The Long-term Investor by M.A. Wylie

[stardust1984]

Hi all,

I am a newbie, fresh starter. I am applying for a CommSec account and just registered an account with ASF. I was bombarded with ton of useful information on this forum. I picked up this book "The long-term invester by Wylie" last year but I was too busy (and lazy) to read it carefully.

Recently I found out that I can invest my super in stock market instead of paying some financial adviser I do not know to invest my money. I decided I will invest my super by myself and also invest part of my saving in the hope to make it grow

Enough about me, I started this thread to remind myself to keep learning and also to share and to discuss about investment strategy. I will spend at least one hour per day to read the book and make note of key points in each chapter and another hour to read the forum and newspaper.

Chapter 1: What is business perspective investment
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Investing shares in the belief that the market - or more accurately the investors - is wrong in its current investment of the company and overtime the share price will graviate towards the true value of the company. This strategy is only for long-term investor.

Criteria for purchasing a share include the company's:

• Management
• Current and projected earnings
• Current and projected financial figures
• Position in its market
• Outlook for next 5-10-15 years
• Product and service

Company management is very important. Investors must find out:

• Company's performance history
• Company's plans for the future
• Manager's knowledge and altitude about the business
• Whether managers operate the business in an honest and rational manner

Another very important factor is company's products or service. Investors must find out:

• Does the company have a 'consumer monopoly' or a strong brand name
• Demand for the product or service
• Who are the competitors?

As an investors, you MUST also ensure that you personally understand the industry that the company operates in.
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If you are experienced investor, you might think what I've just written is too obvious and laughed at me. It's ok, I am here to learn, please help. My questions about this chapter is:

1) How can you do research about the company management?
2) How do you know that the company is well-managed?
3) If you cannot contact the managers directly (I am a small potato, they will not see me anyway), is there anyway to find out their management strategy and also assess their knowledge and management skills.

Any help would be greatly appreciated.

 

[beamstas]

Re: The long-term invester by M.A. Wylie

1) How can you do research about the company management?

You should be able to search around and find info on the company or maybe a propsectus. I'm guessing you'd look at who is managing and what they are doing, what else they have managed, that type of things.

2) How do you know that the company is well-managed?

Out performing other companies in the same sector.

3) If you cannot contact the managers directly (I am a small potato, they will not see me anyway), is there anyway to find out their management strategy and also assess their knowledge and management skills.

This is probably just a personal judgement call.

 

[stardust1984]

Re: The long-term invester by M.A. Wylie

1) How can you do research about the company management?

You should be able to search around and find info on the company or maybe a propsectus. I'm guessing you'd look at who is managing and what they are doing, what else they have managed, that type of things.

2) How do you know that the company is well-managed?

Out performing other companies in the same sector.

3) If you cannot contact the managers directly (I am a small potato, they will not see me anyway), is there anyway to find out their management strategy and also assess their knowledge and management skills.

This is probably just a personal judgement call.

Thank you for your advice
I know this is not an easy game and it will require a lot of hard work.

 

[beamstas]

Re: The long-term invester by M.A. Wylie

Thank you for your advice
I know this is not an easy game and it will require a lot of hard work.

No problem, i don't know much about 'investing' but there are a few here that do.

brad

 

[stardust1984]

Chapter 2 The business perspective investor
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Becoming a business perspective investor means ignoring many popular beliefs about the market. The investor must be always curious to find out all he/she can about the company, to find out something not many other investors know.

Number of key points to remember:
1) Develop your own personal system and stick to it ALL the time. There are exceptions but you must be able to justify your decision of changing the system.
2) Prepare a report on investment you plan to purchase and it meets your selection criteria.
3) Do research by yourself and have someone you trust looks over your work and ask some hard questions.
4) Do not let emotion interfere, all decision must be made based on analysis.
5) Broker' advice may be added to your analysis but should not be the basic to your decision
6) Do not follow the crowd.
7) Do not buy shares just because the price is low
8) Do not put your eggs in too many basket, holding 8 to 10 types of share is good for part-time investor
9) Expect to hold the shares for long, recommended 3 years
10) This not a race, do not buy just because you have cash
11) Analyze and learn from your mistake
12) Do not watch the market intently
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I have few questions about this chapter:
1) The author mentions about setting a period to hold share, and even hold the share in a boom time. I do not totally agree as if you see the profit you should sell. I believe we should set exit criteria for each investment. Am I wrong here?
2) I feel like it is a hunting game, as a part-time investor, can I manage 8-10 types of shares as recommended by the author. In order to do proper research on the companies, 2-3 are more than enough for me. Am I too lazy?
3) The author advised not to watch the market regularly, how often should I look at the share prices?