Category Archives : Investing Theory

A list of articles on the theory of investing. Articles that give you the knowledge on how to invest. Looking at the Invest Money tab to find out what to invest in.


How Benjamin Graham Valued And Bought Stocks

Ask any professional investor about Benjamin Graham and they will tell you he deserves his place amongst the top 10 greatest investors of all time. Ask Warren Buffet and he’ll certainly place Ben Graham as number 1. Benjamin Graham is the father of value investing and wrote one of the book that shaped many an investors career; investors Security Analysis. The book which is seen as the bible of the value investing world is an essential read for anyone wishing to invest in individual stocks. Benjamin Graham’s value investing strategy was focused on buying stocks with the same discipline as an insurance underwriter, carefully considering the risks, rejecting potential securities […]


What Do The Different Dividend Dates Mean? Declaration, Record, Exdividend and Payment Dates

When it comes to investing for dividends, it is important to familiarise yourself with all the different dates in a companies dividend timetable. The dates are important as it determines who qualifies for a dividend payment and when those payments will reach your bank account. The four key dates any investor needs to be familiar with are the declaration date, the record date, the ex-dividend date and the payment date. Dividend Declaration Date This is the date the company you are invested in announces the details of the dividend. By going to the investor relation section of the companies website on this date, you will be able to see information […]


Why Do Stocks That Have Been Dropped By Index Funds Outperform The Newer Stocks Added.

According to research from the great Dr. Jeremy Siegel, 82% of stocks that are removed from the S&P 500 go on to outperform the stock that replaced them in the index during the subsequent three-years.  This finding seems counterintuitive. If a stock gets added to the S&P 500,the FTSE 100 or any other major index for that matter it must be riding a momentum wave that has seen its valuation increase. Likewise, a stock that is removed from the S&P 500 must have been riding a wave of sluggish performance that warranted its exclusion from the index. So what’s the reasoning? To understand the mechanics of Dr Siegel’s finding, contemplate […]


Oil Investing – The Need To Think Long Term 4

As someone who is invested in the oil space via ownership stakes in BP, Exxon Mobil and Royal Dutch Shell, I am not too concerned with the price of oil dipping below $50 in recent weeks. When I took stakes in these companies, I realised that the price of oil will not double overnight. I knew that it will take a considerable amount of time for oil prices to recover. But when the recovery starts, I expect prices to shoot higher and that is why I am optimistic about the oil industry long-term. Oil has a huge tailwind in the form of the emerging global middle class. Global Prosperity and […]


Are Brands Really A Competitive Advantage?

When it comes to analysing businesses, finding out if a particular company you are interested in has an economic moat (or competitive advantage) is one of the most important things. This is because firms with economic moats are able to earn outsized profits for long periods of time due to mean reversion not really affecting them. There are a number of economic moats to look for and if a company has one of these, you can be sure that the company in question will continue to earn higher than normal profits for a long time to come. One of the most common economic moats people look for is ‘Strong Brand […]


The Only Way For Individual Investors To Outperform Is To Increase Time Horizons 1

A few weeks ago I read an investment write-up on a large-cap blue chip stock that is one of the largest and most followed in the FTSE 100 There was a comment that basically asked the following question: “What is your edge with this stock?” The implication of this question is that there isn’t any edge to be had with stocks of large and well followed companies, but there is an edge to be gained with small, under-followed stocks. The commonly held view among value investors is that you need to seek out stocks that are under-followed, in hopes of gaining bits of information that the market is not currently […]


Power Of Compounding Money Illustrated – Best Motivation To Start Saving Money Today 4

Let’s face it, saving money is hard. If it were easy, everyone would be able to do it effortlessly. We are conditioned to spend money today instead of saving and investing it so we can have more money in the future. For many people, savings must be forced. One way of doing this is by automating your savings so that 10% of each paycheque goes directly into your savings account. Whilst this is a great method to build up your savings account, I don’t like saving and investing money to be forced upon someone. I want people to actually want to save money. I believe that if people learn about […]


What Different Jobs Can Teach You About Investing

As investors, we often make the mistake of only concentrating our reading towards the fields of finance, business and economics. This is a huge mistake as it is more productive to read around one’s field than in one’s field. By learning about different fields of work, you increase your worldly wisdom as well as look at the bigger picture. With this in mind, these are some things you can learn from others professions. Biologist: All environments change, and the best protection against those changes is the ability to adapt. Gambler: Bet when others think the odds of success are low (that’s where there’s big payoffs) but be able to survive […]


Fear Of Missing Out – Investors Worst Nightmare

One of the biggest detractors to investment performance is FOMO or Fear Of Missing Out syndrome. This is when you make an investment, whether it be stocks or any other asset, simply because you do not want to miss out on the possible gains it makes. You do not want to miss out on the gains therefore you buy something out of fear of missing out as opposed to being rational and looking at the numbers. Buying assets just because you fear missing out on the gains does sound stupid but it occurs more often than people like to admit. It happened in the dot-com bubble where people were investing […]


3 Things To Look In Shareholder Letters

Most investors today tend to ignore annual reports. They are more content with analysing financial data from Morningstar or Stockflare than that in the raw form from annual reports. There is nothing wrong with this but it is important to remember that these fast financial data sites do not contain all the information found in an annual report. For one it doesn’t include any small print or strategy information. For another, it doesn’t contain shareholder letters. It is imperative for any serious to have a look at the shareholder letter of a company they want to invest in or are already invested in. These letters give a broad overview of […]