vienna value investing meetup #3
TRANSCRIPT
Vienna Value Investing Meetup #3
PRESENTED BY MARTIN BODOCKYSUPPORTED BY
Why this meetup?CREATE VALUE INVESTING HUB IN VIENNA
SHARE IDEAS AND EXPERIENCE AMONG MEMBERS
DOING INVESTMENT RESEARCH TOGETHER
THIS IS AN OPEN DISCUSSION MEETUP, PLEASE ASK WHENEVER YOU LIKE
DisclaimerWE ARE NOT INVESTMENT ADVISORS.WE ARE NOT RECOMMENDING TO BUY OR SELL.ANY DECISION YOU CONCLUDED FROM THIS SESSION IS YOURS NOT OURS, YOU ARE IN CONTROL.
Agenda1. WHAT IS VALUE INVESTING2. VALUE INVESTING FUNDAMENTALS3. MY TIPS FOR BECOME A VALUE INVESTOR4. WHAT’S NEXT
Why should we invest?
Investing in general• INVEST MONEY WHICH YOU CAN AFFORD
TO LOSE• MARKET CAN REMAIN IRRATIONAL
LONGER THAN YOU CAN REMAIN SOLVENT • PREPARE BUY AND EXIT STRATEGY
Stock Market Investing opportunities
Trading Spread betting
Value Investin
gFutures
Facts based short term
Facts based long term
Speculation based short term
Speculation based long term
Trading• TRADING IS BASED ON TECHNICAL ANALYSIS
AND MOMENTUM• TRADING IS AN ACTIVE STYLE OF
PARTICIPATING IN THE FINANCIAL MARKETS THAT SEEKS TO OUTPERFORM TRADITIONAL BUY-AND-HOLD INVESTING.
• TRADERS LOOK FOR SHORT-TERM PRICE MOVES TO PROFIT IN BOTH RISING AND FALLING MARKETS.
Spread betting• SPREAD BETTING IS A DERIVATE STRATEGY,
WHERE PARTICIPANTS DO NOT ACTUALLY OWN THE UNDERLYING ASSET THEY BET ON, SUCH AS A STOCK OR COMMODITY.
• SPREAD BETTORS SIMPLY SPECULATE ON WHETHER THE ASSET'S PRICE WILL RISE OR FALL USING THE PRICES OFFERED TO THEM BY A BROKER.
Value Investing• VALUE INVESTING IS PROCESS OF
DISCOVERING TRUE BUSINESS VALUE VIA FUNDAMENTAL ANALYSIS
• VALUE INVESTING IS BASED ON FACTS• VALUE INVESTING AIMS TO USE VOLATILITY
ON MARKET
Futures• FUTURES ARE FINANCIAL CONTRACTS
OBLIGATING THE BUYER TO PURCHASE AN ASSET OR THE SELLER TO SELL AN ASSET, SUCH AS A PHYSICAL COMMODITY OR A FINANCIAL INSTRUMENT, AT A PREDETERMINED FUTURE DATE AND PRICE.
• FUTURES CONTRACTS DETAIL THE QUALITY AND QUANTITY OF THE UNDERLYING ASSET.
Value of patience
Value investing VS Day Trading• TRADING IS BASED ON TECHNICAL
ANALYSIS AND MOMENTUM• TRADING IS NOT BASED ON TRUE VALUE
OF BUSINESS
• TRADING IS SHORT TERM STRATEGY• VALUE INVESTING IS LONG TERM
STRATEGY
Value investing fundamentals #1• COMPANIES HAVE INTRINSIC
VALUE• BEFORE YOU BUY AN INVESTMENT
SECURITY, YOU AIM TO ESTIMATE ITS TRUE VALUE
Margin of safety
Value investing fundamentals #2• ALWAYS APPLY A MARGIN OF
SAFETY• IT IS OUR ALLOWANCE FOR ERROR• IT MAKES US LESS LIKELY TO LOSE
MONEY IF THE STOCK DOESN'T PERFORM AS WE HOPE.
Value investing fundamentals #3• THE EFFICIENT-MARKET
HYPOTHESIS IS WRONG• IT SAYS THAT STOCK PRICES ALREADY
TAKE ALL INFORMATION ABOUT A COMPANY INTO ACCOUNT.
• VALUE INVESTORS BELIEVE THAT SOMETIMES STOCKS ARE UNDER-PRICED OR OVER-PRICED.
Contrarian investing
Value investing fundamentals #4• SUCCESSFUL VALUE INVESTORS
DON'T FOLLOW THE HERD• THEY POSSESS MANY
CHARACTERISTICS OF CONTRARIANS WHEN EVERYONE ELSE IS BUYING, THEY'RE OFTEN SELLING OR STANDING BACK. WHEN EVERYONE ELSE IS SELLING, THEY'RE BUYING OR HOLDING.
