Investment Decisions

Great businesses are everywhere and it makes great sense to buy a portion of such businesses through the stock market. If you can find great businesses through research, enter at a fair value and stay invested for considerable time, there is a fair possibility of getting wonderful returns on your investment. I highlight the 'enter at fair value' because buying something great at an exorbitant is not really going to be fruitful for an investment. If a commercial property pays high rental income then it may be a great investment but you need to make sure you don't overpay for it else it will cease to be a great investment. There are 3 qualities that I have noticed some great businesses possess: 1) Debt free - firms that don't carry any debt on their balance sheet. 2) Cash rich - firms that are flush with cash on their balance sheet. 3) Negative working capital - Firms that can charge the customers an advance for their products and as a result maintain negative wor...

These are my own notes which I want to keep easily accessible and not for public use, although not prohibited to the interested. Also, these are merely learning from what Berkshire Hathaway's annual letters by Warren Buffett explain so the language is similar. No IP theft here, all credit goes to Mr. WB here. One might call him world bank in fact given that he manages funds better than the actual bank. 2016: Funds Index funds over a period of time beat hedge funds that are manged actively/passively. The simple reason for this is the fee portion of the hedge funds (they have layers of funds and are usually very popular with big investors). Bigger the money, bigger the fee. Investors of any size, massive or tiny should always prefer an index fund over a manged fund. NOTE: Hedge funds are not the same mutual funds. However, John Bogle from whom Buffet picked this information says the same of mutual funds too. Advice from John Bogle: Select low-cost funds Consider carefull...

To the novice investor, mutual funds provide a convenient way to start investing before diving head first in the world of investments. Did you say why? Read on.. You don't need to know which stocks to invest in? Fund manager chooses, buys, sells stocks (or other securities depending on fund category) on your behalf. You don't have to worry about when to start investing. By the way, answer to that question is NOW, whatever the market condition may be. Decide on your money goals and start investing accordingly. You can either buy a fund in lump sum or in periodic installments. The benefit of making  periodic installment is multiple fold. You can start as small as Rs 500/1000 a month. Most funds have that as the minimum investment amount a month. Second an even more important, you never have to think of when is the right time to make an investment. For ex. if you do an SIP for 3 years, you make 36 investments and varying prices throughout the 3 year period. In the end,...