages around the world!  Please share this page with as many people as possible.  Thank you all so much.

As you will see below I had to make some changes to the packages due to restrictions from some of the sites I am using to sell the book at.  There is also a change when it comes to the actual prices of the eBook and paperback as well.  The different packages will be explained below.  Since apparently Amazon does not allow coupons to be sent to people, and I cannot figure out how to set up a sales price, I have dropped the price of the eBook packages and paperback by 25% for the time being instead of sending coupons to everyone.  This is still technically the sales price and I do plan to raise the prices up back to their normal levels at some point so if you want the 25% discount on ALL PACKAGES BELOW please order the book as soon as possible.

Also, if you could please take 30 seconds of your time to review the book on Amazon and send me testimonials of the book that I could post on the blog I would greatly appreciate it.

Preview Chapters If you would like to preview the book first please go to this link to download the introduction and first four chapters of the book.

If you still aren’t sure check out the first 5 star review of the book on Amazon here.

Direct eBook Packages From Value Investing Journey with Discount are at the top. Amazon orders are in the middle of the page, and the link to buy the paperback is at the bottom of the page.

How to value invest cover for Amazon (2)

Basic eBook package $29.25

~320 page book that contains all the best information I have gained over the last 5 years that will teach you everything you need to know to become an excellent value investor.

Continued access to all the free content I put on the adjoining blog.

How To Value Invest: How I Taught Myself To Become An Excellent Value Investor And How You Can Too

Silver eBook package $75

~320 page book that contains all the best information I have gained over the last 5 years that will teach you everything you need to know to become an excellent value investor.

Continued access to all the free content I put on the adjoining blog.

1 hour of research that I will do on any requested company you would like me to look into OR a 1 hour critique of an article/report that you are getting ready to write for work or college classes.

I will look at one of your entire articles or investment thesis, do a bit of research into the company myself, and give you feedback on where I think you can improve.

Will receive the extra 3 chapters I cut from the book, an extra approximate 30+ pages, even if you did not preorder.

How To Value Invest: How I Taught Myself To Become An Excellent Value Investor And How You Can Too Silver Package

Gold eBook package $750

~320 page book that contains all the best information I have gained over the last 5 years that will teach you everything you need to know to become an excellent value investor.

Continued access to all the free content I put on the adjoining blog.

1 hour of research that I will do on any requested company you would like me to look into OR a 1 hour critique of an article/report that you are getting ready to publish for work or college classes.

I will look at one of your entire articles or investment thesis, do a bit of research into the company myself, and give you feedback on where I think you can improve.

I will do full research into any company you want me to (Excluding all financials except insurance companies, pharmaceuticals, and natural resource/mining companies) and write-up a full length article on them for you giving my thoughts on if they would be a potentially good investment now.  Approximately 100+ hours of work goes into researching and writing a full length article.  The article will remain my property with my name on it and I will be allowed to post it on my blog and anywhere else I see fit.

Will receive the extra 3 chapters I cut from the book, an extra approximate 30+ pages, even if you did not preorder.

How To Value Invest: How I Taught Myself To Become An Excellent Value Investor And How You Can Too Gold Package

Amazon Kindle eBook $29.25

How to value invest cover for Amazon (2)

 

Each different link below is for each separate countries Amazon.  I am assuming this means that if you want the book in a certain language other than English that you need to click on the proper country link below.  Amazon also warns that it could take up to 48 hours for the Kindle version to be ready in languages other than English so if it does not work right away come back and buy it later please.

Amazon Affiliate, Createspace Paperback Book cover by Lilam

Buy The Paperback Edition Here for $37.

You will also be able to buy the paperback directly from Amazon once the Kindle version and paperback versions are linked.

Book Cover Design Contest For How To Value Invest, Answering A Reader’s Email To Me, Graham-Newman Letters, And A Mini Review of The Einstein of Money

Started A Book Cover Design Contest For My Upcoming Book How To Value Invest

I started a book design contest on 99designs.com yesterday for my upcoming book How To Value Invest.  The first several submissions are excellent and I am extremely excited to see what I finally decide on.  The contest winner will win a portion of the $299 prize so if you know anyone who is creative please pass this along to them.  The contest for my book can be viewed here.  Seeing the potential book covers with my name as the author on the cover and the title is very surreal and exciting thing.

Answering  A Readers Email To Me

I received this email yesterday and wanted to share my response with everyone.  I have edited out this persons name, place of residence, and the university they are studying at to keep the persons privacy intact.

Dear Mr. Jason Rivera,

I really appreciate your hard work you are putting in your site and I am an avid reader of it. I would like to seek your advice regarding a decision I am facing. My goal is become a value investor and establish my own asset management firm to manage my own money and other people’s money. Right now, I have the opportunity to pursue partnership in my family business and be able to run it along with my father. I am 23 years old, and I am a freshman student at the blank university. If I am to be a partner in my family business, I have to drop out from the university and travel to Dubai, United Arab Emirates, where the business is. I am still a freshman student because when I was 19 years old, I dropped out to establish my own business in the same industry as my family in blank country. I had an experience running a business and I had the opportunity to sell my business after two years of operation to my cousins, and, thankfully, it was a profitable venture.

My family business is somehow facing sales shrinkage and cash flow problem due to low capital (my family made terrible mistakes in managing it) and economic downturn. They are specialty contractors and manufacturers of fenestration products (windows, doors, kitchens, curtain walls, and rolling shutters). If I am to work with them, I can be able to help them in reorganizing the company. It might be risky for me, but if everything worked out well enough, I will have earnings that I believe is better than being an employee.

