# What criteria must be met before you buy a stock?



## gamefisherman (8 August 2009)

Entering at the right price is obviously critical as we believe you make your profit when you buy............

We were wondering what your indicators or conditions are that must be met before you buy a stock?

And Thank you for all your help, talk about a steep learning curve.......

Cheers


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## Aussiest (8 August 2009)

What are yours? A lot would say that's it about management once you're in the trade.


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## haunting (8 August 2009)

My 2c - good entry determines the odds/risk and the basis for exit, good exit will determine your profit.


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## gamefisherman (8 August 2009)

We are only newbies and very green to buying online on the asx......only 7months of experience........so we have loads and loads to learn.......

At present, we look for volumes, what is the overall trend, resistance and support levels of which we are still trying to work out what they are...lol, announcements, commentaries on here and other sites, and to be honest not much else at this point, that is why we are looking to discover which stock to buy and when.......and what others look for....

Agree it is what u do once in too..........have a tight stop loss and dont be greedy is our thing..................


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## Timmy (8 August 2009)

gamefisherman said:


> we believe
> 
> We were wondering






gamefisherman said:


> We are only newbies ........so we have loads and loads to learn.......
> 
> we look for volumes,




Off topic I know, but why the use of the royal "we" gamefisherman?  Just curious.


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## gamefisherman (8 August 2009)

We means my partner and I, she is the brains full stop...lol lucklily someone in the house is smart..............

I am just there for the ride......

PS yes off the topic and as for royal wtf , we are just a couple of aussie battlers mate with kids trying to make a buck


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## brty (8 August 2009)

> What criteria must be met before you buy a stock?




The price must be going up. Resistance broken support holding. Most of the other stuff is noise, but you can trade noise when you know what you are doing. Also need to acknowledge that in the long term all stocks go to zero.

brty


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## Timmy (8 August 2009)

gamefisherman said:


> PS yes off the topic and as for royal wtf ,




Referred to as the 'royal' we because when a person speaks of him or herself as 'we' it is usually because they are royalty!  Off topic, I know, like I said just curious.  More info here if of any interest.




gamefisherman said:


> We are only newbies and very green to buying online on the asx......only 7months of experience........so we have loads and loads to learn.......
> 
> At present, we look for volumes, what is the overall trend, resistance and support levels of which we are still trying to work out what they are...lol, announcements, commentaries on here and other sites, and to be honest not much else at this point, that is why we are looking to discover which stock to buy and when.......and what others look for....
> 
> Agree it is what u do once in too..........have a tight stop loss and dont be greedy is our thing..................




One thing I would strongly urge you is to avoid market commentaries, or only to pay them the very vaguest of attention, especially in the learning stage.  It is much better to look at the data and apply your own assessment.  Of course, learning how to sensibly assess the data is a challenge, but asking question on threads such as this one is a good learning process. 

I found the VSA approach to the buy, sell and ongoing management decisions very useful.  It is a steep learning curve, take plenty of time (I don't think there is any substitute for taking the time). 

There is a firm that markets software/education etc.  I didn't buy the software or any of their education but downloaded a free copy of their basic book "Master the Markets" (fully legal download, will try to find the link for you if you are interested).  Like I said, it takes time, but I found it useful.


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## Sean K (8 August 2009)

Questions.

What's your investment horizon?
What's your appetitie for risk?
How much time do you have to manage the portfolio?
Are you after dividends and some growth?
Do you want to short term trade?


Too many questions...


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## springhill (8 August 2009)

gamefisherman said:


> We are only newbies and very green to buying online on the asx......only 7months of experience........so we have loads and loads to learn.......
> 
> At present, we look for volumes, what is the overall trend, resistance and support levels of which we are still trying to work out what they are...lol, announcements, commentaries on here and other sites, and to be honest not much else at this point, that is why we are looking to discover which stock to buy and when.......and what others look for....
> 
> Agree it is what u do once in too..........have a tight stop loss and dont be greedy is our thing..................




Spot on Timmy, always take commentaries & posts with a grain of salt.... plenty of agendas in these


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## prawn_86 (8 August 2009)

When investing longer term i look to buy stocks that are under my calcualtion of intrinsic value.

The question is, what makes intrinsic value? As i have been wrong plenty of times...


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## beamstas (8 August 2009)

prawn_86 said:


> When investing longer term i look to buy stocks that are under my calcualtion of intrinsic value.
> 
> The question is, what makes intrinsic value? As i have been wrong plenty of times...




