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March 21, 2010

When To Sell?


Selling is always the hardest part of investing. If you get the investment wrong, you should sell. It’s simple. Your only real decision is if you sell right away because things are about to collapse or if you should wait for better prices. This is on a case by case basis. A lot of the time, you just get tired of holding an investment. ... Read More
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March 15, 2010

What Does Cheap Really Mean?


Everyone tells you that they want to buy cheap stocks. What does that mean? There are so many metrics out there: price to sales, price to book, price to earnings or cash flow. Which are the key ones? I think people get caught up too often looking at a few key metrics and they lose sight of the bigger picture. In the end, most ... Read More
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March 14, 2010

Let’s Talk Risks…


Investing is pure risk. Companies can and do go bankrupt. Go to the library and look at a list of large companies from 1950—very few of them still exist. Go back another twenty years. Almost none of the companies from 1930 still exist. Your goal is to make sure that you only invest in things that will exist for at least the next few ... Read More
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March 12, 2010

An Ode To The PIPE


Public Investments in Private Equities, also known as PIPEs are one of the most misunderstood and underappreciated tools that most small company investors have. The majority of small businesses don’t make it. They fail because they are undercapitalized. That is why companies go public in the first place—to access capital. Let’s say a small company is growing quickly. They need money to expand, hire ... Read More
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March 12, 2010

A Short Story


Look in the Forbes 400 list. Who’s there? Entrepreneurs who built something impressive, and the kids of those visionaries. Successful investors. The occasional Royal. Not surprisingly, there are no short sellers on the list. Short selling is dangerous to your portfolio and I no longer partake. A quick history will suffice. For a decade, on average I doubled my money each year investing in ... Read More
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March 7, 2010

What To Look For In Small Company Management


When you are investing in a mature company, you are investing in a brand. You are investing in a business. For the most part, unless the guy running it is a criminal, it just doesn’t really matter that much who is in charge. Even if the CEO quits, there is a strong pool of talent to choose from and it is unlikely that a ... Read More
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