October 22 th 2012
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Common Cents Investment Group. October 22 th 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…

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October 22 th 2012

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October 22 th 2012

Common Cents

Investment Group

October 22th 2012


Agenda

Agenda

  • Today in the Market

  • Picking a Stock

  • Berkshire Hathaway

  • Our personal Investment Strategies


Today in the market

Today in the Market


Today in the market1

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

Picking a Stock

  • Find a stock that has potential growth before others find it!

    • Find an undervaluedstock –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 stock1

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 stock2

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 stock3

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 stock4

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 stock5

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 stock6

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 stock7

Picking a Stock

  • Suggested websites to browse:

    • We have talked about these before

    • http://online.wsj.com/mdc/public/page/marketsdata.html

    • http://finviz.com/

    • http://www.valueline.com/


Picking a stock8

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

Berkshire Hathaway


Warren buffet

Warren Buffet

  • Arguably the most famous Value Investor

  • Age 82

  • Influenced by Benjamin Graham

  • Looks at the Underlying investment


Berkshire hathaway1

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

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

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

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

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

Our Strategies


Membership

Membership

$20

  • 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


Membership1

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?

?

  • Questions, comments or concerns?


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