Investing 101

This blog is all about equity (common stock) investing. The goal is to teach members about investing in equities through a series of blog posts that explain what investing is and how to gather the best data to make an informed decision as to what equities to select.

The blog will begin with an explanation of the following:

• What is investing? (vs saving, speculation, etc.)
• Asset classes overview (stocks, bonds, etc.)
• What is an equity?
• How do people make money investing in equities?
• Introduction to investment styles:
  • Day trading
  • Technical analysis
• Momentum investing
• Growth investing
• Index investing
• Value investing

Next will come discussions of:

• What is value investing?
• History & origin: John Burr Williams, Benjamin Graham, Warren Buffett, Charlie Munger (etc)
• “Mr. Market”
• Intrinsic value vs market price
• Margin of safety principle
• Why value investing works

Then we will begin explanations of the tools used by value investors:

• How to read financial statements using plain English
• Understanding key ratios: P/E, P/B, ROE, debt/equity, etc.
• How to value an equity
  • Relative valuation
  • Discounted Cash Flow
    • To the firm (FCFF)
    • To equity (FCFE)
• How to spot red flags
  • earnings manipulation
  • bad balance sheets

Then some discussion around what you need to do to finish the picture after you have developed a value. This involves a narrative surrounding items like:

• Items about telling a story
• It's not just the numbers
• Where do I find the information

Valuation practice

• A valuation spreadsheet
• Inputs required to calculate a DCF
  • Earnings
  • Growth estimate
  • Risk
  • Terminal value
• 10Ks (links to actual 10Ks to use)