Intro to Fight Club- I Mean Value Investing

For most people, low-cost ETF/Index funds are probably one of the best investment choices out there.  Note: as an Amazon associate, I may receive a commission if you purchase on Amazon using one of the links on this page.

I want to reach financial security and independence as quickly as possible, and one of the best ways to do that is to beat the market.

The most consistent, fundamental, and simple way I have ever known has been value investing, first espoused in depth by Benjamin Graham and David Dodd in Security Analysis and popularized by Warren Buffett.

I can probably save you some time and 2.6 pounds of reading with three rules:

#1. Follow the cash.
#2. Always have a “margin of safety.”
#3. Never forget rule #1.
#4. You DO NOT talk about FIGHT CLUB.  (Sorry, wrong list.  Also seeing if you’re paying attention.)

Simple right?  

Please don’t quit your day job… yet.

As simple as they sound, it’s interesting how a lot of people ignore, overlook or simply don’t understand what a company is doing with its money or how the company is making or losing money.

You’d think that when investing cash people would care about how much cash they could expect to get back, right?


Instead, its like watching people expecting to win the lottery.  People buy stock like Twitter and Tesla assuming that the stock is a lottery ticket without regard to how much in profit those companies can ever return to shareholders.

(By the way, those companies are losing hundreds of millions if not billions of dollars a year.  They may be profitable investments in the future, but certainly not value investments.)

For example, how many of you look at Annual or Quarterly Corporate Filings before making an investment?

I’d bet almost all my cents its less than 5% of you, and I really believe it’s probably less than 1%.

Without researching what you’re getting, it’s like buying a house because your “close friend” Morgan Stanley told you too, but you never visited the neighborhood, estimated its cash flow from rent, estimated resale value, looked at comparables and checked to see if the house fit your investment or personal objectives.

I find it pretty interesting that some people spend more time saving money on groceries than doing due diligence on stocks that they put real money on.  (I’m still looking at you, TWTR and TSLA.)

Talk about penny wise and pound foolish.

What companies are you invested in and how do you do your due diligence?

Leave a Reply

Your email address will not be published. Required fields are marked *