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I Could Use a Mentor


bsned2
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Hello all,

 

I'm a brand new member of this board, and a fairly new student of value investing.  I've read some annual reports, read several books, investigated a few companies.  Haven't bought a thing yet.  (I have not one iota of finance background.  I do have a small comfort level with math, at least.  My career, crazily enough, has been for the most part in entertainment.)

 

As I read through these annual reports, I keep thinking: I could use a mentor.  You know, someone I could buy lunch once a month and ask questions like: "What does this part of the report mean, and do I need to know it?"  I'm pretty sure that eventually I could learn it all myself, but a smart person to bounce stuff off of would really speed up the process.  (Unfortunately there's no "Value Investing" class at my local community college.  Maybe there oughta be.)

 

Any idea how to start?  Or want to tell me not to bother?

 

Thanks so much, glad to have found this board,

 

Brian

:-\

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Hello all,

 

I'm a brand new member of this board, and a fairly new student of value investing.  I've read some annual reports, read several books, investigated a few companies.  Haven't bought a thing yet.  (I have not one iota of finance background.  I do have a small comfort level with math, at least.  My career, crazily enough, has been for the most part in entertainment.)

 

As I read through these annual reports, I keep thinking: I could use a mentor.  You know, someone I could buy lunch once a month and ask questions like: "What does this part of the report mean, and do I need to know it?"  I'm pretty sure that eventually I could learn it all myself, but a smart person to bounce stuff off of would really speed up the process.  (Unfortunately there's no "Value Investing" class at my local community college.  Maybe there oughta be.)

 

Any idea how to start?  Or want to tell me not to bother?

 

Thanks so much, glad to have found this board,

 

Brian

:-\

 

Brian - welcome to the board! While I (and many others, I'm sure) would be happy to serve as e-mentors, it strikes me that it might be useful for you to just continue this thread as your mentorship. Ask questions as they arise; you'll undoubtedly get responses from myriad sources. Plus, you may end up asking questions the rest of us wanted to ask but were too embarrassed :)

 

Jay

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Any idea how to start?

Thanks so much, glad to have found this board,

 

The best thing I did was read every thread on this board.  I started with the General section and I'm about half way through the Investment Ideas section. 

It is well worth your time, especially the posts during the financial crisis.  Most of the long time posters here explained what they did and why they did it. 

 

I found on certain threads that I wouldn't really have an interest normally, I could find little nuggets of info. Some threads it was just one line or one thought from a poster, kind of an "aha" moment.

Keep notes that you find important whether it's just someones reason for liking or disliking a company, certain things to look at in the financial statements or little bits of valuation wisdom.

 

Some of the best posts/thread are the for preferred shares, which normally wouldn't interest me.  But the wisdom from these guys here was priceless.

 

There are also a couple of threads on reading 10K's and how some of the guys here read them and decide what's important. (Everything at first is important  ;D , but with time you'll get better at what to read thoroughly and what you can skim)

 

Plus, you may end up asking questions the rest of us wanted to ask but were too embarrassed :)

Yes, and this too.  ;D

This board can be intimidating at first but most here are very accommodating with answering questions.

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Your mentor can be this board.

Ask away. But please ask questions intelligently.

 

Lately we have gotten quite a bit of this -

 

Stock Idea Thread Title

This stock looks cheap, and they sell stuff. I think it might be a good buy. What do you guys think?

 

Why would someone put 5 minutes writing a response to that when its obvious someone didnt put 5 minutes into the orginal idea.

I probably wouldnt go too far back in terms of reading all of these threads.

 

Here is how I find ideas.

 

I watch most episodes of BNN Market Call - http://www.bnn.ca/Shows/Market-Call.aspx

I find the Canadian market dirt cheap. I am from the US, and live in Australia. In Canada you can buy oil and gas, manufacturing, oil field services companies, and REITs, for less than 10x cash flow. I have bought for between 3-5x cash flow in all of those areas.

 

I find good value investors and follow them. I dont follow the big guys on Gurufocus, or dataroma. I follow small cap value investors. I have followed the CEO of Clarke into 2 ideas. I have picked up investments in 2 ideas from here - http://www.valueinvestigator.com/en/valuefavourites/    I think Eric Nuttal is one of the best oil and gas investors I have come across and I always listen for his thoughts....

 

I review every single idea that comes up on VIC. http://www.valueinvestorsclub.com/Value2/Idea/Index.aspx

I dont have a membership. After 2 months all ideas open up. Often times something is on VIC and there is a discussion of the idea on here, I will tend to join that discussion.

 

I have this forum on RSS, and read most threads in real time.

 

 

Those are my recommendations. If you stick with it you will be fine. The math is the easy part, and if you can multiply you will be fine. The philosophy and mindset are the more interesting bits. There is a strategy / way of looking at investing which works for you. Your job is to find it, without latching on to too many other things....