Is there any proof this actually works?


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## prawn_86 (8 August 2009)

beamstas said:


> Is there any proof this actually works?




Works for me, so i couldnt care if it "works" or not...


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## Uncle Barry (8 August 2009)

Good afternoon.
The longer I am in the Market, the more I understand there are NO Rules to entry/buying, simply because every stock is different.

However there are Rules to a exit,
in my World of makeing a dollar or three from the Market.

Kind regards,
UB


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## Timmy (8 August 2009)

beamstas said:


> Is there any proof this actually works?




His name is Warren Buffett.  Done quite well, apparently.


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## beamstas (8 August 2009)

Timmy said:


> His name is Warren Buffett.  Done quite well, apparently.




Yet if i use his rules to buy stocks i bet i won't end up where he is.. strange isn't it? 

People should read Talebs books, before deciding to invest like buffett.


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## mazzatelli (8 August 2009)

beamstas said:


> Yet if i use his rules to buy stocks i bet i won't end up where he is.. strange isn't it?
> 
> People should read Talebs books, before deciding to invest like buffett.




If TH gave me all his rules, I probably wouldn't be able to replicate him either


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## nunthewiser (8 August 2009)

beamstas said:


> Yet if i use his rules to buy stocks i bet i won't end up where he is.. strange isn't it?
> 
> .





my whole point entirely regarding all these book quotes that get bandied around the forums ..

thanks for finally pointing it out also 

one must find there OWN path .


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## Aussiest (8 August 2009)

nunthewiser said:


> one must find there OWN path .




Agreed. However, would you not say it is sensible to first read the books and then test the theories against real market action?

Personally, i feel isolated by the books as they are not personalised. I have probably learned more from ASF and relating it to *some *theory, than i have in books alone.

Moral of the story: never take information at face value.

Sorry to OP, :topic


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## nunthewiser (8 August 2009)

Aussiest said:


> Agreed. However, would you not say it is sensible to first read the books and then test the theories that you have learned in them, against real market action?
> 
> Personally, i feel isolated by the books as they are not personalised. I have probably learned more from ASF and relating it to *some *theory, than i have in books alone.
> 
> Information needs to be tested and tested again. Never take information at face value..





yes by all means read a book . many gems found that may assist with other points of trading , my thoughts are tho , one cannot follow the methods/rules strategys in said books and be realistic that they will have the same sucess , the book was written by the author who maybe found what works for them and unless the reader/follower of the strategys is a clone of said author ( psycholigical etc etc ) the reader will not get the same results no matter how many they read.

re ASF . amen to that actually .. so many methods and tales all mingled into one place ( good and bad ) but at least one can read a bit of honesty also and see that it aint all sunshine and lollipops out there .

totally agreed re info and face value


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## Aussiest (8 August 2009)

nunthewiser said:


> yes by all means read a book . many gems found that may assist with other points of trading , my thoughts are tho , one cannot follow the methods/rules strategys in said books and be realistic that they will have the same sucess , the book was written by the author who maybe found what works for them and unless the reader/follower of the strategys is a clone of said author ( psycholigical etc etc ) the reader will not get the same results no matter how many they read.




Oh yes, so true!

Sorry to OP for being off topic. Would love to start a thread on this topic, but too scared.

Nun: Sorry, edited my post slightly to reduce wording...


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## Timmy (8 August 2009)

beamstas said:


> Yet if i use his rules to buy stocks i bet i won't end up where he is.. strange isn't it?




Not really.  Attitude plays a very big role.  If you think you can't, you wont.



beamstas said:


> People should read Talebs books, before deciding to invest like buffett.




Taleb's books should be read & understood, regardless.  IMHO.

But even prior to that people need to know their own goals before trying to invest like Buffett or like anyone else, or even trying to figure it out themselves.  Kennas post brought this up.


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## beamstas (8 August 2009)

nunthewiser said:


> yes by all means read a book . many gems found that may assist with other points of trading , my thoughts are tho , one cannot follow the methods/rules strategys in said books and be realistic that they will have the same sucess , the book was written by the author who maybe found what works for them and unless the reader/follower of the strategys is a clone of said author ( psycholigical etc etc ) the reader will not get the same results no matter how many they read.
> 
> re ASF . amen to that actually .. so many methods and tales all mingled into one place ( good and bad ) but at least one can read a bit of honesty also and see that it aint all sunshine and lollipops out there .
> 
> totally agreed re info and face value




You accuse me of just bandying around what i read in books and not knowing what im talking about, Yet what im saying is you shouldn't just do what are in books, because of survivorship.

