Pinoy New Era Of Investment

What does it really take to follow Benjamin Grahams investing advice? Who exemplifies this type of investing? Where can Benjamin Graham take me? These questions have been sifting through my head for the past week every time I glimpse my well used and sticky-noted copy of The Intelligent Investor. If you had to take a tour of my mind you would find innumerable questions like this all relating to business strategy, philosophy, the future of our world, the effects of globalization, business strategy, entrepreneurship, how psychology affects businessmen and woman etc. The purpose of this blog is to really just allow me a place to communicate my opinions in an easy way for people anywhere and everywhere to view. Anyway, that was my introduction to the thought that has been nagging at the fringes of my sanity for the past few days, what is investing?

The formal definition of investing is the process of laying out money or capital in an enterprise with the expectation of profit ... This is my opinion is far from correct. It deals with just one aspect of investing: the bottom line. It disregards the fundamental point of business in general. It also ignore many of the benefits of this age-old art. The world has moved away from investing and moved towards speculation. I see it everyday on the news, Bloomberg quotes stock prices every day, but never once have I ever seen any estimates or calculations for the underlying value of those shares. Bloomberg and related news disseminating companies will promote the widespread use of sudo-science we call Technical Analysis. The only time I see mentions of fundamental analysis in investing is when the name Warren Buffet comes up. Many people attribute his success to luck and simply knowing more than you or I. Well I for one believe that luck does not exist in reality and he doesn't know any more than we could had we the sheer determination that he has. The only thing we can attribute his success to is that he invests the hard way ...

Investing the hard way is a lost art. Spoken rarely about in the common circles of brokers,fund managers, traders and "stock market guru's". The reason why this so-called-secret is never discussed in these circles is because nobody has the effort to pull it off. So instead these people will fill your head with illogical verbal diarrhea about how the share prices on any given stock exchange represent to the fullest extent, everything about that share. I, however, could not disagree more. Share prices change every couple of minutes, are we truly willing to say that the value of a company can change every fifteen minutes? Every time a secretary send an email? Or every time the janitor sweeps the hall? I for one think that this is the most absurd argument in investing history. Well enough about the easy and the wrong way to invest: here's the hard way:

Before you buy a share you must know that that share is not just a piece of paper. It represents a partial ownership in a company. Firstly: never buy a share in a company you would not want to own!
You must go about calculating the intrinsic value of the company you wish to invest in. This may sound easy and I am sure the accountants would be screaming asset value! Well, no not exactly. The value of a company (the true value) is not just the current assets, but also the future assets. The value of the company should include calculations on growth and cash-flow projections. I have compiled a list of factors that must be taken into careful consideration before investing in a share:

The book-value of the company
The value of the brand
The future value of the company under the brand
The future growth of the economy
The future values for inflation/ deflation
The future growth of the industry wherein the company is situated
The mantra in the company
The people running the company
The future competitiveness of the company in the global/ local markets
And many more micro-economic factors relating to the particular business

Now you are thinking how on earth do you work out those things? And well I have some bad news for anybody reading this post, there is no set and sure way to calculate anything, let alone predict the future. Now that is the bad news but here is the good news: If you let go of your preconceived notions that investing is all about complex formulae, stock projections and insider information you will see that a share is a piece of a business. And a businesses success is built primarily on its ability to sell its product, communicate its message and just generally, grow. Now, you may still be thinking OMG I don't even know how to do that, but had I taken you back into the past and shown you Google even a five year old would be able to tell you that it would be a success, WHY? Well because it fulfills a very important human need. Look to history and you will find that the best companies in the history of this world have all done one thing: they have done something that made people's lives more comfortable and better overall ...

Now I will do something very out of character and I will actually say here what companies from my research will be the best performing in the future: companies that appease the moral consciousness of people. In other words, green companies. Companies that will make you and I feel better about jumping into our car every morning. Companies that can guarantee that you are not profiting at the expense of our planet. Companies that make you feel less guilty for living as you do. Green companies are the future of the world and it is just a matter of time before an affordable, mass produced car company comes along that fulfills this 21st century need. And when that company does come, after some further investigation and analysis, I will be there, money in hand investing in the future.