Investing Strategy

  • 29 Aug
    Why Price To Book Is So Important

    Why Price To Book Is So Important

    • The stock market has been only going up in the last 8 years, and will probably continue to do so.
    • Nevertheless, it’s good to take a look at valuations and other financial metrics.
    • One metric that’s often disregarded but extremely important is price to book value.

    Introduction

    The stock market (S&P 500) didn’t go higher last month, which is, to be a bit sarcastic, very strange. More →

  • 28 Aug
    5 Reasons To Be An Optimistic Investor

    5 Reasons To Be An Optimistic Investor

    • I often discuss risks, but this isn’t because I’m a pessimist. I’m just looking for the best risk reward investments.
    • Not being invested isn’t risky, it’s a certain loss of money. Being invested means you pay a fixed price now and what you buy will usually become a much higher price in the future.
    • All in all, the world is a better place every day. Better invest accordingly.

    Introduction

    I frequently discuss risks and talk about all things that can go wrong in my articles. Perhaps this makes some people see me as a never happy, problem seeking, Chicken Little. However, I am quite the opposite.

    I’m 100% invested and an extreme optimist when it comes to financial markets, the economy, and life in general. My focus on risk is simply to prevent losing money and to find investing opportunities that offer the highest reward for the lowest risk. More →

  • 25 Aug
    Why You Shouldn’t Hold Your Facebook Stock Forever

    Why You Shouldn’t Hold Your Facebook Stock Forever

    • Good long-term investments can only come from companies that possess durable competitive advantages.
    • I’ll mention 6 things to watch for when looking for a durable competitive advantaged.
    • Today’s tech companies don’t have large moats, but this doesn’t mean you shouldn’t invest in them.

    Introduction

    As you probably remember, 1999 was a great year for stocks and a relatively bad year for Warren Buffett and Berkshire Hathaway (NYSE: BRK.A, BRK.B).

    Warren couldn’t really compete with the hysteria surrounding dot-com stocks and his performance in 1999 was a mere 0.5% increase in book value while the S&P 500 was exploding. This was due to several of his investments lagging the market due to lower operating earnings. Nevertheless, Buffett mentioned in his 1999 letter to shareholders how he was still happy to hold onto those companies because over time, he believed his businesses would do better than the S&P 500. More →

  • 21 Aug
    Real Estate Vs. Stocks – What Sven Says Makes The Better Investment Today

    Real Estate Vs. Stocks – What Sven Says Makes The Better Investment Today

    • As investors, we must be primarily concerned about risk and return, not asset class.

    Introduction

    I often get a question from people that have a decent amount of money about where to put that money as they know I specialize in investing, and especially the stock market.

    They’re often surprised when I tell them to invest in real estate and to leave the stock market to those who can take advantage of the volatility and greater risks especially now that stock valuations are extremely high, or to do both as an excellent diversification strategy. More →

  • 15 Aug
    Is It Possible To Find A Wonderful Business At a Fair Price In Today’s Environment?

    Is It Possible To Find A Wonderful Business At a Fair Price In Today’s Environment?

    • We’ll first define what a wonderful business should be and what a fair price would be in relation to general stock market risk.
    • We’ll look at price earnings differences among sectors and countries to find places to look for great investments.
    • A list of S&P 500 companies with low P/E ratios shows that it isn’t easy to find wonderful businesses at a fair price.

    Introduction

    Warren Buffett’s main advice to investors is to find a wonderful business at a fair price. Now with the S&P 500 price to earnings (P/E) ratio of 24.34, that implies an earnings yield of just 4.1% which makes me ask myself, is it possible to find a wonderful business at a fair price today?

    I’ll first describe what a wonderful business is, look at what would be a fair price for it, and then look to see if there are any such businesses around. More →

  • 11 Aug
    Is Value Investing Dead?

    Is Value Investing Dead?

    • The last 10 years have been terrible for value investors as it has seemed like fundamentals don’t matter at all anymore.
    • There are limited options to be a value investor as the Russell 1000 value index has a price to book ratio above 2.
    • I’ll discuss three options for what a value investor can do and the historical results of such approaches.

    Introduction

    If you’re a value investor or have been invested in a value fund, you probably aren’t the happiest investor in the world right now. More →

  • 10 Aug
    The Hardest Part Of Investing & How To Do It Right

    The Hardest Part Of Investing & How To Do It Right

    • Deciding when to sell a stock is the most difficult decision in investing. It’s much more difficult than deciding when to buy.
    • I’ll discuss 5 strategies that can go a long way toward helping you in making the difficult decision.

    Introduction

    The vast majority of the discussion around stocks is about what and when to buy. However, what’s even more important than buying is when to sell.

    Knowing when to sell allows you to lock your gains in when you are right, limit your losses when you are wrong, and, most importantly, avoid selling for a small gain when the stock has the potential to double or more. More →

  • 04 Aug
    Think The Biggest Companies Of The S&P 500 Will Outperform? History Says Otherwise

    Think The Biggest Companies Of The S&P 500 Will Outperform? History Says Otherwise

    • The strongest companies in the S&P 500 may look invincible now, but history shows us this won’t last forever.
    • None of the companies in the S&P 500’s 1980 top 10 are still there now.
    • Top 10 S&P 500 companies largely underperform the S&P 500 in the long term.

    Introduction

    Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Johnson & Johnson (NYSE: JNJ) are the 5 largest holdings of the S&P 500 accounting for 11.74% of the index. The other 495 companies account for 88.26% of the S&P 500 which is a pretty strong imbalance, but that’s how the S&P 500 is formed. Its weightings are based on market capitalization. The bigger the market capitalization, the bigger the weighting in the index. More →

  • 01 Aug
    Want The Secret Formula For Economic Success? Look To Ray Dalio

    Want The Secret Formula For Economic Success? Look To Ray Dalio

    • It’s possible to estimate a country’s economic growth with precision and I have done so in this article. Perhaps it’s better to say that I used the available—and free—research done by 1,500 Bridgewater employees.
    • As future economic trends are pretty clear, it’s important to position one’s portfolio accordingly.
    • However, don’t just jump into emerging markets at any price. Compare the fundamentals and the growth in relation to your investment horizon.

    Introduction

    There’s a lot of talk about economics, economic growth, what drives it, etc., but there aren’t many facts that properly show links between causes and effects.

    One person who researched those links and shared the findings is Ray Dalio, hedge fund manager of Bridgewater Associates. In today’s article, I’ll describe what Ray found and then analyze how we can best position our portfolios in order to be more exposed to positive forces and less to negative forces. More →

  • 20 Jul
    Sven’s List Of The Five Books Every Investor & Trader Should Read

    Sven’s List Of The Five Books Every Investor & Trader Should Read

    I love books on investing, and find them to be the best possible investment. For just a few bucks, you can get the synthesized knowledge of the most successful investors. On top of that, many also discuss their mistakes, which are an even more valuable source of learning.

    So with that, today I’ll the list the books on my list that I think every investor or trader should read alongside a short commentary. More →

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