Investing Game

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Investing Game

• where to start?

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How about a story to start things off

• As the 90s waned, a blip came on the investing
  radar
• The company, lets just call it The Currency
  Crappy Fund
• The Issue diversification
• Currency, I thought, might be an excellent
  diversification opportunity
• CCF appeared ripe for the picking
• Excellent returns, fundamentals appeared in
  order, I had watched it for some time,
• Moral Things are not always what they appear!!!

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Some common things you hear about investing

• Buy companies trading below book value
• Follow the momentum
• Buy stocks with low P/Es
• Stick with Quality
• Buy after bad news
• Buy after good news
• Follow the insiders
• Do whatever Warren Buffet is doing
• Etc.

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Ten Lessons for Investors, from Investing Fables

• Lesson 1 The more things change the more they
  stay the same
• Proposition 1 Be wary of complex, fancifully
  named investment strategies that claim to be new
  and different

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Ten Lessons for Investors

• Lesson 2 If you want guarantees, dont invest in
  stocks
• Proposition The only predictable thing about
  stocks is their unpredictability

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Ten Lessons for Investors

• Lesson 3 No Pain, No Gain
• Proposition 3 If you cannot see the risk in a
  high return strategy, you just have not looked
  hard enough

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Ten Lessons for Investors

• Lesson 4 Remember the fundamentals
• Proposition 4 Ignore fundamentals at you peril

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Ten Lessons for Investors

• Lesson 5 Most stocks that look cheap are cheap
  for a reason
• Proposition 5 Cheap companies are not always
  bargains

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Ten Lessons for Investors

• Lesson 6 Everything has a price
• Proposition 6 Good companies may not be good
  investments

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Ten Lessons for Investors

• Lesson 7 Numbers can be deceptive
• Proposition 7 Numbers can lie

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Ten Lessons for Investors

• Lesson 8 Respect the market
• Proposition 8 Markets are more often right than
  wrong

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Ten Lessons for Investors

• Lesson 9 Know Yourself
• Proposition 9 There is no one best investment
  strategy that fits all investors

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Ten Lessons for Investors

• Lesson 10 Luck overwhelms skill (at least in the
  short term).
• Proposition 10 It pays to be lucky

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Point Tally Is it the answer?

• These systems are usually based on some well-held
  beliefs that certain things are important to
  business success
• Management
• Debt
• Cash Flow
• Etc.
• Points are distributed for certain
  characteristics and subtracted for others.
• In the end, a number is reached. If it is above
  some minimum, the stock represents a potential buy

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Dummy Portfolio

• 1 Chubb Corporation 21 Pfeiffer Vacuum
  Technology AG
• 2 Banta Corp. 22 RBC Financial Group
• 3 Matsushita Electric Industrial Co., Ltd. 23
  Tootsie Roll Industries Inc.
• 4 Agco Corporation 24 Tenaris S.A.
• 5 The Chile Fund, Inc. 25 Portugal Telecom
  SGPS SA
• 6 Wilmington Trust Corp. 26 Avaya Inc.
• 7 Ampco-Pittsburgh Corporation 27 Allied Waste
  Industries
• 8 Jefferson Pilot Corporation 28 Dynex Capital
  Inc
• 9 Grupo Televisa, S.A. 29 Milacron Inc.
• 10 ALL TEL Corporation 30 Sun Life Financial
  Inc
• 11 Deutsche Bank AG 31 Shoppers Drug Mart Corp
• 12 Brunswick Corporation 32 Kereco Energy Ltd
• 13 Engelhard Corporation 33 New Gold Inc
• 14 Astoria Financial Corporation 34 Newalta
  Income Fund
• 15 Kroger Co. 35 Belzberg Technologies Inc
• 16 Teekay Shipping Corporation 36 BOC Hong Kong
• 17 Colgate-Palmolive Co. 37 Bank of E Asia
• 18 Coles Myer 38 Hang Seng Bank