 

Let me know if you have any additional questions.

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You do not need a mentor.  Follow these 10 steps and you will ensure your place in the value investor hall of fame. 

 

1.  Be able to converse in Sanskrit.

2.  Get an "I luv WEB" tattoo.

3.  Develop a working knowledge of Shawshank Redemption.

4.  Be a playa.

5.  Be able to lip sync effectively to Wham's "Wake Me Up Before You Go-Go".

6.  Post any thought you have on this board the second you have it.

7.  Understand that one of "turnarounds never turn", "better to buy a wonderful business at a fair price than a fair company at a wonderful price" and "growth and value are joined at the hip" can be used as a reply 100% of the time in any investing conversation and with that you will give your opponent a KO and you can walk away (see #4 for how you should act in that situation).

8. Publicly* denounce the use of "LOL" and emoticons except in the case of an emergency.

9.  Realize that concentrated positions are by far the best way to invest and share this point loudly and proudly.

10.  Use the word "guru" to refer to any well known value investor.

 

You are now ready to walk among the value gods.  Hopefully this advice is not just useful for you, but for others as well.

 

 

* In front of 50 or more persons.

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Your mentor can be this board.

Ask away. But please ask questions intelligently.

 

Lately we have gotten quite a bit of this -

 

Stock Idea Thread Title

This stock looks cheap, and they sell stuff. I think it might be a good buy. What do you guys think?

 

Why would someone put 5 minutes writing a response to that when its obvious someone didnt put 5 minutes into the orginal idea.

I probably wouldnt go too far back in terms of reading all of these threads.

 

Here is how I find ideas.

 

I watch most episodes of BNN Market Call - http://www.bnn.ca/Shows/Market-Call.aspx

I find the Canadian market dirt cheap. I am from the US, and live in Australia. In Canada you can buy oil and gas, manufacturing, oil field services companies, and REITs, for less than 10x cash flow. I have bought for between 3-5x cash flow in all of those areas.

 

I find good value investors and follow them. I dont follow the big guys on Gurufocus, or dataroma. I follow small cap value investors. I have followed the CEO of Clarke into 2 ideas. I have picked up investments in 2 ideas from here - http://www.valueinvestigator.com/en/valuefavourites/    I think Eric Nuttal is one of the best oil and gas investors I have come across and I always listen for his thoughts....

 

I review every single idea that comes up on VIC. http://www.valueinvestorsclub.com/Value2/Idea/Index.aspx

I dont have a membership. After 2 months all ideas open up. Often times something is on VIC and there is a discussion of the idea on here, I will tend to join that discussion.

 

I have this forum on RSS, and read most threads in real time.

 

 

Those are my recommendations. If you stick with it you will be fine. The math is the easy part, and if you can multiply you will be fine. The philosophy and mindset are the more interesting bits. There is a strategy / way of looking at investing which works for you. Your job is to find it, without latching on to too many other things....

 

Let me know if you have any additional questions.

 

Myth. Curious which Clark? Harland Clark?

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  • 2 weeks later...

OK -- again thanks everyone.

 

I've read a bunch of 10K's, read a lot on this board, read several books.  I did fairly extensive research on UHAL (because I read about it on some blog), which took me weeks, and I decided to "fake buy" it -- meaning, just noting the price at which I would have bought it and keeping track as if I own it.  (It's something I'm doing before I put real money at stake.)  I bought at 282, and it's now at 296, and my wife is a little impressed.  But I told her, we have to be in these things for the long haul (no pun intended), a jump up or a jump down in price shouldn't faze us.

 

Anyway I'm a little flummoxed as to what company to research next?  Of course I've got my list, cobbled together from blog discussions, Berkshire ownership, stocks my Dad bought, etc.  But at this point researching a company takes me a long time, because I'm still learning.  I could also use a stock screener to find low P/Es, or yearly lows, etc. but that seems so random

 

When your slate is clean, how do you guys decide what to research next?

 

(Thanks so much!)

 

Brian

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When your slate is clean, how do you guys decide what to research next?

 

Look up what Buffett has said and written about the concept of a "circle of competence", I think that will be helpful.

 

Either start withs something you already know well and keep going deeper and wider, or pick something that interests you and focus on that industry for a while (ie. if you want to learn about insurance, there's tons to read on the web, and you can study the top companies in that industry). Even if you don't find any investable ideas right now, it's ok. You are just building out your circle of competence. It'll come in handy later.

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what the hell do you need a mentor for with almost all human knowledge at your fingertips with the internet. To pour the skill of investing in your lazy ass without much effort? A better question would be, what books to read.

A lot of smart people have said that temperament is the most important factor: not more data. In that case, learning from someone else's experience seems like a good way to refine and mature your own temperament, does it not?

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what the hell do you need a mentor for with almost all human knowledge at your fingertips with the internet. To pour the skill of investing in your lazy ass without much effort? A better question would be, what books to read.

