common stocks and uncommon profits ediz

Common Stocks & Uncommon Profits: Chapter 4

April 7, 2021 by themarathiinvestor 1 Comment

Hello friends, In today’s article we see what to buy: applying this to your own need, from chapter 4 of Common stocks and Uncommon Profits book. Chapter 4 helps you to find which stocks we have to buy and what is the reason for that from the Common stocks and Uncommon Profits book.

Previous Chapter

What to buy: Applying this to your own needs:-Common Stocks & Uncommon Profits: Chapter 4

After studying the 15th point, we have some, like, This work is done by myself or finds some expert.

There are three stocks, Large-cap, Small cap, Mid Cap category stocks. So between that which stocks we have to choose.

Which stocks we have to buy, those pay the dividend and without paying the dividend stock. this all depends on your need.

People have misconceptions about successful investors. They are thinking, Investors are bookish person, that only read a balance sheet and analyzes the financial statements. (Common Stocks & Uncommon Profits: Chapter 4)

If you think like that and work like that, then you get the stock at a bargain price. But after some time these stocks become the value trap.

So, friends, this is the book for making money while taking low risk.

This is only happening by buying growth stocks, and growth stocks are giving each and every decade a 100% return on investment.

So the author only talks about these growth stocks that give 100% return by staying 5 to 10 years. with it.

The authors say, Investor only gives some time to his investment, suppose you have the ability, and time also. (Common Stocks & Uncommon Profits: Chapter 4)

But maybe don’t have time to meet the customer and supplier. If you have time to talk but you don’t know to talk to the customers and supplier and not know which type of question you have to ask.

If you have all the above things, but don’t have to develop an interest in people to talk with you, that tell you all information about the company.

If you have all this ability, then you may not have judgement power to get the meaning thought on that information or if this also has the ability. (Common Stocks & Uncommon Profits: Chapter 4)

if maybe happen, you, your geography is not good, for example, you stay in the village and this person in the city so you can’t meet them.

If you face any of the problems above discussion, then take advice from experts. So don’t toy to be own doctor and lawyer.

So this principle also helps you to find good experts.

If you choose any experts, then you have to see their 5 years record,

If they have a good record then only then give them money. If not then don’t give money.

See advisor is honest and others is ask him investment philosophy that studies in this book. then that better adviser then you know how they got the five years return. (Common Stocks & Uncommon Profits: Chapter 4)

by timing the market or invest in the marginal company or following this 15th principle, that why you have to see his five-year result return.

Three types of the company by following 15 points you get the outstanding company in that.

Large-caps: Those companies have good profits and better financial position or also called institution stocks because insurance company invest in that. For example of Dow Chemical, Du Pont, IBM from 1946 to 1956, three companies stocks are going 5X in 10 years and dividend return goes from 2.5X to 8 and 9 % on original period and this is not an unusual period this is a normal period.
Small and young companies: they have outstanding management and research scientist are capable for example, Amplex stock in 4 years is going 8X.
Between large and small-cap companies ( mid-caps): Small company give you 1000X gain in 10 years. if you wrong then one dollar penny does not remain, so the skilled investor can be done a mistake.

Large companies losses usually temporary, if you buy right time stocks (Common Stocks & Uncommon Profits: Chapter 4)

So what is a good time we see in the next chapter

How much money invest in large-cap companies stocks give more profit but not that much, those give small company.

How much money invest in large-cap companies stocks or how much in a small company is all depend on you.

Profits from big companies are minimum the total loss outway, that happen in a small company.

if a small company is successful then they become a large company.

* High-dividend yield vs Low-dividend yield growth stocks:

Small investors can not live on dividend, whatever amount of a dividend of high, because his overall investment is small.

A small investor having to be sufficient emergency money for their circumstances. If after that some money is behind then only invest for the long term.

If investors circumstances are like they don’t need dividend, then the author says, they have to invest in the company and have to compound their money. (Common Stocks & Uncommon Profits: Chapter 4)

The author’s personal point of view says Small dividend income is not important as after a few increases in maximum income and the author’s sons have a chance to become wealthy in these stocks.

Every stock depends on two things

How skillfully you apply this 15th principle
Matter of good luck

Good luck is best for one stock, if you have maximum stocks, then luck is an average one. luck only matters when you have only one stock or a few.

the author says previous 35 years that many studies on high dividend stock and low dividend growth stock. Each stock outperforms in a 5 to 10 years period.

Surprisingly these stocks have increased their dividends such that they were paying greater dividend return on original investment ( though dividend yield still the low company to compared to increased stocks price) than high dividend yield stocks.

So this is all about chapter 4 of common stocks and uncommon profits.

