Recently I've gotten interested in value investing. As a construct to compound long term gains in the stock market, I think value investing trumps other methods. While others may understand technical analysis better and use it more frequently than fundamental analysis to invest (or speculate) in the market, I believe the fruits of investing come from proper understanding of how businesses are run in their economic environment. Given the vagaries of the stock market in the short term, I believe trading in a speculative fashion requires nerves of steel. Exciting as that might be, my temperament is more suited to making long term bets based on exhaustive research on individual equities.
Over the course of this blog, I plan to publish articles and book reviews on value investing and make notes on companies being analysed. By penning down ideas, I hope to compile a ready compendium of knowledge which I can revisit from time to time. as need be. Posts may thus be subject to numerous edits spaced irregularly through time.
I've felt this myself while explaining my ideas on investing to friends and family. In similar fashion, you, dear reader, are my orangutan. You're most welcome to debate and question my reasoning of course. Actually I'd even encourage it if I believe you make valid points which invalidate my arguments.
For lack of imagination, the blog derives its name from moolya - the Hindi world for value. Value investing disciples go gaga over margin of safety (MOS). MOS is considered to be the cornerstone of value investing. It's a pretty misrepresented term though. This is because it is derived as the difference of intrinsic value (IV) and market price. While market price is available all the time, IV is actually a make believe concept. Different people can come up with completely different values of IV, and based on their assumptions and line of thinking about future outcomes, they may all be right. In time though, Mr. Market will reward only some of these forecasters. Technically speaking, there's nothing intrinsic about IV at all then!
Over the course of this blog, I plan to publish articles and book reviews on value investing and make notes on companies being analysed. By penning down ideas, I hope to compile a ready compendium of knowledge which I can revisit from time to time. as need be. Posts may thus be subject to numerous edits spaced irregularly through time.
While you eat your banana
If a smart person goes into a room with an orangutan and explains whatever his or her idea is, the orangutan just sits there eating his banana, and at the end of the conversation, the person explaining comes out smarter.
- Charlie Munger's Orangutan theory
I've felt this myself while explaining my ideas on investing to friends and family. In similar fashion, you, dear reader, are my orangutan. You're most welcome to debate and question my reasoning of course. Actually I'd even encourage it if I believe you make valid points which invalidate my arguments.
A note about the blog name
For lack of imagination, the blog derives its name from moolya - the Hindi world for value. Value investing disciples go gaga over margin of safety (MOS). MOS is considered to be the cornerstone of value investing. It's a pretty misrepresented term though. This is because it is derived as the difference of intrinsic value (IV) and market price. While market price is available all the time, IV is actually a make believe concept. Different people can come up with completely different values of IV, and based on their assumptions and line of thinking about future outcomes, they may all be right. In time though, Mr. Market will reward only some of these forecasters. Technically speaking, there's nothing intrinsic about IV at all then!
Since I'm an amateur myself, I will not claim to outdo more learned and experienced practitioners in this field. Instead, I will focus more on mooley - a very distant, but well thought through, cousin of intrinsic moolya. My successes and failures will then be my own (with some attribution to whimsical luck). In the long run, my sincere hope is that this blog will bring much moolya to you and me.