You are wrong about what you say about following a strategy with the same success. Even if you do clone what they do you won't have the same success, if you follow Buffetts rules exactly you won't have the same success, same story with if you follow the turtles rules, or anything else from a book. You might have *some* success, but it will be limited by luck.

Doesn't it seem strange that people have come close to replicating Buffetts formula for intrinsic value, but not had the same success? You can't just copy what's in a book and expect to make money.

--

Timmy im going to disagree with this



> Not really. Attitude plays a very big role. If you think you can't, you wont




I don't think attitude has anything to do with it. If i think my trades will be profitable will they? If you have a clearly defined set of rules (such as following them from a book) and actually follow them, attitude won't make much of a difference. If you are talking discretionary trading, then i agree.


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## Frogacle (8 August 2009)

beamstas said:


> Yet if i use his rules to buy stocks i bet i won't end up where he is.. strange isn't it?
> 
> People should read Talebs books, before deciding to invest like buffett.




Presumably, if you use the same rules as Warren Buffett, you will end up exactly where he is. Maybe not the wrinkled skin. Maybe not the Cherry Coke addiction. (Then again, maybe wrinkled skin and Cherry Coke addiction is a necessary by-product). But certainly financially well off over a long time horizon.

The bet should really be on whether you know his rules as well as you think you do. And whether you have the fortitude to follow them as well as he has. And I doubt very much that many people can attest to either - myself included.


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## beamstas (8 August 2009)

Frogacle said:


> Presumably, if you use the same rules as Warren Buffett, you will end up exactly where he is.




I disagree 100%.


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## nunthewiser (8 August 2009)

beamstas said:


> You are wrong about what you say about following a strategy with the same success. Even if you do clone what they do you won't have the same success, if you follow Buffetts rules exactly you won't have the same success, same story with if you follow the turtles rules, or anything else from a book. You might have *some* success, but it will be limited by luck.
> 
> Doesn't it seem strange that people have come close to replicating Buffetts formula for intrinsic value, but not had the same success? You can't just copy what's in a book and expect to make money.
> 
> ...




you may need to read my post again 

my posts verify what you have just repeated

this IS what i posted !



> yes by all means read a book . many gems found that may assist with other points of trading , my thoughts are tho , one cannot follow the methods/rules strategys in said books and be realistic that they will have the same sucess , the book was written by the author who maybe found what works for them and unless the reader/follower of the strategys is a clone of said author ( psycholigical etc etc ) the reader will not get the same results no matter how many they read.


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## Frogacle (8 August 2009)

beamstas said:


> I disagree 100%.




You initially asked if there was any proof that:



prawn_86 said:


> When investing longer term i look to buy stocks that are under my calcualtion of intrinsic value.
> 
> The question is, what makes intrinsic value? As i have been wrong plenty of times...




To which Timmy stated that Warren Buffett was an apt example.

Warren Buffett has a set of rules he uses to choose which stocks he buys by calculating what he believes is the intrinsic value of the business and buying at a price that is competitive relative to that value. And to my knowledge, nobody knows what precise metrics he uses to calculate intrinsic value. How does one value the competitive advantage of Coke? How does one value the aptitude of management? etc.

Anyway, while I can agree that you will not end up exactly where he is. I'd be interested to hear if you disagree 100% that you will be financially well off over a long time horizon.

And, whether you agree of disagree and by whatever percentage, a reason for your position would be nice too.


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## Timmy (8 August 2009)

Beamstas, you questioned the use of buying below intrinsic value (post 12), asking for proof that it works.  In a nutshell (and grossly simplified), this is a core part of Buffett’s methodology.  I propose that Buffet’s results are proof that his methodology ‘works’.  I cannot think of better proof, in the field in which we participate, than billions upon billions in the bank.  You may have some better idea of proof, but I will stick with results.

Your post (#16) then proposes a bet that following his methodology will not have you ‘end up’ where he is.  The next line says people should read Talebs books before deciding to invest like Buffet.  I might have misunderstood your post, it is vague, but I assume you are referring to Taleb’s idea of being fooled by randomness – are you saying that Buffet’s results are a manifestation of randomness?  I assume you are, but your post is vague, so if my assumption is wrong then apologies and I welcome a clarification.

