I can’t put any top spin on the ball. My backhand usually lands outside the lines. It’s safe to say I’m no tennis pro. But that doesn’t stop me from trying.
If you’re an NBA fan, you’ll notice teams are getting smaller. Long gone are the days of the 7-foot center and the 6’9 power forwards. In today’s game, the big man isn’t just required to rebound, protect the rim and score. They also need to help with switches, shoot the mid-range and keep up with the guards.
If I’m honest, I miss the days of big men playing with their backs to the basket. But many teams have now craved out an edge with smaller, quicker teams that shoot three pointers at will. And just like NBA general manager, you also have to define your edge as an investor.
There are usually two camps among value investors – value and quality. Those in the value camp are Ben Graham followers. They’re always looking for cheap opportunities and buying business far below their intrinsic value.
Those in the quality camp prefer Warren Buffett style investments. These are businesses with durable economic moats and can continue to compound your investment for years into the future.
Discount rates aren’t really that sexy. But it doesn’t have importance implications for stock values. In fact, it’s probably one of the single most important factors when estimating intrinsic value.
If you’re like Buffett, you’ll want to value a business like you value a bond. That means you’ve got to add up all future cash flows at an appropriate discount rate. But what does ‘appropriate’ mean?
Dinner time at Charlie Munger’s house. Around the dinner table were rational thinkers and the world’s best investors. Munger thought he’d test the table with a simple problem.
Legendary investor, Peter Lynch attributes his success to the number of opportunities that came across his desk. Whether they were Buffett style companies or deep value opportunities.
According to Lynch, the person who turns over the most rocks wins the game. Meanings, the more stocks you look at, the better chance you have at finding a great investment.
In the spirit of turning over as many rocks as possible, I’ll show you couple of stocks worth looking at each week. This week I want to show you three different deep value opportunities. If you’re unsure what deep value is, check out an article I wrote explaining it, here.
What to be a great investor?
According to activist investors, Bill Ackman you don’t need a degree from Harvard Business School or Columbia School of Business. Instead just read every word and watch every YouTube clip Warren Buffett is in.
One idea Buffett always talks about is owner’s earnings.