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Investment Secret of Warren Buffett

March 30, 2021 by themarathiinvestor 1 Comment

Hello friends, in today’s, article we see how warren buffet use the method for his investment and they become the investment secret of warren buffett, that come form the chapter 2 of common stocks and uncommon profits book. This secret of warren buffet help him to become the $100 billion club person.

Previous Chapter 1

Chapter 2: What ” Scuttlebutt” can do (Investment Secret of Warren Buffett)

So friends, we know up to now is form stock market we can make a lots of money, just finding outstanding company and invest in that.

How to know we this company is outstanding company or what, this is only possible by using the Scuttlebutt method. (Investment Secret of Warren Buffett)

So many people says this method, we can’t apply, so authors say’s those people, if you want to find out the outstanding company, you should have to follow it.

So let’s starts, you have to talk with customer, suppliers, competitors, management and former employee, by asking this peoples you get the clear image of company of relative strength and weakness. this people are right about the company, because they directly involved in the company connection. so this people know better than the outsider broker. (Investment Secret of Warren Buffett)

You can also talk other people like research scientist in universities and government company. And you can also talk with executives of trade associations and former employee of the company.

The former employee help you to know about companies strength and weakness insights so whatever you get the information, you have to make them cross check, of that information because it is very important.

Some time employee is fired and they talk bad thought on the company, so you have to ask them question like, ” why are you leave the company.” So this question help you to know his thought is right or wrong about the company. (Investment Secret of Warren Buffett)

It is not necessary to get you whatever information about company from any part is almost true as company show you. so you have match it. and compare this information and that information and use the common sense and get the right outstanding company.

If Company is outstanding, then average investor also get clear image of that outstanding company. If you like a company by scuttlebutt method, then you to do talk to the management. (Investment Secret of Warren Buffett)

After meeting management people, you can fill the gap present in your clear image of outstanding company.

if you talk five companies of any industry, and you have to talk about other 4 company to one companies that you have to invest in that. After asking this, you get the best information about the companies and there strength and weakness. And you get the clear image, which company is better than the other company. (Investment Secret of Warren Buffett)

While following scuttlebutt method ( talking customer, supplier, employee, former employee, competitors, and management peoples) we get the information that we know which company is outstanding or not.

READ more: One Up On Wall Street book summary

But now question is what actually we have to talk and what we have to know about asking questions they will we see in next chapter. (Investment Secret of Warren Buffett)

So, this is all about the scuttlebutt method, they ken(Philip A. Fisher) talk about the diamond point of this book.

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Common Stocks and Uncommon Profits: chapter 1

March 29, 2021 by themarathiinvestor 1 Comment

Hello friends, in today’s article we see the chapter 1, clues from the past of common stock and uncommon profits book. In this book Philip A. Fisher explain the how we can learn form the history, and how people are makes money in history, in chapter 1, clues from the past of common stocks and uncommon profits book.

Previous introduction part

Common stocks and uncommon profits Chapter 1: Clues form the past

Philip A. Fisher say’s by seeing the past of stock market, they get

People are comes stock market for only one reason is that they want to make money in the market. So in past they use the two methods to make money in the market.

By predicting business cycle, and betting on that prediction, they buy the stock at the bad time and sell stock at the good time. So they collect the information from there connection and know the when the bad time is come and when to buy that bad stocks. Those people have the more connection that prediction is goes more accurate and they make the money.
Finding outstanding company and hold them on good and bad time of business economy. So this method helpful to get the low risk and maximum profits. (Common Stocks and Uncommon Profits: chapter 1)

So comparing both method, you get the good result of second way than the first one.

And this second method is more profitable for more people, But you have to identify the out standing company.

So outstanding companies opportunities also available in past and they are also available in present, and they are maximum in number as compare to the present. Because in past there are only the family business present, and they only run by the family member, whatever the person is they deserve or not the company, but they run the company.

But in now time, if in any family business they are not capable to run the business, they hire the most eligible management.(Common Stocks and Uncommon Profits: chapter 1)

Other things is that now business are spend more money on the research or R&D department. This is start form the Hitler time, in Hitler army, there are so many research are going on the weapons, so that’s why they become very famous, so every country they know about the power of R&D. So there from each and every country start developing research and spend money on R& D. (Common Stocks and Uncommon Profits: chapter 1)

So people make the R&D of commercial products also. Now the companies revenue about 20% is come from the those product that are actually not even present or develop.

So doing research is good, if you don’t do the R&D, is more expensive than doing R&D.

Bond:

Bond is very bad investment for long term, because the simple one is infection.

This inflation is more than the bond interest. Your money is going negative while you choose the bond as a long term investment.

So bond is only profitable when you have to know how to time the interest rate of inflation in short term.

So get the whatever the coupons on the bonds they are very less in value as you give them and buy bonds.

