Investing

I have made a decision to talk about another interest (passion, maybe?..) of mine which has remained consistent now for a number of years. That is the topic of investing – a more specific mindset and method of investing called ‘value investing’. It is likely that I will post more about this topic from now onwards.

So where did this interest come from?

When I was 18 me and my family rented a place in Worthing, (South Coast of England, near Brighton) and I got into a discussion with our landlord there. I had little going on that summer (of 2009) and, following on from my interest in Economics I had started watching snippets of financial TV – Bloomberg, CNBC etc. I was talking to the landlord, David his name was, about this and he referred me to a book which he said had served him well (he owned multiple properties) and is excellent if you have an interest in the stock-market. That book was ‘The Intelligent Investor’ by Benjamin Graham, updated as the 2003 version.

I bought the book not knowing what to expect and in honesty, it took me while to get round to reading it and I didn’t understand it too well at first. It wasn’t really until 2011 when I really picked it up and took a direct, personal interest and the philosophy of the book really resonated with me. That is ‘value investing’, a method popularlised by Warren Buffet – arguably the most successful investor who ever lived.

To those who don’t know I’ll try to explain ‘value investing’:

Many people who invest look to make very, very returns which can make them rich, from finding the next mini ‘Apple’ for instance or trading frantically on on-rushing news. Most who put money in the stock-market actually lose money, sometimes to a devastating extent mainly due to these behaviours which actually work well in other areas of life. Value investing is to invest cautiously so as to be safe against big losses and make a decent return, over a long term basis. Some value investors have in fact made among the highest returns in history over extended periods – see Warren Buffett (there are several more, too).

This is done by buying shares which have a stock-market value less than the value of the underlying business. The business is best in a strong, solid financial and industry position. And never put so much in one basket if a loss on one investment will hurt you big time. Then, be patient, sit back and don’t look at or think about your portfolio often – trust your convictions.

I decided in 2011 to try this out on a practice portfolio. Admittedly, things didn’t go too well at first but even through failure, simply reading wider from other materials and investors, and doing the research got me interested more. Honesty is the best policy and I admit that my first portfolio was 25% down from my very elementary methods. In 2012 I restarted my portfolio hopefully learning from my mistakes and since then things have been fairly solid going (I’ve kept with the same portfolio).

I look to continue this activity of mine which I have done in my spare time. Perhaps if things continue to go solidly in practice, and I have enough money I may start applying the investing method and philosophy I’ve built up for real 🙂

There’s something Zen about Value Investing. If you do it as it’s taught, a great amount of time you’re sitting around doing nothing but when you do ‘do’, it is with diligence, sensibility and conviction!

I should be writing more about this topic a little more. Value Investing has a fairly small audience (if it didn’t it wouldn’t work, so they say!) so it’d be awesome if I get a few, even a single reader who shares similar beliefs

If you’ve reached here, thank you and it may be interesting to hear from you

Josh Zahangir

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