40 Tips to Invest From Warren Buffet (Part II)

Thursday, December 26, 2013
Warren Buffet is the richest man of the entire world, let´s follow his counsels on value investing philosophy.

21. Crisis? Yes, but not for everyone.

Some companies do resist to crisis. Just watch them when economy is low because they can be wonderful opportunities to invest.

22. Manage your investments

Make a check-list before taking any decision just like plane pilots do, because the brain will get used to put aside the things which are not convenient. Using a check-list will bring you to reality and to the necessary discipline to take decisions.

23. Be humble

Humility should be part of human behaviour but it is essential to the investor because it will allow you to accept your errors in order to correct them.

24. Be calm to invest

No prevision can determine the time your investment will need to return profit. Do not use capital that you could need.

25. Diversification

"Exaggerated diversification is only justified when investors do not know what they are doing."
But diversification will dilute risk too.

26. Invest on a good brand

Investing on a well known brand means success in the long term.
Well known brand will deploy time and energy to impose themselves and success. Logically your portfolio will have a better long-term valuation.

27. Be objective in all your decisions

Learn to be critical towards your own decisions. Determine the reasons that compel you to buy or sell a stock.

28. A good record

A good record remains a good record even after a fall of 3%. The swings of the stock market in the short term can offer you beautiful buying opportunities at the best price.

29. Watch the leaders

Do not forsake the simple investment. Some values have grown steadily but sometimes they go unnoticed because often
investors do not like the simplicity and are more reassured by investing more complicated cases.

30. Work hard

Investing is about dedicating your time and working hard to attain objectives.

31. Free thinker

Stay free and independent for all your decisions. Being of the same opinion is not a guarantee of success.

32. Capital and growth

Study the companies that do not need regular investment for their development. These companies always have
sufficient reserves to ensure their financial stability.

33. Watch for overvalued stocks

Be aware as well of the market realities. An overvalued value may represent a good opportunity to sell

34. Look for small golden opportunities

Many small values which are neglected by institutional investors and the media are often very beautiful investment opportunities.

35. Accounting, you know?

Understand the business and its value will require a minimum of knowledge. Be sure to read some books so you are familiar with the language of business.

36. Be watching

Take advantage of the swings of the market to be always ready to catch opportunities that present themselves to you. Learn how to be a reactive investor!

37. Invest without precipitation

Investment takes time and careful study for each selected value. Override these rules will transform you in an speculator unable to ensure the sustainability of your investment.

38. Look for the keys of success

A company with a high growth potential has probably innovation, patents and know-how... which will ensure its success.
Try to find the keys of success of the company on which you want to invest

39. Keep a cool head

Your judgment must not be altered by the swings of the market, publications in the media and analyst opinions. Stay objective and be confident in your own judgment.

40. Do not compare

If your neighbor has made 18% profit last year, do not try to imitate him or her, but develop your own investment strategy and your own analyzes.

40 Tips to Invest From Warren Buffett (Part I)

Thursday, December 19, 2013
If you had invested 1000 dollars in Berkshire Hathaway Inc, the financial holding company of Warren Buffet, you will have 5 millions dollars today.

1. Rule number one: do not loose money. Rule number two: do not forget rule number one.

  • Whether it's socks or stocks, I like to buy the goods quality when is marked down. Stocks have ups and downs all the time. When stocks go up then prices are really high, when they go down prices are cheap.
    In real life when you want to buy yourself a good coat you wait for the mark down period, they why should you buy stock options when prices are so high?
    Wait patiently till the market will propose you a good price and to recognize a good price, learn to value a good company.
  • It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Don't hurry, be patient and invest in good quality companies when prices are cheaper. You'll take less risks and get better results, just watch to not buy too expensive.
  • We're just trying to be to be fearful when others are greedy and greedy when others are fearful. The ideal situation is to buy stocks that people are selling for reasons that do not concern the fundamentals of the company. To do so, you must learn to value a company and control your emotions.
  • I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.
    Invest into companies which are simple to understand and simple to manage. If the activity of a company is too complex, keep away from it. You won't be able to value it and if you are not able to value it you'll never know if it is a good opportunity or not.
  • Risk comes from not knowing what you're doing. Everybody thinks that risk comes from market volatility, that is what they learn at the commerce school. But it is a stupid thing because the real risk of investing comes from the probability to definitely loose your capital. And this probability becomes bigger when we don't know what we are doing.
    If you want to buy yourself a car you spend weeks to compare prices and look for the best offers. This is common sense.
    But it is strange that when we are dealing with stock options we act by impulse without thinking or reading the WHOLE financial report of a company and we just act because one line impresses us.
  • You just need to learn one single lesson, that it is of vital importance: to know how to value a company. It's the only way to know if you're paying a fair price, otherwise it is not investing but casino playing.

