Thursday, March 1, 2007

Fundamental Investment $1

Warren Buffet known as one of the most successful stock investor. His believe in 'Fundamental Investment' made him the richest man in the world after Bill Gates. Hold excellent stocks for ever might not working for some, but not to him. At least, his success story able to live up those who believe in buy-&-hold strategy. In fact, 'value investing' guru back then; Benjamin Graham, suddenly became so famous. So, how to succeed in this type of investment philosophy? How to make money without selling the stock? Last but not least, does it really work with Bursa Malaysia?

Keyword #1: Invest In business
As the name says for itself, one have to select which business to be in & finalized the chosen company. Identifying a fine industry might be difficult, but to discover a 'profitable germ' is more than tricky.

-Brain is #1 asset
Before proceed to record profit, one should consider effective management 1st. While property market is all about location, stock is a matter of the company's management. Let alone proven track record for analysis, one might not able to chart it's future undertakings.

The other tricky question will be, how can we (retail investor) evaluate it's management effectiveness & efficiencies? Well...one of the way will be reading clippings as much as possible on the company's news & profile. Interpret as much as possible on how the management deal with challenges, solve problems & moves forward. Silly companies normally give billions if not millions of detailed reason why they failed to meet expectations, but superb 'profitable germ' will only plan to execute solutions.

E.g. while average property-based companies keep on blaming the shortage of foreign workers available & increase in construction material cost, superb one will only identify new business opportunity with higher profit margin that able to mitigate the increase of cost & manpower shortage.

The other way of analyzing company's management is simply by looking it's working employee. While first-class leaders set world-class visions, effective management will make it happen; which success be measured by pool of staffs of energetic & competent.

E.g. if you are customers to several banks in Malaysia, you can easily noticed how one banks do than another. Excellent banks don't let his customer frustrated from long Q, made application easy & continuously enjoy entertaining the most irritating customer (ade ke bank M'sia camnih???...HaHaHa....c4urself!!). Once it's staff act as an owner, they enjoy with what they are doing & able to perform.

Lesson: Competent workforce easily available in profitable companies for their better salary

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