October 22 th 2012. Common Cents Investment Group October, 2012 Agenda Today in the Market Picking...

October 22th 2012

Common Cents Investment GroupOctober, 2012

Agenda

Today in the Market Picking a Stock Berkshire Hathaway Our personal Investment Strategies


Today in the Market


Today in the Market

Google…having a bad week… Did not reach earnings http://www.firstcoastnews.com/video/

default.aspx?bctid=1911685171001&odyssey=mod|newswell|text|FRONTPAGE|featured


Picking a Stock

Find a stock that has potential growth before others find it! Find an undervalued stock – Fundamental

Analysis Stock whose price currently reflects a trend

reversal – Technical Analysis

Nearly 3,000 companies on NYSE alone Not counting NASDAQ/AMEX/OTC/Pinks/etc..

How do we navigate this mess?


Picking a Stock

Pick a market that makes sense to you.

Many play the market on gut I’m not comfortable buying shares of a

nuclear fusion business. Focus on sectors that you know and

understand! Cars, technology, clothes, insurance


Picking a Stock

For now we focus on fundamentals Financial Ratios

Profitability, Leverage, Solvency, Liquidity, Efficiency

Comparison to other companies in the same industry Valuation modeling

Is the company’s equity more than its market cap?

Basically, you are looking for stocks with real intrinsic value

We will delve into ratio analysis very soon


Picking a Stock

Intrinsic Value: The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors

http://www.investopedia.com/video/play/intrinsic-value/#axzz2A3z0FYcc


Picking a Stock

Avoid Liabilities By this we mean serious ones… not

(necessarily) just accounts payable

Stay away from stocks that are in the news because of large and looming lawsuits. Legal problems can drag on for years, so

your best bet is to steer clear of companies that have these headaches.


Picking a Stock

At the very least, make sure the majority of analysts are predicting stable or growth in earnings per share.

***Do not trust what a single analyst believes, but rather the majority. Still need to be defensive and take opinions with a grain of salt. The majority can still be wrong – i.e. housing bubble/bank fallout

Companies need to be profitable to stick around.


Picking a Stock

Find a stock that is NOT popular You want to pick a stock that is not popular

today, yet could be popular tomorrow.

Stock that is being ignored by the market presently but has the future potential to pull out and up.


Picking a Stock

Suggested websites to browse: We have talked about these before http://online.wsj.com/mdc/public/page/mar

ketsdata.html

http://finviz.com/

http://www.valueline.com/


Picking a Stock

The only surefire way to find a stock is to SEARCH

The process WILL take some time!

The more practice, the faster you will become You tend to know what you want

Berkshire Hathaway


Warren Buffet

Arguably the most famous Value Investor

Age 82 Influenced by

Benjamin Graham Looks at the

Underlying investment


Berkshire Hathaway

Holding Company: a company or firm that owns other companies' outstanding stock

Business Groups Insurance

Geico – 1995 General Re – Reinsurrance

Manufacturing, Retail, Etc. Fruit of the Loom – 2002 Benjamin Moore – 2000 The Pampered Chef – 2002 McLane – 2003


Major Investments

Wesco Financial (100%) ComdisCo Holding Co (38.2%) Washington Post Co (20.46%) USG (16.6%) American Express (12.59%) Moody’s (12.13%) Coca-Cola (8.6%) Wells Fargo (6.41%)


Stock Structure

Two Share Classes A Shares (BRK-A)

$132,609.00 Full Voting Rights Convertible to 1500 B Shares

B Shares (BRK-B) $88.51 1/10,000th of Voting Rights of the A Share

Rather than 1/1,500th of the vote Not Convertible


Performance

Overall Gain 1964-2008 Berkshire: 362,319% S & P 500: 4,276%

Compounded Annual Gain 1965-2008 Berkshire: 20.3% S & P 500: 8.9%

2008 Berkshire: -9.6% S & P 500: -37%


Buffet Quotes

“Price is what you pay. Value is what you get.”

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.”

“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”

“If you're an investor, you're looking on what the asset is going to do, if you're a speculator, you're commonly focusing on what the price of the object is going to do, and that's not our game.”

Our Strategies


Membership

Cost is only $20 for the whole year! Benefits:

Member of a very beneficial and informative club that will inevitably be valuable in your future

A network of friends who share a similar interest in investing and personal finance

A virtual portfolio challenge that will strengthen your confidence in investing


Membership

Make sure to check out our website for the presentations Monday night | ccig.osu.edu

Get on our Facebook page and like us!www.facebook.com/ccigosu


Questions?

Questions, comments or concerns?

October 22 th 2012. Common Cents Investment Group October, 2012 Agenda Today in the Market Picking...

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