Wednesday, April 23, 2008

The Ten Commandments of Value Investing

And behold Moses returned from the mountain with the presence of God upon his face, and he delivered unto the grandchildren of Benjamin Graham the commandments unto which they shall live. And the Value Investors rejoiced for they were delivered to the land of long-term investment success.

I. Thou shalt not believe anything that the sell side tells you for they are the purest form of evil in the land.

II. Thou shalt seek out free cash flow companies and rejoice in them.

III. Thou shalt invest with a long term investment horizon, and worship at the altar of valuation.

IV. Thou shalt not care about earnings guidance for it a false God that forces short term thinking in management.

V. Thou shalt not move with the herd but shall stand to the side looking at the herd with derision and contempt etched upon thy face.

VI. Thou shalt not use EBITDA for it is not equal to free cash flow and was invented for the purpose of deceiving investors.

VII. Thou shalt not listen to anything Jim Cramer shall spake because he is unclean and evil and an abomination upon the Earth.

VIII. Thou shalt not listen to the talking heads on CNBC or Fox News or Bloomberg TV for thou art shills who pumpeth their own stocks for thine own benefit.

IX. Thou shalt do your own research and not worship on the altar of “smart money” which existeth only as a myth.

X. Thou shalt rejoice in the distress of thine fellow investors during volatile market days and use such panic to buy thine favorite stocks.


Anonymous said...

Like Moishe Rabeinu and the Rambam!!
Disciples: Sir John Templeton
John Rogers
Marc Faber
Bless them and their children and acolaids.

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Kunal Saha said...

Beautiful.. captures the essence

Alisa said...

I like this!

I just started my investment journey into the stock market:

I tend to be leaning towards the value principles of investing that is why I am finding this so helpful.

Thank you for the post! Keep up the good work!