2. Invest in companies you understand

An investment you understand is a sure success. Many people ignore this but it's so important. We can take the example of Warren Buffet which has almost never invested in technology (with the exception of IBM from which he owns 5% in shares).
But in general if you don't understand a company, do not invest.

3. Patience always pays

Look for quality companies but wait for good opportunity prices.  It is very important to not pay too much.

4. Committed managers

A company whose executives are shareholders will always be responsible in the decisions and directions it will take in the future towards its partners and investors.

5. Leaders of impeccable honesty and integrity

The integrity of the company's leaders is a sign of success and confidence in the business world. It's up to you to watch over the managers of the company you've chosen.

6. Buy cheap, sell expensive

This seems logical but it is easy to forget if you jump over an opportunity following an impulse that is often too expensive.

7. Patience

Patience pays and investors know about it. Nevertheless if you act on an impatient mood your decisions will be less objectives.
If you haven't seized an opportunity just be patience as the price will
become attractive sooner or later.
Think that the market is huge and that there are many others opportunities out there.

8. Knowledge

Knowledge is the key to success. So read, study, keep informed yourself and compare things all the time; it's the best way to be completely objective.

9. Passion

Investing with passion will allow you to put the time and energy in your job as investor.

10. Fear, the chance to get good opportunities

Ask yourself why values are overly sold on markets because they are often unfairly sold off, an this is an excellent opportunity for you to acquire them.

11. Price is what you pay. Value is what you get.

Cheap stocks does not necessarily mean a good deal, for you may still be buying them at its highest price. You must observe its value in time to really see if it's the moment to buy.

12 Motivate your decisions

Do not invest without taking the time to note down your motivations, then you can compare your writings with the reality of markets and get conclusions.

13. Risk

Investing your money without controlling the risk is like being in the back seat of a car at whole speed without driver.
If you can't define the rules to handle risk, do not invest.

14. Markets influence

Do not be fooled by the markets and sell your values only if they have achieved what you set out in your trading plan.

15 Undervalued stock, yes, but for how long?

To buy undervalued stocks is a good opportunity, but ask yourself about the reasons for its devaluation.
An event such as a takeover bid or launching a patent could bring investors interest on this value

16 Stocks smoke screen

You may think that you know a value by its image, its marketing, its name, its products... but focus your attention more on its annual reports on its figures, projections ...
This approach will allow you to remain objective and have a length ahead of many investors.

17 Footnotes

You may find important revelations in the annual reports small printing footnotes.

18. Short term investing for long term investments

Enjoy the markets in the short term, the companies offering good prospects in the coming years.
The market often tends to amplify the good or bad short-term news which represents many opportunities for invest in promising values.

19. Macroeconomic forecasts: myth or reality?

Do not attempt to predict macro-economic figures to motivate your investment decisions. Do not expect an economical upturn  because it is often too late.

20. Compare, Analyze

To invest you need to compare and analyze markets, but as an investor you need to compare and analyze your failures as much as your success. Write down a plan.

Change Anything You Want in Your Life in 3 Steps

Wednesday, December 11, 2013
To change a bad habit, overcome a behavior that does not suit you, or to adopt a different attitude you have to go through these 3 steps.

If you skip one you just wont make it. Whether if it is to achieve financial independence, become more efficient, learning to not to procrastinate, develop your leadership or make a significant change, you have to go through these key steps.
If you do not respect, it will be difficult to get to it .

The 3 steps to change anything you want in your life are simple:
  1. Understand the mechanisms that trigger factors, difficulties and performance.
  2. To have the desire to adopt a new behavior .
  3. To be willing to make efforts .

Apply this to the domain of your choice and see that these are essential steps. You'll see that if you skip a step, it will be hard to make it.
For example if you want to stop procrastinating and you  "force " yourself you are going to burn because you do not understand what you are facing and you will misdirect your efforts.

