Principles for Intelligent Investing - contd

Principle No. 1: Have a sound investment philosophy.
Without a logical approach to allocating capital, you're doomed right from the start. You must have a sound philosophy on which all of your investing activities are based, and this philosophy must, first and foremost, protect you from permanent loss of capital.

The smartest investment philosophy I have come across was one the late Ben Graham spelled out in The Intelligent Investor: "Investment is most prudent when it is most businesslike." In other words, always view investing as an opportunity to acquire ownership stakes in businesses.

Graham also offers us the three most underrated words in all of investing: margin of safety. When you acquire shares in a business, make sure you do it at attractive prices, to protect your downside. Graham's teachings and philosophies ultimately served as the foundation for value investing, and his most famous student, Warren Buffett, has shown you what you can accomplish when you have a sound investment philosophy. It comes down to value investing, and as Charlie Munger aptly says, "All intelligent investing is value investing."

Principle No. 2: Develop a good search strategy.
Once you understand and appreciate the soundness of a value-investing approach, you need to develop a good search strategy. There are tens of thousands of stocks out there, so knowing where to look is more important than knowing how to look.

When Buffett was starting out as an investor in his early 20s, he literally read through every page of the Moody's stock manuals -- all 10,000 pages per volume -- looking for ideas. Those manuals were the best source of investing information available back then. Fortunately for us, the Internet has opened up many more wonderful investment resources. (Of course, it's also given us a fair share of not-so-good investment resources, so tread carefully.)

A great way to start your online investing search is with stock screening, which allows you to define your investing parameters. There are some amazing screens out there. One of the best I've found is Joel Greenblatt's Magic Formula screen. Each day, this site provides you the names of the 100 businesses that earn the highest return on invested capital and earnings yield. All levels of investors can use the site. Even superinvestor Mohnish Pabrai used it to discover an eventual multibagger investment, Pinnacle Airlines (Nasdaq: PNCL).

Some other fantastic places to start online are the Value Line reports, for a good overview of businesses, and the SEC website, where company filings can reveal what the world's best money managers are buying and selling. Thankfully, in investing, no one penalizes you for using someone else's ideas to make you rich!

Principle No. 3: Know how to value a business and assess management quality.
Once you use the value approach to search for good companies, you then need to know whether the businesses you're considering are suitable for investment. First, you must understand the business, the industry, and the competition. Once you understand a business and its operation -- and you must be able to understand the business; if you don't, you can't properly value it -- you then need to determine its intrinsic value, so you can figure out whether Mr. Market is offering you an attractive price.

Even if a business passes these tests, quality of management is still crucial, because an attractively priced business can be a terrible investment if management is making bad decisions. You need the company's assets working as well as they can to make your investment appreciate in value.

As Buffett has said: "Investing is simple, but it's not easy. You don't need an IQ of 160 to be a great investor." Those are valuable words for any investor. Buffett himself has enjoyed enormous success putting that philosophy to use -- he has bought stakes in easy-to-understand businesses at attractive prices, and then he holds them for a really long time. Through my years of studying the investing greats, I've come to realize that they share a set of similar characteristics that make them so successful. And those characteristics have arisen from following principles such as the three we've discussed today. In a future column, we'll look at three more.

Here is a link where you might be able to get some books on investing

Your resource for Intelligent investing.

Principles for Intelligent Investing

I was going through the Fool.com and found an interesting article by Sham Gad

Tiger Woods hits about 500 golf balls a day when he's practicing. With each practice shot, he has a very specific target in mind.

The same approach holds true for a good investor. Successful investing is, by definition, a methodology. And just as in any other trade or profession, there are methods and techniques you need to apply, regularly and intensely, if you want to come out on top. After all, investing, like golf, is a game between you and all of the other competitors out there. If you can't bring anything to the game, you shouldn't be playing.

In the investing world, there are six investing principles you need to apply if you want to succeed in the long term. These are principles that the world's greatest investors are constantly dispensing. Just pick up a copy of a Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) annual report or a Longleaf investment report, and you'll see them on display. Every investor will apply them differently, but they all infuse the activities and methods of the most successful investors on the planet.

These principles all build on each other, in that you cannot apply a subsequent principle until you understand the one before it. In this article, we'll consider the first three.

