Factor In Your Income Sources When Seeking Diversification

When it comes to diversification, you have to look at your entire life and not just your portfolio.  Several years ago there was a book I really enjoyed that dealt with this topic called Are You a Stock or a Bond?: Create Your Own Pension Plan for a Secure Financial Future. It explained some professions, [...]

from Joshua Kennon

A Hedge Fund vs. a Mutual Fund

In the next 2-5 years, depending upon what happens at the private businesses we own, I am seriously considering launching either a hedge fund or a mutual fund.  Both have significant advantages and disadvantages. A Hedge Fund The Pros: With a hedge fund, I could do almost anything I can do now in private business.  [...]

from Joshua Kennon

The Sugar Refiner Shares We Own Are Surprising Me (and More Portfolio Updates)

I hardly ever talk about the portfolios I manage (the last time was when I added Campbell Soup to the blue chip reserve portfolio in Some Changes In the Portfolio), mostly because investment ideas are rare.  Still, I write about it to the same extent I would be willing to discuss something over coffee with [...]

from Joshua Kennon

Value Investing from the Goldman Sachs Chief Investment Officer

Eileen Rominger, the Chief Investment Officer at Goldman Sachs, told Fortune magazine how she, as a value investor, ranks companies.  She had a very good answer.  It’s a sound process. Fortune Magazine: You’ve been a value investor for 30 years.  How do you decide whether a stock is attractively priced? Eileen Rominger: There are two [...]

from Joshua Kennon

The Postman Just Brought Gifts

The mail just arrived. I have the new Sears Holdings 10K, the Union Pacific 10K, the Panera Bread 10K, the Charles Schwab annual report, and a host of others. How on earth am I supposed to write now? I want to read!

from Joshua Kennon

How to Find Investment Ideas

Years ago, I wrote an article called Finding Investment Ideas for Your Portfolio for About.com, a division of The New York Times.  I’ve been thinking for the past few days about how it is that I seem to come across so many opportunities and then I realized that most people like me are always looking [...]

from Joshua Kennon

John Templeton and Value Investing

John Templeton was a billionaire mutual fund pioneer that specialized in using a value investing strategy to buy stocks around the world.  By practicing a disciplined version of Benjamin Graham’s teaching on a global scale, Templeton amassed an astounding record that made shareholders of his fund wealthy and earned him hundreds of millions of dollars [...]

from Joshua Kennon

Using Cash to Increase Your Value Investing Returns

One of the least discussed secrets of great practitioners of the value investing strategy is the use of cash, cash equivalents, and bonds to augment returns.  From Benjamin Graham and Warren Buffett to Wallace Weitz and Marty Whitman, intelligent use of excess funds has as much to do with growing your capital over the long run [...]

from Joshua Kennon

Focused Value Investing Strategy

The focus value investing strategy is different from traditional, Benjamin Graham value investing strategy because it is based upon the idea of putting money into more of an investor’s “best ideas”, as Warren Buffett put it.  Some value investors despise focused investing, while others swear by it.  I’m always very hesitant to talk about this particular [...]

from Joshua Kennon

Peak Earnings – A Common Value Investing Trap

Peak earnings are a common value investing trap that most often hurts inexperienced investors who look only at the earnings per share and not the underlying driver of those profits.  The last big round of peak earnings value traps occurred at the end of the housing bubble.  By knowing what to look for, you’ll be better equipped [...]

from Joshua Kennon

Value Investing vs. Growth Investing

As you become a better and more experienced investor, you may hear a lot about value investing versus growth investing.  The true professionals know, in the words of Warren Buffett, that value investing and growth investing are joined at the hip because all investing in value investing.  The growth rate of a company is a [...]

from Joshua Kennon

Earnings Yield as a Value Investing Strategy

Many famous portfolio managers that practice a value investing strategy have said they think of stocks as “equity bonds”.  Instead of receiving a fixed rate of return, like you would when you buy a traditional bond, you receive a variable return based on the company’s underlying profit.  This approach makes it easier to value a [...]

