First a little excerpt on enterprising investing by CapitalIdeasOnline and then a little excerpt from The Great Investors: Lessons on Investing from Master Traders (Financial Times Series) by Glen Arnold.
In a wonderful book, “The Great Investors”, the author, Glen Arnold, writes explains Benjamin Graham’s enterprising investing.
“In the requirements for enterprising investing Graham proposes that similar criteria be used as for defensive investing as a starting point, but he relaxes their boundaries and changes emphasis. If, for example, a company failed to produce a profit three years ago, but performs satisfactorily in all other tests, then its shares could be considered for purchase. He dispenses with the large company criterion because if groups of small companies are bought this will afford enough safety.
At this year's annual Robin Hood conference, which was held virtually, the founder of the world's largest hedge fund, Ray Dalio, talked about asset bubbles and how investors could detect as well as deal with bubbles in the marketplace. Q1 2021 hedge fund letters, conferences and more Dalio believes that by studying past market cycles Read More
As well as requiring informed judgement to weigh up the importance of key statistical data, the analyst needs to estimate the average earnings over a period of years into the future. Future earnings power estimation can be informed by knowledge of past physical volume, prices received and operating margin. Assumptions then need to be made concerning future growth prospects. This takes us much more into qualitative analysis, requiring a knowledge of strategic positions of firms and judging the quality and decency of the managers. Clearly enterprising investing requires much more work and thought than the defensive approach. Because it requires a high level of knowledge it makes sense to concentrate your efforts on those corporations or industries where you have a special knowledge or interest. This will help give a competitive edge over other analysts, an insight others lack.
Full article via CapitalIdeasOnline and more on book below
The Great Investors – Description
The Great Investors is the story of a number of remarkable men: John Templeton, George Soros, Warren Buffett, Benjamin Graham, Philip Fisher, Peter Lynch, Anthony Bolton and John Neff. Whether you’re new to investing, have had success in the markets, or you’re a professional investor or fund manger, you’ll benefit from reading about their proven, and successful, trading philosophies.
The Great Investors will show you how to:
- Be a business analyst rather than a security analyst
- Do your homework and develop a broad social, economic and political awareness
- Control emotion so as not to get swept away by the market
- Be consistent in your approach, even when you have bad years
- See the wood for the trees and not over complicate your portfolio
- Learn from your investing
- Be self reliant, stand aside from the crowd and follow your own logic
- Take reasonable risk