Becoming a Value Investor

The proper temperament is far more important in successful investing than points of intellect.

-Warren Buffett

The above quote from the “Oracle of Omaha” gave me hope that I can be a successful investor. Not because I consider myself less intellectual but more temperamental, rational and less speculative. It’s been an year and half that I started to get into the headspace of a “Value Investor”. And I can assure you that it’s not just a mindset to be a successful investor but also a mindset on how to be smart in spending your hard earned money. Being “Value Investor” is a way of life.

A Little Bit About Me

Let me talk a little bit about my thoughts on investment a while ago. “Stock market and investing in stocks is for gamblers. An average Joe like me who doesn’t like to bet on things should set money in Savings Account!”. In fact, a lot of people from working middle class families do have the same opinion. Just about anything else in this world, Investing also has 2 sides like a coin. One side, the speculative investments carried on day to day basis. It’s the stock market news/movements which we see on the news. And other side, more value driven and more long term.

I was never a person who took personal finance seriously. I was careless with my finances and I always was in debt to the credit card companies. Nothing really motivated me to take finances seriously until COVID-19 hit the world. I lost my job during the initial wave of layoffs in 2020. Mind you I’m an International Student in the U.S on OPT, with a student loan and a car loan. Luckily, I saved up some money which kept me afloat for 2 months before I could land another contract job. That was the period during which I had a realization on the importance of personal finance. Since, I landed a job and there was a steady flow of income I cared less on the financial part yet again. During next one year, my credit card debt would pile up and I’m paying more in interest than the principal.

Inflation

My credit card outstanding balance every month bothered me because I was careful on how I was spending. I have never been more careful. The unknown factor here bothered me. I started looking into my bills and credit card statements for answers. Voila! There it is. I’ve been paying more for grocery, rent and electricity over the last 1 year. For instance, I was paying $8.79 for 5 dozen Costco eggs in January 2022 and by July 2022 I was paying $11.99(~36% up). Electricity was 14 cents per kWh and it creeped up to 18 cents(~28% up). Rent was up 15% from $1100 to $1273. This could be seen across all in the services sector. For the first time in my life, I was experiencing the effects of Inflation and stagnant pay. There were a lot of unknowns for me since I did not have the knowledge of the economy or market.

First Steps towards Becoming a Value Investor

The unknowns bothered me and I had a strong feeling of taking things into control and be more aware. The required knowledge for an individual to be ahead of the curve and be financially savvy is all out there on the internet(Always take the financial advices on the internet with caution). During the pursuit of financial savviness, I’ve come across Naval Ravikant’s How to Get Rich: Every Episode. This podcast was an eye opener for me in many ways (Useful Resources). Eventually, I started listening to all the podcasts he has appeared on and also followed his twitter storm thread. Another most influential podcast for me was with Joe Rogan where he says “Anyone can be Rick“. This was when I realized the importance of understanding the economy both micro and macro(More on this in future posts).

Photo by Anik Mandal on Unsplash

Investing in Stocks

During this pursuit, I’ve come across many successful personalities discussing about the virtues of Investing in American Businesses(you may also call Stock Market). By this time I was still skeptical about investing in stocks or businesses because of my limited knowledge. To be honest, I was also scared to lose money. One day, I came to a realization during one of my long walks that I should take advantage of the free market and effect of compounding that this country offers. Naturally, being a millennial I opened YouTube(not for financial advice of course) to get advice on “Best books for Investing”. I went through a few videos but 1 video will always be my favorite, “Best Books for Beginner Investors (5 MUST-READS)” by Rose Han. I strongly recommend to go through this video if you’re the kind of person who loves to learn by reading. One of the book recommendations which changed my mind was “InvestEd: how Warren Buffett and Charlie Munger taught me to master my mind, my emotions, and my money (with a little help from my dad)”(We shall go over this on future posts). This book opened a world of possibilities for me and the path ahead is the brightest I ever saw. I will be sharing more about this exciting path in the coming posts.

Current Me(Almost Value Investor)

Well, about an year ago I switched jobs to a full-time Mid-Level Software Engineer role. With the joining bonus and a generous pay, I was able to pay off my debt within 6 months. Now, I have a Discover savings account. The savings account interest paid is 3.7% which is not entirely bad(compared to other financial institutions). A 401K and a Roth IRA(More on these in future posts. Maybe?). I also have investments in the stock market in some wonderful companies. The Value Investor mindset helped me reprioritizing and reorganizing my finances, helped me in taking smart decisions based on value rather than on emotion. I wanted to buy a new car by trading in my old car. But before going ahead, Value Investor philosophy helped me in assessing the new car market, the demand and supply and the over all situation. Even though the used car market was booming and even though I could get a better price for my current car, I will end up paying more than the value for a new car.

Conclusion

The intent for this blog is not to provide financial advice in any form. But if you are someone who’s willing to embark on a journey to learn about the financial investments world, I would love to share the resources and tools which helped me. I would love to bring some value into your learning by coalescing topics, ideas, philosophies and tools important in the investment world into this blog. The intent is to encourage learning and excelling. As far as I can see in the future, I do not think I will be posting about any company analysis or stock picks. With that said, I hope you learnt something new. Keep Learning!

Disclaimer

The following blog posts are provided for informational purposes only and should not be considered as financial or investment advice. The content presented in these blog posts is based on the author’s personal opinions, research, and analysis of the financial markets.

Investing in stocks, bonds, cryptocurrencies, or any other financial instruments involves risks, and past performance is not indicative of future results. The value of investments can fluctuate, and it is possible to lose some or all of your investment. It is essential to conduct thorough research and consult with a qualified financial advisor or professional before making any investment decisions.

The information provided in these blog posts may not be suitable for all investors and should not be relied upon as the sole basis for investment decisions. Each individual’s financial situation, risk tolerance, and investment goals are unique, and it is crucial to consider these factors before making any investment choices.

The author of these blog posts does not guarantee the accuracy, completeness, or timeliness of the information provided. While every effort has been made to ensure the information’s reliability, the author and the blog cannot be held responsible for any errors or omissions. The author may hold positions in the stocks or companies mentioned in the blog posts, which may influence their views and opinions.

By accessing and reading these blog posts, you acknowledge and agree that the author, the blog, and any associated individuals or entities are not liable for any losses, damages, or actions taken based on the information presented. You are solely responsible for your own investment decisions and should seek professional advice if needed.

Remember, the financial markets are inherently unpredictable, and there are no guarantees of investment success. Proceed with caution, do your due diligence, and consider the risks involved before making any investment decisions.