Is your stock investing pretty much hit or miss?
Do you simply fly by the seat of your pants and try to catch the wave of the ‘next big thing’?
If you’re honest with yourself, do you basically have no clue what you’re doing when it comes to the stock market?
Do you close your eyes and make a wish before you open your monthly investment account statement?
In case you answered “yes” to one or more of these questions, it would behoove you to pick up a copy of Jeeva Ramaswamy’s Creating A Portfolio Like Warren Buffett. Now, if you’re sitting there reading this, have no clue what you’re doing, and have yet to head over to Amazon and pick up a copy simply because Buffett’s name is attached to it, let me tell you why you should. What Ramaswamy has done here is put together a blueprint for how to approach investing in the stock market. And he explains to you with plenty of examples – both simple and complex – how Buffett normally studies a company’s stock before he shelves out his hard-earned money. Let’s face it – to say Buffett is successful is a ridiculous understatement. But, if he takes the time to go through a company’s financials thoroughly, maybe (just maybe) you should too. That’s just our two cents here at Financial Bin.
Before we get into more about the book, let me tell you a little about Jeeva. He is a managing partner of GJ Investment Funds, which is an investment fund modeled after the original 1950’s Buffett partnership. GJ Investment Funds has delivered a compounded annual return of more than 72 percent (net to investors) since Jeeva started the company in November 2008. Prior to GJ Investment Fund, he was CEO for Miracle Software Inc., an information technology and solutions company. He holds a bachelor’s degree in Electrical Engineering from the Coimbatore Institute of Technology and is a member of the Indus Entrepreneurs (TiE) Association. That is where Jeeva Ramaswamy is coming from. If you ask me, he is a person to respect and an authority on the subject of stock investing. (Make sure to catch Jeeva’s interview tomorrow on Financial Bin Radio at 5:30 with host David Domzalski).
Unfortunately, I cannot give you each and every great tip I learned from the book in this review. However, one thing I want to pass on is this from Chapter 32, “No Shortcut Approach” —
If you want to have 10 stocks in your portfolio, you need to research around 100 companies every year. In five years, you will know around 500 companies. When you know about 500 companies, you are a stock market guru; you do not need to listen to any market pundits on CNBC.
That’s some of the soundest advice I’ve heard about stock market investing, which as Ramaswamy and Buffett stress, must be approached as a business. In that vain, Ramaswamy suggests you complete these tasks to “improve your investment success” –
- Identify the stocks
- Research the stocks
- Calculate intrinsic value (Chapter 23, “Intrinsic Value” does a fantastic job explaining this)
- Manage the portfolio
- Monitor the company’s portfolio
- Make sell decisions
As you may or may not know, we are not huge supporters of the market at Financial Bin. We tend to think it’s a rigged casino most of the time. However, by approaching investing the way Buffett and Ramaswamy do, you can certainly have a much better shot at succeeding. By learning as much as you can about a company, leaving the herd mentality for the amateurs, and investing like a business leader, you will put yourself in a more formidable position than most. And Jeeva’s book can certainly help you get on that path!
Make sure to listen live to Jeeva’s interview on Financial Bin Radio with David Domzalski. The show airs this Tuesday, May 15, 2012 at 5:30 PM Eastern.