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Archives for May 2013

The Most Dangerous Software for Investors

A consultant died and went to heaven. There were thousands of people ahead of him in line to see God.

To his surprise, God left his desk at the gate and came down the long line to where the consultant was, and greeted him warmly. God took the consultant up to the front of the line, and into a comfortable chair by his desk.

The consultant said, “I like all this attention, but what makes me so special?”

God replied, “Well, I’ve added up all the hours for which you billed your clients, and by my calculation you’re 193 years old!” 🙂

Laughing at God’s response?

Well, that’s the way consultants really bill their clients.

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What Value Investing Is, and Isn’t

Charlie Munger stated it quite clearly. “All intelligent investing is value investing — acquiring more than you are paying for.”

So, value investing equals intelligent investing.

Ask anyone who has a faintest idea about value investing, and the general view is that it is same as bottom fishing, or buying cheap stocks – those that are trading at low price to earnings (P/E) or low price to book value (P/BV).

But this is far from truth.

Value investing is much more than buying cheap stocks.

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IL&FS Investment Managers: A Business on a Treadmill

I first heard about IL&FS Investment Managers (IIML) when Prof. Sanjay Bakshi mentioned it in his interview with Safal Niveshak.

Since then, I have wanted to analyze the business, but could not do so until March this year, when a “back-of the envelope” analysis led me to buy a few units of the stock at almost the current price.

But then, I lost that envelope 🙂 and decided to do a re-analysis of the company, which I present here.

Before I begin, please know that this analysis is just to cheer you up on a hot Friday afternoon and remind you that the weekend is here. 🙂

My mind generally goes off to sleep as the weekend approaches (though my entire week is like a weekend), so be very careful of whatever conclusions you draw from what you read below.

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How to Read

As a reader, two questions may have come on top of your mind right now.

One, “Why is a site that should tell me ‘how to invest’ telling me ‘how to read’?”

And two, “Who needs to learn how to read?”

The answer to your first question is – Before you invest, you must read. What to read? First, read my outline of a 2-year course in investing.

The answer to your second question is – Before you read, you must learn how to read.

But then, as you rightly asked, who needs to learn how to read?

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30 Big Ideas from Seth Klarman’s Margin of Safety (E-Book)

With the possible exception of Warren Buffett, no investor today commands more respect than Baupost Group’s Seth Klarman.

Since founding his investment partnership in 1983, Klarman has not only produced unrivaled returns (in excess of 20% per year), but he has also from time to time offered wise and timeless commentary on markets and the craft of investing.

He is the author of Margin of Safety, Risk Averse Investing Strategies for the Thoughtful Investor, which became a value investing classic ever since it was first published in 1991.

As I was reading Margin of Safety for the third time, I thought of collating the key ideas Klarman has written about, and present to you as a compilation.

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Your House is Your Best Investment. Really?

This post has been written by Nishanth Muralidhar, a Safal Niveshak tribesman.

One of the great enduring myths of the Indian middle class is that an investment in real estate can never go wrong, and that buying or constructing a house is the best investment that you can make.

I believe Vishal himself wrote a post on Safal Niveshak stating that his house was the best investment for him.

———————–Safal Niveshak Value Investing Unconference 2013——————

Announcing “The 2013 Safal Niveshak Value Investing Unconference”, a 2-day meetup of Safal Niveshak tribesmen where we discuss and debate unique and profitable investment ideas and get to know other members of this tribe better. Click here to Register
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Well, we are here to see if that statement holds true regardless of age, life situation, and individual circumstances for all investors. But first…

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Announcing: The Safal Niveshak Value Investing Unconference

If you have ever wanted to attend a value investing conference but have never been invited to one (like me)…

If you have ever wanted to network with fellow small investors but never knew where to look…

If you are open to learn from others’ investing gains and pains…

If you are open to take a mini-holiday of different kind…

Here’s announcing “The 2013 Safal Niveshak Value Investing Unconference” – a 2-day meetup of Safal Niveshak tribesmen.

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A Tribesman Visits Warren Buffett’s Annual Meeting 2013

Janardhanan Vembunarayanan (Jana), a long time Safal Niveshak tribesman, recently attended Warren Buffett’s 2013 shareholder meeting in Omaha.

He sent me his notes from the trip, which I requested to be used on the Safal Niveshak website.

Jana agreed, and here are his (unedited) notes from his trip to Omaha.

My Visit to Berkshire Hathaway Annual Meeting 2013
by Janardhanan Vembunarayanan

In 2006, I got interested in investing. I read a lot about Warren Buffett and his investment style. I wanted to become a shareholder of Berkshire Hathaway and attend the shareholders meeting.

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