|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Invert, always Invert. 5 Inverted Questions for Maximum Investing Success.
Posted by: Jae Jun (IP Logged)
Date: August 15, 2013 02:56PM
Invert, always invert!
My left fist is clenched at the back of my neck.
My right hand is holding a pen like a dagger and my jaw muscles are tight and sticking out.
That was me trying to work difficult math problems back in school. If somebody, anybody, had introduced me to Carl Jacobi, it would have saved me a lot of heartache.
Who is Carl Jacobi anyways?
None other than the German 19th century mathematician all-star. Unlike me, when Jacobi encountered difficult problems, he was fond of saying;
Quote:Sound familiar? Yes. Charlie Munger took the lesson from Jacobi and introduced it to value investors.
While math problems are less of an issue in investing, the multi-disciplinary approach is highly relevant and useful.
Investing is full of variables and problems that leave me dumbfounded.
So what should a guy like me do?
Common “Verted” QuestionsOne of the most common things you do when you approach a stock is to estimate intrinsic value in the long run.
How much is it worth?
How much will I make?
How long will it take?
Categorize these questions as forward looking.
If the growth prospects are there, or if it looks like the next big thing, these questions help you jump on the bandwagon.
E.g. it’s easy to join the mad dash with the hottest thing like the Social Media ETF (SOCL). After all, the internet is only going to grow as more devices are used by people to be constantly connected.
But with every investment there are two sides to the story, and the other side is what Jacobi and Munger want you to think about.
Invert, Always Invert. 5 Inverted Investing QuestionsThe purpose of investing is to make money. To make money, there are two main ways.
Quote:Unless you and I are trained, the most common way to think is the first option. However, to get to Buffett’s playing field, it takes lots of trial and error to get from “how much can I make?” to “how do I not lose money?”.
Same destination. Different road taken.
Here are the top 5 inverted questions I like to ask myself when looking at stocks. It helps me break up the mindset of trying to find bullish reasons.
What about you? What inverted questions do you ask yourself?
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.