 

Not everybody learns the same way. I learn best by myself, reading. Some people learn better from other people.

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what the hell do you need a mentor for with almost all human knowledge at your fingertips with the internet. To pour the skill of investing in your lazy ass without much effort? A better question would be, what books to read.

A lot of smart people have said that temperament is the most important factor: not more data. In that case, learning from someone else's experience seems like a good way to refine and mature your own temperament, does it not?

yeah but almost every good investor out there has written a book or two. Or a lot of letters in buffett's case. Burry's write ups. VIC write ups etc. You don't really need a mentor if you want to go in investing.

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Sure, but I think it could be very helpful. Reading isn't the same as applying your knowledge in the real life. You played poker, right? Coaching is also very popular there, and for good reason. You can read every book & watch every instruction video about poker ever made but you will still play like shit. Somebody who points out glaring errors, makes you think about plays in a new way and challenges your reasoning process can greatly enhance your play. Coaching also happens & is useful for students, new company employees, all athletes, politicians and criminals. Basically for everybody - and with good reason.

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I review every single idea that comes up on VIC. http://www.valueinvestorsclub.com/Value2/Idea/Index.aspx

I dont have a membership. After 2 months all ideas open up. Often times something is on VIC and there is a discussion of the idea on here, I will tend to join that discussion.

 

Thank you so much! I thought this was a closed community. I immediately made an account. Looks like I have my weekend filled up ;)

 

Oh and OP: I assume you read "The intelligent investor"? It's one of the best books I ever read. I probably should read it again soon, it's been a few years :)

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Sure, but I think it could be very helpful. Reading isn't the same as applying your knowledge in the real life. You played poker, right? Coaching is also very popular there, and for good reason. You can read every book & watch every instruction video about poker ever made but you will still play like shit. Somebody who points out glaring errors, makes you think about plays in a new way and challenges your reasoning process can greatly enhance your play. Coaching also happens & is useful for students, new company employees, all athletes, politicians and criminals. Basically for everybody - and with good reason.

I can speak for poker, but with poker information usually wasn't so open out there. There are some coaching sites, but they didnt tell everything.  There was one guy and he did a certain thing really well and I got coaching from him. But only because the information wasn't freely available. But with investing all the best investors put out their mistakes and best picks out there in painstaking detail. With a lot of other professions you usually want to guard valuable information more closely because it is more a zero sum game. Or it is less a matter of sitting back and thinking, and more a matter of doing it just right in the moment. I think valueinvesting is pretty unique in that regard.

 

I personally think if you don't have that attitude of wanting to read everything you can about it, valueinvesting is probably not for you. You constantly have to read tons of books, articles and boring reports to get better. So if you cannot be bothered to read even the basic books on it, then maybe you should do something else. Probably a very important reason buffett is so succesfull is because he spends so much time reading. The only reason he got mentored by graham was because there was not nearly the same amount of detailed information out there. He had to get it from graham.

 

So yeah start here:

http://www.cornerofberkshireandfairfax.ca/forum/books/

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Advice above is good.  The board has been my mentor, and a source of stability.  i.e. Sometimes, I get overly enthused about an idea and the board brings me back to earth; other times I get disgruntled with a company's performance and board members point out my irrationalities.  The board serves a my Munger and my Buffett. 

 

Other than that I couldn't coach someone due to style differences.  I work off of two distinct styles.  One is finding high dividend payers (SSW, PWT) and loading up for income.  The other is using extensive leverage primarily via leaps.  I dont do Ben Graham very well.  I have a vast repertoire of non-investing industrial experience to draw from so I can visualize how companies make money, and why many dont and never will.  I also dont blindly follow "gurus".  I dont know them or their motivations. 

 

In the early days I used to read Annuals before getting to know a company.  Now I do it toward the end of the process.  Once there, I am mostly looking to make sure my "value" investment wont go bust, quickly, or worse, slowly. 

 

I will add that my only advantage is temperamental.  I cannot beat the majority of fund managers on information, nor do I need to. 

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Every university in the world has an instructor guiding/directing students in specific subjects. The process goes back at least as far back as the ancient greeks, & most would argue that it works - & works very well. However; universities do not teach application.

 

Before the internet; you had to 'do', & ask your colleagues or circle of acquaintances as to the how/what/where/why/when. If you had access to investment folk it was pretty hard to screw up - as godfathers usually kept a close eye. The system worked very well, & continues in virtually every A list I-Bank today.

 

You still have to 'do', but now your circle is wider - & works differently. If you cannot handle the emotions, don't have the discipline, or cannot keep your head - you aren't going to be investing very long. But do it well ... & your spurs will take you anywhere.

 

Just keep in mind that godmothers also exist, they are usually just as ruthless, & they live longer.

Who do you think the other 50% of the population learns their craft from ....

 

SD

 

 

 

 

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