If you want to negotiate your salary and you assume that you had a positive opinion of your job last year, you better go thorough these steps before.
To understand how a salary negotiation work, you'll have to change to get it and accept the efforts you have to do.

Step 1: Understand what is happening.

If I take the example of time management  we realize that what works well is illogical. It is often the opposite of the basic advice that everyone gives you .
They say that to be effective you must make a list of everything you have to do. The problem is to listen to people who know nothing about it. The other problem is that sometimes there are people who makes you believe that they know what they are talking about.
To overcome a problem you must understand the key mechanisms and especially those that apply to your situation .
But you do not you need to become an expert in time management to learn effectiveness, you just have to understand the mechanisms .
Triggers are situations or stimuli that cause the problem. For example, you are overwhelmed each time a new project comes. You lose patience when Tom is involved in a meeting, etc. .
These are signals.

Ask yourself the good questions to understand what's happening.

What are the consequences of my current behavior?
When a new project arrives and you feel overwhelmed you destroy the work in progress and your customers suffer.
When you lose patience you lose credibility in front of your team.
You 're committing self sabotage.
Then you have to understand the process with a more broader view .
What are the cognitive processes, behavior and what goes through your head when the problem is occurring? The goal is to "understand".

Step 2: Have the desire to change.

Change anything you want in your life
Image courtesy of [Stuart Miles] / FreeDigitalPhotos.net
I know it's obvious. Who would strive to change if it was not his desire? But how do you change? What is it that motivates the change?
Sometimes we force ourselves when the desire is not strong enough or because it comes from others and we are not really convinced of wanting to change.

Step 3 : Make efforts.

Yes, change will require an effort, that is evident. To make an effort is to commit yourself to take time and money if necessary. To make an effort is to consciously work on that behavior that needs to change.
It is not that you must exhaust yourself or get frustrated about it, but to be aware that there will be a time when you have firmly decided that things really must change and you feel ready to accept the transformation.
What will you do when you'll face the first challenges?

Should I Invest in Bitcoin Now, Exploring the New Currency

Monday, December 9, 2013

What are bitcoins?

The word bitcoin literally means currency in bits. It is a decentralized virtual currency that no one controls. You can buy bitcoins as if you bought currencies. You can get paid or pay in bitcoins and there are more merchants accepting that currency.

Maybe at first the idea of using bitcoins is a little bit scary, but it is very simple: the programs to handle bitcoins are open source and free to use and the transactions are encrypted and public.

It is a mode of payment and a way to save money as well, but investing in bitcoins is another subject.

Why bitcoins?

Bitcoins exist in response to traditional currencies which are 98% virtual and the rest is in the banknotes in circulation.

The drawbacks of the traditional coins are:
  •     It is controlled by a central bank.
  •     Is in constant devaluation, that is manipulation.
  •     The state controls all movements.

Why bitcoins are interesting?

You can send and receive money around the world at no cost.

Nobody controls, limits or prevents your transactions.

The bitcoin is relatively independent from traditional currencies and allows, in theory, to protect your assets in case of collapse of the euro or the dollar.

This means that you could buy anything even if it is illegal, bitcoins are just a tool and what you do with it is up to you alone.

How much do they cost?

The value of bitcoin it's just shooting up and no one knows how far it can reach. The mass of bitcoin is limited to 21 million today, which in theory also limit its value once everything has been distributed.

The value of bitcoin is very volatile

The volatility is hight from 700-540 dollars in two days last November and now (December 2013) has surpased $1000 and the value changes every five minutes.
 
Source : http://www.businessinsider.com/bitcoin-540-2013-11
At the moment while I'm writing this article (9 Dec 2013) China's government has banned bitcoins so the value has gone down to $576.
I would say that news and rumors are the only rules with bitcoins.

The risk of bitcoins

The dangers of having bitcoins are basically these two :
  1. Fraudulent intermediaries such as the case of China Limited Global Bond platform http://www.techienews.co.uk/972880/bitcoin-trading-platform-gbl-shuts-5-million-bitcoin-disappears/  that was supposedly an exchange platform on bitcoins registered by the state, when in fact it was all about scammers that have stolen 5 million in bitcoins.
  2. Cyber thefts victims because of the lack of security of platforms hosting wallets.
As everything is new it is easy to find unscrupulous people, these are the limits of a currency that is not subject to any rule, but it is something you can easily avoid working only with services or recognized companies only.

