Intelligent Investor

investor

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Intelligent Investor by Mind Map: Intelligent Investor

1. Defensive investor

1.1. 'I dont know & I dont care"

1.2. Dollar cost averaging

1.2.1. Time diversification

1.3. stay away from growth stocks, preferred stocks, secondary bond

1.4. Should invest most of the money in index funds, 10% self stock picking

1.5. Stock selection

1.5.1. Large Size

1.5.2. Current assets = 2*current liabilities

1.5.3. earnings stability

1.5.4. earnings growth

1.5.5. dividend record

1.5.6. P/E * P/B <22.5

2. Enterprising investor

2.1. preferred stocks and bonds only take into consideration if 30% below par

2.2. look for net working capital > price

2.3. stock selection

2.3.1. current assets >1.5* current liabilities

2.3.2. earnings stability

2.3.3. earning growth

2.3.4. some dividend record

2.3.5. price < 120% of net tangible assets

2.3.6. if trading at <60% appraised price good

3. Pitfalls

3.1. EPS manipulation

3.1.1. need to look at average EPS across years

3.1.2. Special charges

3.1.3. report past loss for future gain

3.1.4. dilution by convertibles and warants

3.1.5. depreciation accounting method

3.1.6. income brought by change in pension requirement

3.2. beware of ipos

3.3. brokerage firms encourage day to day trading

3.4. market view needs to appear moderate and authoritative

4. Portfolio

4.1. <10% money into mad stocks

4.2. Diversification

4.3. Rebalance periodically

4.4. Earning / price ratio should be >AA bond yield

5. Attitude

5.1. Investing not speculating

5.1.1. be business owner

5.1.2. comfortable with daily price quotes

5.1.3. time is an advantage a long as good earnings

5.2. ok with modest returns

5.3. Do thorough research

5.3.1. Bonds

5.3.1.1. interest charge coverage by earnings

5.3.1.2. size

5.3.1.3. equity /debt ratio

5.3.1.4. property value

5.3.2. Stocks

5.3.2.1. Long term prospects

5.3.2.2. management

5.3.2.3. financial strenght

5.3.2.4. dividend record & rate

5.3.3. Funds

5.3.3.1. Managers are shareholders

5.3.3.2. low fees

5.3.3.3. dare to be different

5.3.3.4. no consistent poor performance

5.3.3.5. dont advertise

5.4. Loss protection