I would contend that buying anything below intrinsic value increases the chance of its price appreciating and then being sold at a profit.  This is what used-car dealers, for example do.  They will buy a used car below their calculation of value, and most of the time then on-sell that car at or above value.  Do this with stocks, in big quantities (this is a gross simplification of Buffets methodology, but close enough) and profit should be the result.  While the extent of Buffet’s success may well have a random component, the core methodology is actually a defence against randomness; it is a methodology used by many, many, successful ‘dealer’-type businesses.  

My discussion of attitude more refers to what appears to be a knee-jerk dismissal of the methodology by yourself, a dismissal of something that you don’t appear to understand.  I must admit I am puzzled by your attitude.  Elsewhere you quite rightly pointed out that there was more than one way to skin a cat, but on this thread you have rejected another way without, apparently, understanding it.  I am probably being a bit blunt, apologies for that, but I like the idea of there being alternative ways of getting results and perhaps being able to incorporate some of the positives from those methodologies in my own approach.


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## motorway (8 August 2009)

There maybe well be many ways to skin a CAT

But they all end up with a Dead Cat with it's skin off..

Same you can really only  make money
By ONE ESSENTIAL WAY
when buying And selling ( Trading ) shares.

There are really NOT many ways of doing essential things
Just correct and incorrect
more or less ideal

eg OK Taleb
If you say his thesis is correct
Then easy to apply correct strategies

Key with Taleb is to know what you know ( really know , maybe nothing ? does that matter )
and what no one knows ( Just as important... Who knew the market would rally so hard ?  someone ? no one ? under which case was it easier to profit from the move ? IF everyone knew ?
If you buy something it needs to go higher
NO OTHER WAY to win

OK I posted 25 rules ( They are in fact TALEB BASED -- But see  people just talk words like TALEB but do nothing about it )
One was the importance of disconfirmation ( compared to confirmation --THAT IS WHAT THE BLACK SWAN AS IDEA IS )

So look for what is ending or stopping
before you look for beginnings and starting

There are only a very few CORRECT PRINCIPLES
when acting with uncertainty
when no one knows--> That is where participation will produce largest gains

OF course if you really know something ( BE HONEST )


Do not be fooled by randomness
But then realize that there are non random things as well

Focus on these
and profit from them

That trends exist
and that there are turning points
both exist  because people Don't Know
( But that SOMEONE knows something eg Buffet knows when he is buying )

Use good tools to identify Both TRENDS
and THEIR TURNING POINTS

That the  present is built from the PAST and that the Future unfolds from the present and as pre existing  goal 

That BULL markets lead to Bear Markets and BACK

That EVERYTHING is FLUX and CYCLES
But APERIODIC not in terms of TIME

But of SCALE

It is always HOW BIG the sandpile is ( in various aspects )
not how long the clock tics


motorway


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## beamstas (8 August 2009)

I understand how Buffett does what he does, my question earlier was a loaded question, I wanted proof, not that it worked for Buffett, but that it can continue to work. Buffett may or may not have had probability on his side on his rise to greatness, i don't care about that becuase even if he did, history is history and it won't change where he is now. 

Just a quick rundown.. He gets an "intrinsic value" for a company, and then takes it over. His methods are a tough comparison because he isn't simply "buying shares" like the average mom and dad investor, so following his method might be foolish if you can't do the same thing.

You can contend the point of buying stocks below intrinsic value all you like. I cannot prove that it can't work, you can only prove that it does. I would argue that buying stocks under intrinsic value does nothing to the probability of the stock price going up, but i am not prepared to research this because i don't care..  (i mean that in a nice way, i do not consider fundamentals)

You are focusing on Buffett and his success, but what about all the people who have tried it and failed? We know Buffett succeeded, but what if 9,999 other people tried this and failed? (The number is probably alot greater than this, i'd argue that the majority of poeple who use his techniques failed during the recent GFC). That means that by using Buffetts way of doing things, you'd have a 0.01% chance of being successful.. Not great odds and certainly not something that i'd arm my bow with. 

I anticipate your reply, timmy, as im open to new ideas too. 
Brad


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## Julia (8 August 2009)

Good points, Beamstas.   When many people say they are taking a Buffet approach they overlook the fundamental fact that mostly he just bought the company, put his own management team in, and turned it around to profitability.

To suggest that the ordinary buyer of shares in an 'undervalued' company which has not been taken over and rejuvenated by a Buffet like new owner can expect a Buffet-like level of success just makes little sense to me.

