Question: How many individual stock do you have in your portfolio? Any good value investment forum to recommend?

Stephen Lai: Also check out : warren Buffett Stock Portfolio by Mary Buffett David Clark
Michael T. Nowacki: Valution: Meausirng and Managing…by McKinsey (buy older version to save money)
Michael T. Nowacki: You can get a free valuation course by a very good NYU professor here The best way to learn investing is to learn about as many companies and industries as possible. Read WSJ and Barrons. Watch CNBC and Bloomberg. Study Value Line every week. You need to know at least basic accounting so you know how to create and read financial statements. Essays of Warren Buffett, Common Stocks and Uncommon Profits, Margin of Safety by Seth Klarman (goes for $900 on amazon, you can download PDF file from Google search)
Senad Hadziahmetovic: Hi guys, thank you for your help – especially you Michael Nowacki! I come from hospitality management background but had a nasty spine injury last year so was stuck home and this is how I got interested first in trading and now in investing. I do have some basic accounting knowledge and so far Ive read Intelligent investor, Three questions that count, Warren Buffet Wealth. Now I have loads of books in pdf and need to focus more on accounting and analysis. In my possession I have titles like McKinsey – Valuation, Investment valuation by Damodaran, Security Analysis by Hook, Little book on valuation, Reading financial reports for dummies, Business valuation for dummies, Business valuation and analysis by Palepu, Hook. Which one of there mention would you recommend, have experience with? I am just starting on Essays of Warren Buffet and would like to hear you on what my next book of these here mentioned should be my next. On the portfolio Q Ive just wanted to get the idea on what kind of people in this group we have in relations to trading vs investing. After Ive seen how helpful you guys are I know a lot and I like what I see 🙂 Cheers
Michael T. Nowacki: I could explain valuation to you in 10 minutes. The challenge is coming up with the correct valuation because it requires predicting the future. You will see oil companies and financials selling at p/e’s under 10 (volatile earnings, unpredictable earnings) while consumer staples sell at p/e’s of 15 to 20 (steady and predictable earnings). This does not necessarily mean the financials and oil companies are more undervalued. You can also find companies that almost always sell for less than tangible book value, such as KCLI. This also does not mean they are undervalued (liquidating an insurance company would be time consuming and costly; it may also be impossible because of regulations). The best way to learn valuation is to do it. Read as many 10-Ks and 10-Qs as possible. Start with simple companies like BBY or MCD and follow them for years. The more companies and industries you closely follow, the better investor you will likely become. Temperament is the key ingredient to successful investing. Most investors are knowledgable and smart. The ones that become great are the ones with the right temperament. Read “When Genius Failed” for a lesson on how brilliant people can go bankrupt.
Senad Hadziahmetovic: Ive read about this example in The only three questions that count (it was mentioned without going into too much details). After finishing Essays to corporate America Ill start with Valuation by McKinsey. PS Im based in Europe – Croatia and focused on local stock market with all of the specifics of it. Although there are differences in investing environment principles are the same thus Im looking at US market for its wast source of intelligence and study material. Thank you Michael! Looking forward to further discussions
Senad Hadziahmetovic: Forgot to ask, any thoughts on Security analysis by Graham(2008 edition)? And how does it compare to Valuation – McKinsey?
Michael T. Nowacki: When I was in grad school I managed money for two of my professors. One with a PhD in Finance and one with a PhD in Economics from Georgetown (I was actually dating her too:). I don’t necessarily think they should do it on their own either. They are very busy and have almost no time to spend on researching companies. They wanted to leave it to someone they trust and does have the time.
Senad Hadziahmetovic: Graham does say that one having a better control of his emotion but lacking investment experience has a better chance of success the other way around. If you do your analysis well and are confident in the decision of buying a part of that particular business price fluctuation which are inevitable should not change ones judgement. Basically only reason to sell is if something significantly goes wrong with the company or personal life. Lows are buying options i.e. Buffett and new coke introduction followed by price degradation back in 85.