My way of becoming value investor• I DON’T HAVE MBA OR CFA , BUT I HAVE A
GENUINE INTEREST IN STOCK MARKET AND BUSINESS UNDERSTANDING
• MY BEHAVIOURAL TIPS WHICH HELP ME TO BE MORE CONSISTENT
• EVERY VALUE INVESTOR NEEDS HIS/HER INVESTMENT CHECKLIST
Value Investor tip #1• I DETACH MYSELF FROM DAILY NOISE
AT STOCK MARKET• I CHECK STOCK PRICES AS INFREQUENTLY
AS POSSIBLE• WHEN WE SEE CHANGING A STOCK PRICE,
THAT CAN CREATE FEELING WE NEED TO ACT UPON IT
• HELPS AVOIDING OVER TRADING
Value Investor tip #2• IF SOMEONE TRIES TO SELL ME
SOMETHING AND HAS SELF-INTEREST, I WON’T BUY IT
• I NEED TO BE FIRM, I ALWAYS DO MY OWN RESEARCH
• IT BUILDS CONFIDENCE IN COMPANY AND MY SANITY IF PRICE GOES IN OPPOSITE DIRECTION
• HELPS AVOIDING TO BE PUSHED TO BUY OR SELL
Value Investor tip #3• I WANT TO FEEL COMFORTABLE WITH
TRUE VALUE OF BUSINESS BEFORE I START LIKING ITS MANAGEMENT
• IN MOST CASES THE MANAGEMENT ARE SALES MASTERS AND HIGHLY LIKABLE PEOPLE
• MAKE IT AS LAST CHECK BEFORE INVESTING
• HELPS TO CUT THE NOISE
Value Investor tip #4• I GATHER INVESTMENT RESEARCH IN
“RIGHT” ORDER• CHECK MOST RESPECTABLE INFORMATION
FIRST• ANNUAL REPORTS, 10K/10Q REPORTS,
YOUR FINANCIAL MODELS, PRESS RELEASE• CHECK WALL STREET RECOMMENDATION
LAST
• HELPS BUILDING MY UNDERSTANDING OF BUSINESS
Value Investor tip #5• I DISCUSS YOUR INVESTMENT IDEAS
ONLY WITH PEOPLE WHO HAVE NO AXE TO GRIND
• MANY PEOPLE, MANY OPINIONS NOT ALL ARE EQUAL
• CREATE A GROUP OF TRUSTED INVESTORS
• HELPS AVOIDING TO BE INFLUENCED
Value Investor tip #6• I RARELY BUY OR SELL WHEN THE
MARKET IS OPEN• DECIDE YOUR ACTION WHEN MARKET IS
CLOSED• I SET PRICE LIMIT AND LEAVE THE
BROKERAGE ACCOUNT• I KEEP DISTANCE FROM DAILY PRICE NOISE
• AVOID BEING ABSORBED
Value Investor tip #7• IF A STOCK TUMBLES AFTER I BOUGHT
IT, I DON’T SELL IT FOR “TWO YEARS”• THIS HAS REFLECTION AND LEARNING
PURPOSE• WHEN I BUY INTO COMPANY I WANT TO BE
MAKE SURE TO KEEP IT AT LEAST FOR TWO YEARS, EVEN IT LOST 50% OF PRICE SUDDENLY AFTER PURCHASE
• HELPS TO AVOIDING QUICK BUY FROM EXCITEMENT
Value Investor tip - Bonus• I DON’T TALK ABOUT YOUR CURRENT
INVESTMENT • I WILL NEVER KNOW WHO WILL USE MY
WORD IN DIFFERENT TIME AND PLACE
• HELPS AVOIDING A CONFLICT OF INTEREST
Value Investor tips• THEY ARE NOT RULES NOR
GUIDELINES, THEY ARE MY LEARNT LESSONS
• I WILL PROBABLY BREAK AND CHANGE SOME OF THEM IN FUTURE
• TO HAVE THEM IS HELPING ME TO BE FOCUSED AND SORT OF CONSISTENT
• EVERY VALUE INVESTOR SHOULD HAVE SOME OF HIS/HER OWN
Investment Checklist part #1
• CIRCLE OF COMPETENCE – INDUSTRY, SECTOR EXPERIENCE
• RISK AVERSION – VOLATILITY OF SECURITY
Investment Checklist part #2
• DIVERSIFICATION – BETA, INDUSTRY, SIZE
• GOAL APPROACH(TIME LIMITED INVESTMENTS)
Any questions?
Next sessions• THIRD WEEK IN APRIL – RESEARCH GROUP• FIRST WEEK IN MAY – BEGINNERS GROUP• ANY IDEA ? - PLEASE PARTICIPATE