The philosophy of buying these so called undervalued companies (imo they're often where they are for a pretty good reason), and then holding indefinitely in the hope the market will recognise what fantastic businesses they are is a very unappealing strategy.


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## Timmy (8 August 2009)

beamstas said:


> I anticipate your reply, timmy, as im open to new ideas too.
> Brad




Really nothing more to add beamstas.

Except to say no cats were harmed in the making of this thread.


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## motorway (8 August 2009)

Julia said:


> Good points, Beamstas.   When many people say they are taking a Buffet approach they overlook the fundamental fact that mostly he just bought the company, put his own management team in, and turned it around to profitability.
> 
> To suggest that the ordinary buyer of shares in an 'undervalued' company which has not been taken over and rejuvenated by a Buffet like new owner can expect a Buffet-like level of success just makes little sense to me.
> 
> The philosophy of buying these so called undervalued companies (imo they're often where they are for a pretty good reason), and then holding indefinitely in the hope the market will recognise what fantastic businesses they are is a very unappealing strategy.




Most important things for Buffet
is that he can see steady sustainable GROWTH
at an ATTRACTIVE PRICE

He is not a "VALUE BUYER" in a sense most use it
he does not want a Dung Heap at half price
But real diamonds at a reasonable price

Also he uses tremendous leverage ( at no or little  cost -> that is His Gamble )
and Yes he can exert control ..

motorway


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## Frogacle (8 August 2009)

From what I've read, and I stand to be corrected...

Buffett does very little management overhauls and business turnarounds. He may buy the whole company instead of packets of shares in companies, but he prefers to leave capable management to do what they were doing before he came along. I think he tried with Berkshire Hathaway (as a textiles company), but mostly he's left management alone.

If you had bought Coke when he did, or Gilette, Amex, Washington Post, when he did and you could have (unless, like me, you weren't born yet), you would have done tremendously well. I believe that the philosophy is not of buying "so called" undervalued companies, but in buying actually undervalued companies which run fantastic businesses.

I think Peter Lynch did it too. Except that if Buffett was a sniper, he was more of a flak cannon.

That all being said... and back to the topic: I don't think I actually have a set of criteria that must be met before I buy a stock other than that I can, one way or another, divine (read: convince myself) that the share price will go up - mostly technical entries. I don't have the patience for fundamentals, I don't have the time for business analysis. And I really can't wait until I'm 50 to hit my first billion.


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## Aussiest (8 August 2009)

Frogacle said:


> Presumably, if you use the same rules as Warren Buffett, you will end up exactly where he is.




I'm going to chime in here. Investing and most situations are about more than a set of rules. You have to look at the macro environment. Eg, what is happening in the world around you? What is trendy? Where are the opportunities? 

What may have worked for Buffet may not work now, due to different surrounding circumstances.

Also, a certain amount of success is attributable to the people around you. Unless you can replicate exactly the people around Warren, their states of mind, and the macro environment (which is virtually impossible), i don't think you could use his rules to exactly replicate his success.


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## prawn_86 (8 August 2009)

Well then Beamstas in order to answer your "does it work" question (i didnt use Buffett as an example as he is in a unique position of being able to take majority interests), you need look no further than many members here at ASF.

I hope they dont mind me singling them out, but people like ROE, Kennas, Julia etc all use some form of fundamental 'intrinsic valuation' (either solely or in conjunction with other ideas) and they seem to have done well for themselves.

The way i look at it, (and i stress this is for longer term purchases, not short term trading) is that each investment decision i make is like financeing a project. What is the expected rate of return? What is the payback period? etc etc As with any project evaluation there are going to be things that need to be forecast, but that is the nature of the game, with experience comes more accurate forecasting (hopefully). 

Or you can simply say stocks make you the owner of part of a business and if you could, would you buy that business and not make any changes to it? If yes, then buy some shares.


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## Frogacle (8 August 2009)

Aussiest said:


> I'm going to chime in here. Investing and most situations are about more than a set of rules. You have to look at the macro environment. Eg, what is happening in the world around you? What is trendy? Where are the opportunities?
> 
> What may have worked for Buffet may not work now, due to different surrounding circumstances.
> 
> Also, a certain amount of success is attributable to the people around you. Unless you can replicate exactly the people around Warren, their states of mind, and the macro environment (which is virtually impossible), i don't think you could use his rules to exactly replicate his success.




