Investing is not hard. The secret is to put in money today, and get back more in the future. Haha. If it is only as simple as that.
Value investing is simple. Find companies selling below intrinsic value, and wait for Mr Market to recognise its true worth and sell it back to him.
Buffett told us to invest in our 'circle of competence', and Munger said that it is the wise that operate within their circle of competence.
Circle of competence in my understanding, is to truly understand the business you're investing in. Its like if you're the 100% owner of the business, do you know what forces affects you business and what is your company's edge? Phillip Fisher has laid out all the 'steps' and questions to ask to help individual investor ask the right question. Yet for the past 2-3 weeks, after attending numerous analyst meeting, i realise few analyst cared about the business, but more about the financials.
People asked questions on sales growth, margins, SGA, ROE...but few questions was asked regarding what give rise to these numbers. Accounting and financial figures are simply a way of trying to express BUSINESS in a manner that every one agree upon. If we don't understand the business that is underlying those numbers, any sort of financial analysis or projection is not meaningful.
Furthermore, if numbers are expressed in a way that almost NO ONE understands, then what's the point of disclosing the numbers in the first place? Thus accounting principle should be reasonable and generally followed.
Read this article on Royal Sporting House on its weird line items in the income statement. Kudos to Jamie Lee, the reporter that covered this story. And boohoo to all those companies that have WEIRD accounting policy (that follows FRS but expressed in a convoluted way) and those pple who stayed in their aircon room and dream up weird accounting policies (yaya...those economist who want to 'fair value' every thing).
Re-reading Fisher's Common Stocks and Uncommon Profits. See new things that i've never seen before. Btw, i think as a general rule, if u see that cash flow from operations and income statement has NO RELATION,buyers bewares!'
...mmm....off to memorise choir scores. So happy that our Ajalumnichoir sounds like a choir now. haha. Amazing amazing.
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