Among the famous investors of Graham-and-Doddsville that Warren Buffett refers to as ‘super-investors’, the most conservative yet in no small measure less successful was Walter Schloss. He was perhaps the closest to what was commonly referred to as ‘cigar-butt’ investing, and someone who perhaps followed the bargain hunting principles in stock picking perfectly and over … Read more
Opinion is divided on whether your house is an asset based on who you ask. Some financial planners recommend that you make your investment plan first, save for a house, buy it only when the rent vs buy equation makes complete sense, and treat the monthly payment as a pure expense (after accounting for tax … Read more
In the area of finance and investing, like many other fields, the questions you ask are perhaps more important than the answers to them. But again in this area, even the simplest of questions can have a variety of complex answers. Which Stocks? So something as basic as how should I select which stocks to … Read more
I have often heard a lot of financial planners advise an asset allocation strategy based on the age of the investor – something on the lines of invest 100 less your age into equity or similar. While the broad logic of this strategy is that with increasing age, the capacity of an individual to earn … Read more
I have often wondered whether financial independence is an end in itself. The goal of financial planning is to basically create a corpus for a goal like retirement. This corpus must replace your current income stream in inflation adjusted terms. And it is all good. Getting out of debt, high rates of savings and investing … Read more
I have always felt that individual investors (or perhaps any investor to some extent for that matter) have never got a complete handle of the decision on when to sell. Traders or speculators mostly have a fixed target for profit or stop-loss, but investors never seem to enter a stock with a clear exit goal. … Read more
The core objective of diversification is to reduce risk. The idea is that peaks and troughs in a specific investment should not affect overall portfolio return objectives. One must define risk less as volatility, and more as a either a complete or partial, but permanent loss of capital. In that case. an individual investor would … Read more
Assuming that I want to “invest” in the stock market, and not “trade” or “speculate”, getting average market returns is a no-brainer. I just need to buy an open-ended index fund or an exchange traded index fund, and I am done. At the lowest cost, I am guaranteed returns that the market index will give … Read more
Individual investors are interested in getting answers to questions like which stocks to buy, at what price and when to sell. But they do not realize that these are the least important questions. These are irrelevant when it comes to building long term wealth. The single most important decision in portfolio strategy that influences long … Read more