Yes. I have since requalified my statement. It was a mistake to use the word "exactly", as I was looking to then contrast this with his wrinkles and Coke addiction.



Frogacle said:


> Anyway, while I can agree that you will not end up exactly where he is. I'd be interested to hear if you disagree 100% that you will be financially well off over a long time horizon.




While I agree that a certain, limited, amount of success is attributable to the people around you, your example of what is happening in the world around you... what is trendy... where are the opportunities... Those are the types of qualitative factors that WB looks for in determining intrinsic value.

He identified that Coke's formula had universal appeal (opporunity), that Amex could capitalise on the spread in the use of consumer credit (trends) and that Washington Post was operating in an effective monopoly (macro environment). And he continues to do so, presumably with deals like the ones he did with Goldman Sachs and Burlington Northern.

Warren's success aside, I think its not unreasonable to use identification of intrinsic value as a method of finding profitable investment ideas (as opposed to, but not precluding, becoming the second richest man in the world).


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## Timmy (8 August 2009)

Frogacle said:


> I think its not unreasonable to use identification of intrinsic value as a method of finding profitable investment ideas (as opposed to, but not precluding, becoming the *second richest man in the world*).




Frogacle, are you not paying attention?  
Don't worry about results. 
Buffet's approach doesn't work, some dude on the internet told me.  
I have seen the light.


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## tech/a (8 August 2009)

motorway said:


> Most important things for Buffet
> is that he can see steady sustainable GROWTH
> at an ATTRACTIVE PRICE
> 
> ...




And as such there isnt a person on this forum who can trade like Buffett.
Ducati ran an exercise in this futility not long ago. (Attempting to find "Value" stocks and trading them to a profit.)


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## gamefisherman (8 August 2009)

Thanx for all the input to those who posted........some great banter........and yes agreed alot to learn here that is why we post....and if we get one get idea from a thread, usually many though.....lol in fact too many sometimes........we note it and work it through our heads.....


Cheers


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## mazzatelli (8 August 2009)

I'd chip in and reiterate motorway's point in being able to define and detect:

1) Structure in financial time series: 
Whether it is mean reverting, stochastic trend, or random

2) Regime Shifts
E.g. from mean reverting to trending regime

This is applicable to shorter term trading rather than longer term horizons.


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## Julia (8 August 2009)

Aussiest said:


> Sorry to OP for being off topic.
> 
> .



With apologies for what is probably woeful ignorance, what does 'OP' stand for?




prawn_86 said:


> I hope they dont mind me singling them out, but people like ROE, Kennas, Julia etc all use some form of fundamental 'intrinsic valuation' (either solely or in conjunction with other ideas) and they seem to have done well for themselves.



Prawn, sorry, but I've largely moved away from concerning myself with any sort of intrinsic valuation basis in favour of simply buying well known companies that are showing a solid uptrend, holding as long as they continue this, and selling when this turns around.
However, I'm still going to be aware of such companies' place in the overall macro situation.
What I simply don't do is buy dogs.  Quite possibly miss out on some good turnaround profits with this rule so good luck to anyone who is happy to take this sort of risk.




> Or you can simply say stocks make you the owner of part of a business and if you could, would you buy that business and not make any changes to it? If yes, then buy some shares.



Yes, remember Realist?  This was his approach.  He bought companies with the intention of holding them forever.   I can't think of too many companies to which I'd apply such a 'set and forget' approach.




tech/a said:


> And as such there isnt a person on this forum who can trade like Buffett.
> Ducati ran an exercise in this futility not long ago. (Attempting to find "Value" stocks and trading them to a profit.)



Ah yes, what an interesting thread that was.  Might be a good one for the instigator of this thread to read.  Do you remember what it was called, Tech?  Have a link to it?   Did Duc eventually concede defeat?


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## nunthewiser (8 August 2009)

op = original poster


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## Julia (8 August 2009)

nunthewiser said:


> op = original poster



Oh, of course.  Thank you, nun.

Re my earlier reference to the 'competition' between Tech/a and Ducati, here is some of it:

https://www.aussiestockforums.com/f...ghlight=technical+fundamental+analysis&page=4


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## MRC & Co (8 August 2009)

I'm not sure why you need to be the next Buffett to use 'value investing'.

Why do you need to be the next Soros to use 'global macro'?  

Or the next Paul Tudor Jones to use 'technical analysis'?

