Introduction: Picking Great Stocks is Tough
0. Successful Investing is simple, but it's not easy.
1. Bad news - Picking individual stocks requires hard work, discipline, and an investment of time (as well as money). There's no magic formula and there's no guarantee of success
2. Good news - basic principles of successful stock-picking aren't difficult to understand and the tools for finding great stocks are available to everyone at very low cost.
3. Basic Investment process is simple - Analyze the company and value the stock. Great company and great investment can be very different. Don't make the mistake of confusing this.
4. Your goal as an investor should be to find wonderful businesses and purchase them at a reasonable price.
It's the Business that Matters
5. This book focuses on company's fundamental financial performance - Company fundamentals have a direct effect on share price.
6. Analyst upgrades and chart patterns may be fine tools for traders who treat Wall St like a casino - but they are of little use to investors who truly want to build wealth in the stock market - get hands dirty and understand the business of the stocks you own
7. We firmly advocate focusing on the long-term performance of businesses because the short-term price movements of a stock is completely unpredictable.
The Long-Term Approach
8. Given the proclivity of Mr. Market to plead temporary insanity at the drop of a hat, its not worth predicting its actions
9. Thousands of truly exceptional money managers don't spend any time at all thinking about what the market will do in the short term.
10. Betting on short-term movements means doing a large amount of trading, which drives up taxes and transactions costs.
Having the Courage of your Convictions
11. Successful stock-picking means having the courage to take a stance that's different from the crowd.
12. Investment success depends on personal discipline, not on whether the crowd agrees or disagrees with you.
Let's Get Started
13. Successful investing is built on five core principles:
1. Doing your homework
2. Finding Companies with Strong competitive advantages
3. Having a Safety Margin
4. Holding for the Long Term
5. Knowing when to Sell
14. Summary of chapters
0. Successful Investing is simple, but it's not easy.
1. Bad news - Picking individual stocks requires hard work, discipline, and an investment of time (as well as money). There's no magic formula and there's no guarantee of success
2. Good news - basic principles of successful stock-picking aren't difficult to understand and the tools for finding great stocks are available to everyone at very low cost.
3. Basic Investment process is simple - Analyze the company and value the stock. Great company and great investment can be very different. Don't make the mistake of confusing this.
4. Your goal as an investor should be to find wonderful businesses and purchase them at a reasonable price.
It's the Business that Matters
5. This book focuses on company's fundamental financial performance - Company fundamentals have a direct effect on share price.
6. Analyst upgrades and chart patterns may be fine tools for traders who treat Wall St like a casino - but they are of little use to investors who truly want to build wealth in the stock market - get hands dirty and understand the business of the stocks you own
7. We firmly advocate focusing on the long-term performance of businesses because the short-term price movements of a stock is completely unpredictable.
The Long-Term Approach
8. Given the proclivity of Mr. Market to plead temporary insanity at the drop of a hat, its not worth predicting its actions
9. Thousands of truly exceptional money managers don't spend any time at all thinking about what the market will do in the short term.
10. Betting on short-term movements means doing a large amount of trading, which drives up taxes and transactions costs.
Having the Courage of your Convictions
11. Successful stock-picking means having the courage to take a stance that's different from the crowd.
12. Investment success depends on personal discipline, not on whether the crowd agrees or disagrees with you.
Let's Get Started
13. Successful investing is built on five core principles:
1. Doing your homework
2. Finding Companies with Strong competitive advantages
3. Having a Safety Margin
4. Holding for the Long Term
5. Knowing when to Sell
14. Summary of chapters
- Chapter 1 - develop an investment philosophy
- Chapter 2 - Know what not to do. Avoiding mistakes is the most profitable strategy of all. Overview of most common mistakes that investors make.
- Chapter 3 - How to separate great companies from mediocre ones by analyzing competitive advantages aka economic moats.
- Chapter 4 thru 7 - Analyze companies reading their financial statements
- Chapter 8 - Detect aggressive accounting
- Chapters 9 thru 10 - how to value stocks.
- Chapter 11 - two case studies that applies tools (fundamental analysis) presented in the previous chapters
- Chapter 12 - 10-Minute Test - a quick-and-dirty checklist that can help you separate firms that are unlikely to be worth your time from the ones that deserve a thorough, in-depth examination
- Chapters 13 - thru 26 - tips for analyzing different sectors of the stock market