With markets in turmoil, more people are turning in to see who is the latest casualty on Wall Street. Unfortunately, many of these individuals are also individuals who lost a large portion of their savings, retirement, pension,etc. because their mutual funds, advisers or Madoff’s lost their money. In this article I will try to get you the reader headed in the right direction for less than $100, the way I did it.
On the second day of the new quarter ( our university is based on a 8 week quarter system) a Wall Street Journal representative came in to sell the Journal. Putting an unorganized speech and overselling aside, I came away with one thing that I will tell anyone who wants to handle their own money; to understand Wall Street, you have to speak the same language as Wall Street. EBITDA, Return On Investment, Breakup Fee, Arbitrage, P/E,etc. might sound Marsian at first, but a couple of weeks reading the Journal and one will have no problem fitting in cocktail parties.
Wall Street Jornal Subscription: $0, WSJ.com currently has free articles. Test the waters first then think about subscribing. Ebay has discount offers.
Read, Read, Read
Read everything you can about finances, but stick in the value camp. Outside my office there’s is a poster that states, “It’s difficult to soar with eagles when you run with Turkeys”. Wall Street is a game of action, but its the boring crowd that wins. In total I have about 10 investing books and 5 of those are all the editions of David Dreman’s Contrarian Investing Strategies. Unless you are the type who likes to have new books, Amazon.com or Half.com will help us save a ton of money. Below are the list of books in my library and their used price:
- Contrarian Investment Strategies in the Next Generation by David Dreman ($2.39)
- The Little Book That Beats the Market (Little Books. Big Profits) by Joel Greenblatt ($3.87)
- The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham, Jason Zweig, and Warren E. Buffett ($10.00)
- Beating the Street by Peter Lynch and John Rothchild ($0.46)
- One Up On Wall Street : How To Use What You Already Know To Make Money In The Market by Peter Lynch and John Rothchild ($2.85)
- You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits by Joel Greenblatt ($2.97)
- Value Investing: From Graham to Buffett and Beyond (Wiley Finance) by Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, and Michael van Biema ($9.25)
- Other editions of Contrarian Investing Strategies (5 books for a total of $20)
That’s 12 books for $51.79 (not including shipping). Running total: $51.79
Online Media
Twenty-five years ago there was a big discrepancy between the information available to the general public and information available to institutional investors. With the expansion of the internet, that gap has now closed. The information available online is HUGE, but some of it can also be misleading. For example, its great reading all the different stock analysis but one should never and I man NEVER make an investment decision on something a blogger wrote (including this site). Below are some resource I have bookmarked.
- 10′Ks – http://www.edgar-online.com/
- Berkshire Hathaway- http://www.berkshirehathaway.com/letters/letters.html
- Warren Buffett Partnership Letters- http://www.ticonline.com/buffett.partner.letters.html
- Guru News- http://www.gurufocus.com/
- Value Investing News- http://www.valueinvestingnews.com/
- Blogs- I have too many on my feeds, but this will do http://www.thediv-net.com/
Again, all these sites are free (some offer premium services) and are constantly being updated on a daily basis. I can continue with with investing magazines such as Forbes, BusinessWeek,etc.. but some of their commentary makes no sense as they sometimes include greek letters (beta, alpha,etc.).
Internet: $15-$20 for DSL. Running Cost $71.79
I will not include the capital you will be adding into your brokerage accounts but assuming you make one trade a month and you maintain a balance above $2,500.00 USD, your fees will be $0
Broker Commissions : $0 Running Cost: $71.79
To wrap things up, as you can see it does not take much to get started in value investing. Even with my poor performance in 2008, I outperformed individuals like Bill Miller and I believe David Dreman. These individuals spend good money on analysts, industry reports,etc. but as Warren Buffett says ” Value Investing is simple but not easy.” In the end, we all have access to the same 10-K. Someone in Tahiti will see the same figured as someone in Tajikistan. Finally, yes these individuals might hold MBA, PhD’s,etc. but the failure of Long term Capital Management proved geniuses can fail.
Success in investing doesn’t correlate with I.Q once you’re above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.- Warren Buffett
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A very good list. Reading is everything. Of all the times I’ve watched CNBC, I come away with nothing. Every time I read a book, I come away with a notes full of information.
I’m in the same boat. Somewhere I read that Warren ‘watches’ CNBC with the television on mute, so he still gets all the headlines but without all the commentary. I do the same, but read the Journal and a cup of coffee by my hand.
Cool. So, with $100, where can I put it with a goal of just getting started. Its more of a psychological than a financial move for me. Once I am started, I really get into it. Until then, I have no interest.
Once started, then subsequent moves become financial