ROE is one guy who uses this 'value investing' approach as a stand alone tool and proof is in the pudding.  You can check his posts yourself and see his results and how aweful his 'averaging down into a sold company' strategy is........

It's his style, it works for him.  It has risk, he may blow up 20% of his account if the stock goes to 0, but any strategy in a bad period could do the same.

As for value investing, I would say another good proof is simple long/short equity hedge funds, many will use this sort of approach and many perform consistently with great results (as far as I am aware they are one of the best performing 'styles' in the hedge fund industry).

Stupid debate anyways, market goes up, market goes down, market moves sideways.  It's not exactly hard to work out how you want to exploit that, just look at different methods and work out what you think works.  Then do it.


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## tech/a (9 August 2009)

*Julia.*

It wasnt a competition as such but more a point Duc was attempting to make that he could return 30% compounding as Techtrader had for a few years at the time by simply value investing. Duc wasnt a technical trading buff and didnt believe in systems---or anything technical really.

His plan was to buy these low risk stocks which were grossly undervalued (By his valuation) and when they rose 30% or so sell them out while holding those which didnt reach 30% profit until they did. The reasoning was that as they were such amazing value fundamentally there was no way they wouldnt eventually increase 30% or more.

Here are the results.

https://www.aussiestockforums.com/forums/showthread.php?t=2829


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## motorway (10 August 2009)

tech/a said:


> *Julia.*
> 
> It wasnt a competition as such but more a point Duc was attempting to make that he could return 30% compounding as Techtrader had for a few years at the time by simply value investing. Duc wasnt a technical trading buff and didnt believe in systems---or anything technical really.
> 
> ...




To apply a "Buffet" or "Fisher" or even a "Graham" 
or any "Thematic" Type "Investing" can certainly be made to work for any 
"Investor" of any Size..

& Buffet does apply a _type_ of Black Swan type method
He is prepared to stick in a stock for a long time making nothing or even small losses.. So that he can make large profits..

TALEB principle of BLEED vs BLOW-UP

HOWEVER there is one reason ( maybe more )that BUFFET succeeded and DUC didn't..

Buffet no matter how attractive a situation IS
never buys unless He knows there is going to be Significant ACCUMULATION

IE his TIMING is VERY GOOD ( FOR HIS TIME HORIZON )

In a previous post in the thread I said "Buffet Knows something"
 a particular something..


OK for You to be a BUFFET or a GREENBLAT

you have to be more like a William O'NEIL  ( or the Original RD WYCKOFF )

You CAN NOT MAKE IT HAPPEN
You NEED TIME & TIDE WITH YOU

YOU have to be a "HITCHHIKER"  (RDW)

When Buffet buys 
HE makes it happen 
He is *ACCUMULTION * on the way down , in the range & on the way up

Mr _onlybuying1000shares_

Is not going to make it happen maybe never in his lifetime
If he is the only one seeing it ( BUFFET realized this when he was a smaller player too )

You buy and it just keeps on going down
or a whole year passes and everything else but your play takes OFF..

KEY you need to be working with the Composite MAN
you need to learn HOW to see
ACCUMULATION
whether on the way down, in the range or on the way UP
and then when the 'TRAIN is at the station'  AFTER IT HAS REVEALED a TREND ( some variations to timing of course particulars etc )

JUMP on for the RIDE...
( remember the Levy FLIGHTS it is all FLIGHTS & "JUMPS" so forget tools designed for WALKS ( most TA & a lot of FA )

TIMING MATTERS

DUC maybe _proved it_ 
He would run out of money_ before he found a positive black swan_
( pure comment on just that thread not on DUC in general )


So more William O'NEIL ( CANSLIM ) '" How To make money in Stocks"

or an ORINGINAL ( & VERY GOOD BOOK ) from 1926/28

How I Trade and Invest in Stocks and Bonds
Methods Evolved and Adapted During My Thirty-Three Years Experience in Wall Street
by Richard Wyckoff

Both CHEAP 

Don't fade the crowd ( be contrary for the sake )
Don't follow the crowd ( over cliffs esp )

But harmonize with the _COMPOSITE MAN/OPERATOR_

BULL MARKETS  & BEAR MARKETS
really do exist at ALL SCALES

ACCUMULATION is what happens before stocks are in a BULL MARKET
it is eg  TALEB principle of focusing on preparation

it is not Mr XYZ buying all the shares ( though at times it could be )

It is the  building of the jump off points of regime changes...


motorway


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