from Joshua Kennon

Mr. Market – The Famous Value Investing Allegory

In his classic treatise, The Intelligent Investor, Benjamin Graham, the father of value investing, created an allegory to help new investors understand how to think about stock prices and value investing in general. By using it, you can help protect yourself from overpaying for a stock, panicking when the market crashes, or doing foolish things [...]

from Joshua Kennon

Margin of Safety – The Secret Value Investing Strategy

The single most important concept in all of investing, according to Benjamin Graham and later confirmed by his star student, Warren Buffett, comes down to three simple words: Margin of Safety. What is the margin of safety?  How do you calculate it?  How important is it to developing a successful value investing strategy?  As you’ll [...]

from Joshua Kennon

Tweedy, Browne Value Investing

For years, my family has maintained a substantial portion of our retirement accounts through Tweedy, Browne & Company, the oldest value investing firm in the world. Originally serving as stock broker to the father of value investing, Benjamin Graham, Tweedy, Browne & Company converted to a money management company and eventually launched several highly successful mutual funds [...]

from Joshua Kennon

Common Characteristics of Value Investing Stocks

There are several common characteristics that often present themselves in stocks that are thought to be attractive to those who follow a value investing strategy.  These have been written about extensively by famous value investing firms such as Tweedy, Browne & Company, and even Benjamin Graham himself.  By understanding the traits that frequently manifest themselves with [...]

from Joshua Kennon

Charlie Munger Value Investing Strategy

Charlie Munger, the Vice Chairman of Berkshire Hathaway, former hedge fund manager, and billionaire value investor, was instrumental in changing Warren Buffett’s way of thinking about value investing. Charlie insisted that the investor would be better served by focusing on better quality businesses, even if the price were higher, because those businesses could be held [...]

from Joshua Kennon

Bill Ruane Value Investing Strategy

In 1950, William Ruane, or Bill Ruane as he was known, took a course on value investing taught by Benjamin Graham and David Dodd at Columbia University despite having graduated from Harvard Business School.  One of his classmates was Warren Buffett, with whom he formed a friendship.  Years later, when Buffett dissolved his investment partnership, [...]

from Joshua Kennon

Walter Schloss Value Investing Strategy

Walter Schloss, a legendary value investor who learned directly from Benjamin Graham, the father of value investing, never graduated from college and was hired as a runner on Wall Street in 1934, at the age of 18. Schloss enrolled in the New York Stock Exchange Institute, where he took courses from Benjamin Graham on how [...]

from Joshua Kennon

Benjamin Graham Value Investing Strategy

In addition to penning several of the most important value investing books in history, Benjamin Graham, the father of value investing, was one of the two partners in the Graham Newman Corporation, the investment fund through which he put money to work. It was at this firm that Warren Buffett worked early in his career, [...]

from Joshua Kennon

Value Investing 101

Some of the greatest investors in history have been value investors including Warren Buffett, Walter Schloss, the Managing Directors of Tweedy, Browne & Company, Bill Raune, and Eddie Lampert, just to name a few.  With hundreds of billions of dollars in wealth between them, you may be tempted to look into the value investing philosophy and [...]

from Joshua Kennon

Market Capitalization Asset Allocation

One particularly popular strategy used by asset allocation investors is to divide their stock investments into different “piles” based on market capitalization.  (If you are a new investor, you may not know what market capitalization is.  Market cap, as it is often called, is the price it would take to buy 100% of all of [...]

from Joshua Kennon

Tactical Asset Allocation and Your Portfolio

Tactical Asset Allocation vs. Value Investing The difference between tactical asset allocation portfolio management and value investing is that tactical asset allocation only seeks to find undervalued asset classes – not individual securities or investments. That is important.  An investor that is using a tactical asset allocation approach may look at stocks, bonds, real estate, [...]

from Joshua Kennon