I am facing a decision that I need to make. You might not be able to advice me, but whatever advice you give me, I appreciate it. If my goal is to manage my own money and other people’s money by establishing my own asset management firm, is it helpful to have a university degree or the experience of having ran a business? Shall I drop out and pursue my family business opportunity? If I am to continue studying, I will incur student loan debt which I won’t prefer. But, alas, I will do it if it need be to accomplish my goal. Thank you a lot.

My response below to this very important question.

Nice to make your acquaintance and thank you for your kind words about my blog and work, I greatly appreciate it.

I will let Warren Buffett give you some advice before I give you my thoughts. “I am a better investor because I am a businessman, and a better businessman because I am an investor.”

I am admittedly biased against college due to how much money you have to pay, for classes that you do not want to take, and for the return that you get on your money after graduating.  I have not been able to go to college due to health reasons.  Most of my friends and family have gone to college, finished with at least a Bachelor’s degree (or sometimes even a Master’s Degree) and almost all of them have had problems finding jobs or being paid what they should be getting paid, all the while being saddled with hundreds of dollars a month payments due to student loans payments.  From all the people I know who have gone to college I do not think it is worth it unless you want to become a doctor, nurse, engineer, teacher, or a related field like those.  Almost everything else can be learned online for free/cheap now.  Almost every person I know who has gone to college and has graduated with Bachelor’s or Masters degrees have been told when they look for a job that the reason they weren’t being hired, or weren’t getting paid more, was because they didn’t have ENOUGH EXPERIENCE.  Experience is still king in most cases. I have been told many times that I know more about investing than most MBA’s and professional level investors and I am completely self-taught from mostly free resources I have found online.

The only reason you will need a degree is if you want to work at an investment firm since most people won’t even look at your application unless you have a Bachelor’s degree or are a CFA.  If you want to be your own boss this isn’t necessary.

If you want to open up your own investment firm it is most likely going to be better for you to quit school (You can always take classes online if you do want a degree) and gain all important experience and contacts by working at your family business.  I would also recommend taking some of the money you do earn, invest it, refine your processes, get better, and keep track of your returns.  The main thing potential investors in your firm will be looking for won’t be degrees, it will be your investment track record and how well you have done over time in your own portfolio and the portfolios that you manage.  I would also recommend starting a blog so your record can be public and people can see how you have done over time as well.  You will also get great feedback and improve a lot faster this way as well.  Since starting a blog I have improved more in the last year than in I did in all the previous four years combined.

Remember that I am very biased against going to college because in most cases I do not think that it is worth it so keep that in mind when thinking about what I have said.

I also have packages of my upcoming book where I will give you advice and critique your work as well if you would want me to help you on the investment front.  If you would like further instruction let me know and we can work something out as well.  I love to teach and help so please let me know if this interests you at all.

I hope this has helped, please let me know what you decide, keep me up to date with how things are going, and let me know if you would like me to help you in any way that I can.

Jason Rivera

Value Investing Journey

After I sent that email I realized that I forgot to include a few things that I wanted to but forgot to include.

  1. Treat everything that you do as a learning experience.
  2. Do the best that you possibly can at everything.
  3. Give 100% effort and focus to everything that you do.
  4. Try to improve yourself every day.
  5. Learn something new every day.
  6. Push yourself out of your comfort zone every day.

If you can do the above things on a consistent basis you will do very well in whatever you choose to do.

Do any readers have any other input on this situation, maybe someone who has a contrasting point of view to mine or maybe something that I missed about this situation.

If anyone else has any other questions you would like to ask me I would love to have you email me and converse with you and I will try to help you out in any way that I can.

Graham-Newman Letters

While I was finishing up listening to the audio book of The Einstein of Money: The Life and Timeless Wisdom of Benjamin Graham the other day the conclusion part of the audiobook mentioned that some of Benjamin Graham’s shareholders letters from his partnership had been transcribed and circulated.  I immediately searched for them and found the Graham-Newman partnership letters and wanted to share them with you.  As I tweeted out the other day I cannot believe that I did not know about these before and I am going to start reading through them immediately.

I would also like to mention that if you have ever been interested in listening to an audiobook before I highly recommend Amazon affiliate Audible.com.  They are offering two free audiobooks when you sign up for a free trial right now.

Mini Review of The Einstein of Money: The Life and Timeless Wisdom of Benjamin Graham

I only got to listen to one book on my trip and it was one I had wanted to read for a long time and I am glad that this was the audiobook that I picked.  The Einstein of Money is a must read for Benjamin Graham admirers or value investors of any stripe.  The book is a biography of one of my personal investing heroes and chronicles his personal and investing life.  Even though I have read a lot about Graham and his investing methods I still found the book worthwhile, even for more advanced investors.  The book will be a great introduction to beginning value investors as well because it goes over most of his investing philosophy and techniques.  The book is a lot shorter and less dry than Security Analysis (Which I still recommend every serious value investor to read) and the Intelligent Investor (Still one of my all time favorite books) and since it is a biography delves into Mr. Graham’s personal life a lot.  I found a lot of the stuff on his personal life very interesting because I knew almost nothing about Mr. Graham outside of the investment world.  The book chronicles his failings as a husband, how he got started in investing, his outside interests (Who knew the man wrote many other books that weren’t related to investing and even wrote a couple plays), his college years, etc.

If you are even remotely interested in Mr. Graham the investor, his value investing philosophies, and learning more about his personal life than I highly recommend that you read or listen to this book.