Value Investing Principles: April Checklist Invested Book

Value Investing Principles: April Checklist Invested Book

In my investing practice, I apply the lessons I learned from Danielle Town’s and Phil Town’s Invested Book (2018) April chapter: First Principle of Value Investing.

If you’re interested in learning how to take control of your finances and start becoming an investor like Warren Buffett, check out my free PDF guide on my free resources page!

Based on what I learned from this chapter, I created the following checklist (get out your notepad!):

  1. Mentally commit to start researching companies and industries of interest this month
  2. Do the Three Circles Venn Diagram to do investing research in one’s areas of interest
  3. Choose & read a newspaper for business news
  4. Practice an “Investing Intensive”: Read the “Buffett Bible” aka the Berkshire Hathaway Annual Letters
  5. Start building a Wish List of companies I’m interested in learning more about or buying
  6. Look at companies’ 10-K Annual Reports and Gurus’ 13F Filings in the SEC EDGAR site
  7. Allocate some time to these efforts in one’s schedule and just go for it

If you want to value invest in businesses like Charlie Munger, there are 4 key musts:

  1. We are capable of understanding it
  2. Intrinsic characteristics that give it a durable competitive advantage
  3. Management with integrity and talent
  4. Buy at a price that makes sense and gives a Margin of Safety (MOS)

I cover why Warren Buffett does not invest according to Efficient Market Hypothesis or Theory (EMH/EMT). A key mindset is to think of value investing as buying a business, not a stock. I also cover high level market indicators of the Robert Shiller PE ratio (CAPE) and the Warren Buffett yardstick or Wilshire GDP ratio. These ratios seem really high and are enough to scare me about investing too much right now.

Even Warren Buffett is sitting on over $100 billion of cash and he’s waiting for a market storm in order to buy companies on sale. Charlie Munger says it’s better to buy a wonderful business at a fair price than a fair business at a wonderful price. Practicing principled investing rocks!

Many of us who might like to invest like Buffett could become part of a community of Superinvestors of Buffett and Munger-ville! (Imagine updating Superinvestors of Graham and Doddsville article of 1984). Phil Town calls this style of value investing Rule Number 1 or Rule #1.

We should get to really know our circles of competence. Buffett has a Too Hard tray or box on his desk where companies go when he doesn’t think he understands them.

Furthermore, I visit the SEC EDGAR search and other sites to check out required filings of companies and investors including Berkshire Hathaway and Bill Ackman to give some clues as to what I might like to invest in.

All of us are on the journey towards FIRE (Financial Independence, Retire Early) and it is one filled with much gratitude and enlightenment, and I look forward to making more investor friends.

Add me on instagram @ michellemarki! 🙂