Author say’s from past we have to learn five things, (Common Stocks and Uncommon Profits: chapter 1)

those people makes the maximum return by identifying outstanding company, those company that sales and profits grow fast than the there industry.
When you have found such a company and hold for long period of time, get the maximum results.
this is not necessary to this type of company is small cap, but company management is intelligent enough to handle the problem of company, and identify the new opportunity for the company to grow, and make the company profitable.
Growth is comes from research that, those product which is develop from the existing product.( Growth is associated with knowing how to manage research to bring to market economically worthwhile and usually interrelated product lines.
Opportunities that present before 25-50 year that are now present also and more than.

So this is know us form the history stock market, money making stategy.

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Read more: one up on wall street book

Common Stocks & Uncommon Profits

March 28, 2021 by themarathiinvestor Leave a Comment

Hello friends, in today’s article we see COMMON STOCKS AND UNCOMMON PROFITS book introduction. In this introduction Philip A. Fisher son write the three different preface about the COMMON STOCKS AND UNCOMMON PROFITS book. This introduction help you to know about the which parts of this book is very very much important and other parts is most valuable. So let’s start’s with first preface.

Introduction:-Common Stocks & Uncommon Profits

Ken fisher written three preface, let’s starts with first preface

What i learned from my father’s writing:-Common Stocks & Uncommon Profits

Ken fisher says, his first stock is reverse 10 bagger, means if they buy the $100 stocks and that stocks goes to $10. So that lose is 90% means 10 bagger reverse stocks.

So ken fisher say’s , ” he is not the clear or topper of the class in college and school, and not even completed his higher education from famous university like Harvard university or nothing his special accomplishment they has to written in this preface.” (Common Stocks & Uncommon Profits)

But they got the 15 points from in COMMON STOCKS AND UNCOMMON PROFITS book, and now they manage the billions dollar in his funds. So if they do without doing anythings is special so any buddy can be do better in the stock market by applying this 15 points.

Ken say’s, ” In this book 15 points is directly says the how to buy company if you want to maximum profits, and if you compare that stocks with scuttlebutt method then you know company actually what is the business and how it grow and what problem comes in this process.”

Scuttlebutt method:-Common Stocks & Uncommon Profits

In this method, you have to talk companies employee, supplier, competitor and customer and also the management of company. Why this people? because this people know the know what is going in the company and clear image of strength and weakness. Customer tell you about the product and why they people buy again and again, and how they know about the new products means service and marketing department information. Supplier tell, about the raw material side or inventory of company. Competitor say’s how company is strong and his weakness. (Common Stocks & Uncommon Profits)

So this information you get by following the scuttlebutt method, so this information you found on the main street not on the wall street or dalal street, So this information is good and trustworthy.

If you want to collect information form the wall street, then you face the dot com bubble candle sticks so you get the information form the main street is safe and trust worthy than the wall street candle sticks charts and financial reports of accounting. (Common Stocks & Uncommon Profits)

If you are ask customer and supplier, you get the truth of company.

Scuttlebutt technique is very helpful to you to stay away from those company that have the good on paper but actually not in real situation, so this types of company stocks get in ponzi sheme, then they lose the 90-95% stocks value.

So this 15 points help you to define which types of company you found, is outstanding company or Ponzi scheme company. (Common Stocks & Uncommon Profits)

Philip A. Fisher believe in hodling stock forever, and ken believe in holding stocks for 5 to 10 years and growth stocks, value stocks, large cap stocks, small cap stocks, all types of stocks you can use this method, because this method help you to find out which is quality company, whatever they company in any industry.

Ken say’s Scuttlebutt chapter is about 3 page but they told this is best part of book and very important parts

One of the best questions of Philip A. Fisher is not in this book, key say, ” What are you doing that your competitors aren’t doing yet. “

So that means if company is not doing anythings means they lead the others company in same industry and other company follow that company. (Common Stocks & Uncommon Profits)

Ken says, 15 points of company quality and scuttlebutt method is the diamond of this book. so and other topic is also very much important, like 10 don’t for investors.

So ken suggest you have to read this book as many as time while you analyze company.

Second preface is all about the Philip A. fisher family, you can read, buying this book, by click on image, so let’s

Starts Preface by Philip A. Fisher :

In this preface author give the shorts story of writing this book. Before writing this book, author run the investment counselling business at the age of 26, they run this for 10 years, and after that

in 1941 he got the job in army air force. They work there for 3.5 years. so in this time period they reviewed there investment actions. So from that review some good points is born that are different from the financial community analysis rules. (Common Stocks & Uncommon Profits)

After end war they use this 15 points and they got the good return for 12-13 years, and they want to keep the printed record, so they write this book.

Author says, beyound that 15 principles other two importance things matter for investment success.

Need patience for making big profit.
Stock market is deceptive and follow the crowd , the results are not good.

so from next article, you get the chapters of this book.

Read more: One up On wall Street book summary