Value Investing Newbie

Hi people

Completely new here. Recently got very interested in value investing. It sort of came up while I was studying for my Actuarial exam. Have now invested a good 3 months into reading the works of some of the great value investors. I have gone through the following books already:

One up on Wall Street
Beating the Street
The Little Book of Common Sense Investing
The Little Book of Value investing
The Little Book that beats the Market
Common sense on Mutual Funds

will start reading The Intelligent Investor (its a slow read if you are trying to absorb everything) once I'm done with my exam end of April

So i have an idea on the theoretical underpinning of value investing. however I am having a lot of trouble implementing the ideas.

The first major problem is how to actually screen from the whole global stock database to find those stock that could potentially being of good value. I tried a couple of good screeners but couldn't get a hang of them. The current one that i think is quite user friendly is:

http://markets.ft.com/screener/customScreen.asp

Its quite neat as it searches in alot of stock exchanges. Now I need advice regarding using a screen-er

Which filter criteria should I use apart from Market cap and P/E ratios?
For these criteria what values should I use?
Are values such as P\E ratios and Debt\equity Ratios different for different industries\Countries (Retail vs Mining for example)?

I did find a good site that has P\E ratios according to countries and industries don't know how reliable it is though:

http://pages.stern.nyu.edu/~adamodar...le/pedata.html

The next major hurdle is When you have finally found a few companies that look appealing to you. How do you go about investigating them?

I am still looking for a simple excel template where I can just put in the balance sheet, income statement, cash-flow statement. Most of the templates I have found have addins to them and I like to start out simple by inputting stuff myself so that I can learn more and develop that attention to detail thats required. Also a lot of the templates use discounted models i.e. either a discounted future earnings model or a discounted future dividend model. the problem with both of these are they require you to make assumptions about what the future earning of dividends will be, which i'm not keen on doing at this stage. So I'm wanting something simple which just presents the facts and nothing else.

Apart from the template I need advice on what to look at in the letter to shareholders resources on the net provide good info for constructing the story of the Company as Peter Lynch would say

I am learning from a value Investor point of view not a trader. I'm planning to build my portfolio (hopefully over the next couple of years starting with very modest amount of NZD2500) in to a something that is split 50% to 60% in Low cost ETFs\Indexes (probably SP500 and Global Mid CAP) and the rest in individual stocks that I would research. I will probably build my base by regularly saving in ETFs and only use New money to buy individual stocks. I'm 25 years old so I don't think I would worry about putting anything in bonds for now.

Appreciate your thoughts and advice. Anyone who is willing to mentor me or get together to do research or send resources my way. I'm pretty good with Excel and macros so open to building a stock valuation template if someone can point me in the right direction.

Cheers

Hi Sarmed,

Seems like both you and I have a similar interest. One person I suggest you look at is Cliff Asness, a guy that runs one of the largest Quantitative Hedge funds in the world, and applies Quantitative techniques to Value investing. Probably right up your alley given your Actuarial studies.

Feel free to PM me, as I'm looking for someone to bounce ideas off from a quantitative point of view too!

Grunter

Quote:

Originally Posted by Sarmed

Hi people

The first major problem is how to actually screen from the whole global stock database to find those stock that could potentially being of good value.

Did you find this screener ?

http://www.serenitystocks.com/screener

Hi

@Grunter will definitly read up Cliff, Would be interested in hearing about what investment strategy you follow

@Peat I have come across this screener it quite good but only shows the US stock market. The one that I mentioned searches a database of 38k stocks so bit more range there. Thanks for the link will use it to narrow in on the US market

Cheers

Quote:

Originally Posted by Sarmed

Hi

@Grunter will definitly read up Cliff, Would be interested in hearing about what investment strategy you follow

@Peat I have come across this screener it quite good but only shows the US stock market. The one that I mentioned searches a database of 38k stocks so bit more range there. Thanks for the link will use it to narrow in on the US market

Cheers

I'm still formulating it in practice, but its a construction of a portfolio consisting of value and momentum stocks, and creating an optimised portfolio on this basis.

I'm still building up my fund base, as it's a bit hard to have a broad portfolio with limited funds.