I will post the principles in continuation with this.

Ramidi.com & Ramidi.org

I have recently launched my personal sites, Ramidi.com and Ramidi.org please visit them when u get a chance.

Ramidi.com is a custom search engine enhanced by google and will let you search any thing on the web.

Ramidi.org is a charity foundation that helps needy children get education.

I will keep posting more details about these sites in my next blogs.

Is the time right to enter into the Indian Stock market?

Although it is tempting to take the opportunity to buy stocks on SALE... I mean they are really on SALE!!!

India has been an emerging market with double digit GDP growth. Lot of foreigners are investing in Indian stocks and have gained double digit returns. Today the sensex (BSE) rose by 259 points.

According to Sandeep Nanda Head of Sharekhan it is better to wait for a bit before entering the markets to see how the markets react to economic data rather than just being optimistic on Fed cuts and so on.

He further adds that for Q2 earnings season, one needs to watch out for the stocks, which gained on on forex gain in Q1 as we might see, a reversal on that.

He are the Excerpts from CNBC-TV18's exclusive interview with Sandeep Nanda:

Q: Would you wait on a bit and then enter the market?

A: Yes. It is tempting to conclude that things are stabilized but I would recommend waiting for three-four more days in the sense that this has been a peculiar week in the US because all the data has bunched up towards Friday and next Monday.

I think we need to see how markets actually react to economic data rather than just being too optimistic on Fed cuts and so on. I would definitely wait for that and by then our own domestic political situation will also become clearer.

Q: Do you see much of a squeeze on liquidity going ahead for the next couple of months as a whole and how do you approach the next earning season, which is just about a month and a half away?

A: We are running a current account deficit and because of the change in ECB guidelines as well as whatever is happening globally, liquidity is definitely going to be tighter.

Our capital inflows are about 2%-3% of GDP and that is definitely going to be a problem and if the political situation is a bit dicey or all the political pundits are saying that we will have elections in three-five months then I guess even the rupee will be a bit weaker so one should play along with those trends.

As far as earning season goes, we need to particularly watch out for stocks which gained in the first quarter on forex gain. I think we will see a lot of reversals on that. We saw it in Reddy or Ranbaxy or Reliance Industries, RCOM, Tata Motors, Tata Steel we saw all of these stocks gained a lot on the forex front, so one needs to start factoring in the reverse of that in Q2

Soruce: Moneycontrol.com

Buffet says market choas creates buying opportunities

Billionaire investor Warren Buffet in an interview Thursday with CNBC's Becky Quick said he is optimistic the current market downturn will probably create buying opportunities.
"You get more excited when there's a lot going on, you can't help it," said the chairman of Berkshire Hathaway. "And frankly, it will probably present more opportunity to us because when dislocations occur, things get more mispriced and that sort of thing ..."
Speaking with Quick before a fundraiser he co-hosted for Democratic presidential candidate Barack Obama, Buffett continued, "So it can be a time of opportunity. It won't be for sure, but generally speaking, when there's a certain amount of chaos in certain sections, the fallout, and it's unpredictable where the fallout will be, but the fallout sometimes offers some real opportunities

Source: www.chinaview.cn

What would Warren Buffet do at this time when Stock market is falling.

Will he sell all his stocks or the ones that are falling?
Will he buy more of the stocks that are risiing?
Will he buy more of the stocks that are falling?

Well if you are familiar with Bejamin Graham's Intelligent investor, he advices not to sell any stocks because the market is falling. Stick to all of them provided you have done your due dilegence on the stocks before buying.

As I read his book, I will try to post more interesting things you should know when buying stocks.

Warren Buffet

I was wondering what makes Warren Buffet, Warren Buffet? I started to learn more about him and in the process started searching with Google News. Here is the link for all those who is interested about Warren Buffet and become a Billionaire. http://news.google.co.in/news?svnum=10&as_scoring=r&ned=in&ie=UTF-8&q=Warren+Buffett+location%3Aindia&btnG=Search

Becoming a billionaire, sounds like it is not a do-able thing, but if you start with that attitude you will never. Look at it as if you are Warren Buffet 40 years ago and if he thought like you will be be where he is? No, So let us change our perspective and start thinking like a billionaire. Think big and achieve big!!!!!