Another possible risk is to invest in bitcoins and then to have to get the money out in a time when the value is lower. But this would be the same risk as if we were investing in foreign exchange.

As the whole system is in a period of experimentation it could disappear suddenly and you could lose all the capital . The probability of this happening is remote, but we can not exclude by prudence.

How does it work?

To use bitcoins you do not need a card id and an appointment with the bank, you do not even have to give any information.

You have to download a program that lets you have a wallet with wich you can generate code that is the key that you will communicate to receive the money .

By the way if it is installed on a computer you must either save the information for this KEY if you do not want to "lose" money if you computer is stolen, damaged or reformated.

With this wallet you can also send money to someone you have communicated your code.

How to buy bitcoins

To feed your wallet you can convert your euros or dollars in bitcoins in specialized agencies (for approximately 1% commission) or "mining" for Bitcoins (a long operation that requires calculation power from your computer).

You can also get paid something in bitcoins it's the easiest way to get them.

Should I invest in bitcoin now?

I'm thinking of getting a small wallet to experiment. The truth is that I like the idea of bitcoins, because it seems consistent with individual freedoms.

But I would not invest in bitcoins for the moment because there are no rules and because I think that is in a growing bubble period that could burst in any moment.

I consider it an interesting experience to make transactions and a good tool, but would I not use it to seriously invest or deposit a significant part of money.

You can find all useful information on bitcoins in the site: http://bitcoin.org

Leonardo da Vinci, that Ignorant Man

Sunday, December 1, 2013
Leonardo da Vinci considered himself as an ignorant man because he had not learned Latin. All the books on science and knowledge of his time were written in Latin and the language of the universities was also Latin.
But he just had a basic education in school, he learned to read and write and some basic maths, nothing more.
If Leonardo da Vinci was an ignorant, how come he created so many fantastic things?
I would say because of these three reasons:
  1. To ask the right questions and seek solutions.
  2. To take action to end.
  3. To write everything he did.

To ask the right questions and seek solutions

Leonardo da Vinci created a new way of thinking, he wanted to know how everything worked and find the answers based on good observation.

Here are some of the questions and answers of Leonardo:

Leonardo da Vinci, that ignorant man
Credit: Janaka Dharmasena (shutterstock)

Why in the distance the mountains are blue?

Until then, the artists of the time painted the distant mountains green or brown and only the sky could be blue when they painted a landscape.
Leonardo said, the blue color of the mountains is the reflection of the water vapor in the atmosphere in the distance. And so he was the first to paint the distant mountains in blue.

What are the proportions of the human body?

The man of Vitruvio drawing are a good examples of his study of these proportions.
You can read all about these proportions here: http://en.wikipedia.org/wiki/Vitruvian_Man

What is the movement of water?

For Leonardo water movement looked the way hair grows, in spirals. He said that the movement of water is like the air movement, and that movement is the principle of nature.
His research on movement led him to very important inventions, such as gears and the endless screw, without which the industry and mechanics would not exist as we know them today.

How do birds fly?

To design his flying machines he observed the flight of birds and also the flight of a bird without wing flapping or just planning, hence the invention of what we now call a delta plane.

How does the human body work?

Studying the anatomy and the functioning of the heart he discovered how do the valves work inside the heart and how it directs the flow of blood in the body.
He performed autopsies and did detailed drawings of the inside of the human body. His writings could be classified as the first treaty on cardiology.

To take action to end

Experiencing, sketching, creating and manifesting were his constant passions. The most impressive is the perfectionism, the precision and how prolific his work is. His innovative spirit, the desire to go beyond to find the light like no one had done in painting, to find answers in the fields of engineering and mechanics.
The mixture of art and science in a perfect renaissance man. In those times a wise and instructed person knew about maths, art, literature, philosophy, engineering and sometimes medicine. That was a complete person. Today is the opposite, people are so specialized in one single subject that they do hardly get a global vision of things.

He wrote everything he did

Thanks to the diary of Leonardo da Vinci the Codex Atlanticus along with the other Codex, in which he wrote three pages a day, today we can read about all these wonderful things .
Because he left a record of all his creations, ideas and new inventions, the Codex Atlanticus is undoubtedly one of the most important contributions to the advance of our world.

And if Leonardo da Vinci was an ignorant ... that's what he thought of himself.
And you, what do you think about it?

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