Do you have what it takes to pull the trigger and buy more shares when you are in negative(-) profit

One Speculator and One Investor Work Together:
My coworker and I both purchased shares in different companies at about the same time and a few months later were randomly talking about our “portfolios”. Don’t be surprised, but him and I were in the negatives at that time. I was down about 17% and he was down about 30%. So the next question I asked him was are you ready to buy more shares?? His response was NO because he already invested a certain amount of dollars and was not able to purchase more. When he asked me the same question, my answer was an immediate YES. What about you, the negative profit you have in your portfolio, are you ready to buy more shares? What would your answer be to this fundamental fork in the road?

The YES Man <= No seriously watch this movie 
The reason why I would purchase more shares is fundamental for any investor, as you acquire more shares when the price is cheaper. Why would I want to buy more shares of something that is already loosing money? To answer this question you have to look at your entire system. If your system is setup for investing then you are setup to regularly purchase stocks, say every 3 months. Then the companies you are regularly investing in(4 times a year) need to have a basis for an investment. Otherwise you are investing money into something you are not sure about, and I can predict where your profits are going to end up with this approach. For this reason my coworker should have an outstanding reason for purchasing more shares of a cheaper company. There should be no fear associated with loosing because you should be protected by a rule you have put together to manage risk. If you do not have such a system then you are a speculator, a clueless speculator I will add.

The Good Old Days:
I used to think that I was an investor, but in reality it took me a really long time to realize that I was a speculator all along. I encourage everyone to fully research and understand if they are a speculator or an investor. Going from speculator to investor is like getting a professional tuneup for your money management skills. Probably the best way to put investing into an analogy is to compare it to a gym. As a child you have always seen bigger people than you, and one day you started asking how do people get big muscles. The answer to your question was going to the gym. Your adrenaline is pumping as you are getting excited about becoming the world biggest muscle builder. Then after going to the gym once you realize that  working out once does practically nothing to your muscles. So you re-think and develop a new strategy for building muscles. This new approach involves going to the gym 3-4 times a week. In one year you are going to see results, and the rest is history. Main point being that because you invested in stocks once, you have practically done nothing. To become a professional body builder you must make a dedication and likewise in investing, you must make a dedication to your money if you want to become a professional money manager.

Do you have what it takes to pull the trigger and buy more shares?
I always say YES to buying cheaper stocks, and why am I so confident in my stock choices? What possible information could I have about these companies that is driving my decisions with such comfort? Most individual traders these days rarely think about the worst case scenario. Imagine today the year is 1929 and you are heavily invested in stocks, and are about to wake up to the “Great Depression”. There are two extreme scenarios to wake up to in 1929. One is where all of your money is gone, and the other is you being reasonably down on your returns, but you have a margin of safety. This margin of safety is like an airbag which saves your life in a car accident. This airbag gets deployed in a case of an economic collapse, worst case possible. Which of these two options would you rather be prepared for this year? If you picked the second one, then you can apply Mr.Graham’s methods for finding a list of stocks matching his 2 rules from “The Simplest Way To Select Bargain Stocks”. Once you acquire this list, invest an equal amount of dollars into each company’s shares, and repeat this again in 3-4 months.

Who is Benjamin Graham:
What possible situation in 2015 could provide enough margin of safety to outlive the worst situation possible and still see another day? I can only point to one man who taught and practiced such methods. Would you be surprised to know that this man actually lived through the “Great Depression” and is a key person in Warren Buffets success? I think you would be very surprised that this man is also responsible for many successful investors known today. In case you do not know his name, it is Benjamin Graham. Google his name and paint your own picture about who he really is. To continue here, I will talk about this margin of safety and some of the last research this man managed to publish related to the subject of managing risk and beating the indexes.

Real World vs. Formula:
There are many ways to manage risk, academic and non-academic, or just nothing at all and so forth. If you part take in the academic approach, you find yourself proving that a formula makes the world go round, and not the opposite. But only life’s experiences can bring wisdom to investing which is far from what the formulas can provide. Because Benjamin Graham has lived through the worst economic depression United States has seen. He documented his portfolio which was down quite a bit and it took a long time to recover funds back to normal. During that time he developed principals for investing into stocks that have protection against a total economic collapse where your invested capital is retrievable, instead of lost.

Famous Words:
Have you ever heard these words “a dying man can do nothing easy”? You probably have not. Those were the last words spoken by Benjamin Franklin one of the founding fathers of U.S. who died at the age of 84 back in April of 1790. I mention those last words because Benjamin Graham’s last published article was “The Simplest Way To Select Bargain Stocks”. This man has spent a lifetime researching stocks, and to the best of his knowledge the principals specified in this article are the best results for an investor seeking higher returns. His investment approach buys bargain, undervalued and safe stocks which meet two rules. First they must be in an outstanding financial position(shareholders have a ton of equity), and second they must be cheap and not overpriced on the market. This means companies like Google & Amazon Mr.Graham would never buy. But companies like MLFX would be included in the portfolio because as of February 23, 2015 this company has an outstanding financial position with a P/E ratio of 5.7.

The Lost Treasure:
Benjamin Graham published a list of stocks in 1976 which met these two rules above and has provided specific instructions for discovering stocks which meet these rules in the financial galaxy today. These instructions which were published in 1976 can be applied to the stock market today in 2015. You can set out to find all of these stocks full time or you can skip this step by buying this list today on http://www.bg2rules1976.com for $199.

Follow the White Rabbit:
If you are a true investor you should research this man who shaped things like the Securities Act of 1933(“Truth in Securities Act”) in the United States promoting integrity in financial statements. You definitely want to research his books and as a reference read some of them. But the most important document I want to recommend for every investor is the last articles that was published for this man. Google “The Simplest Way To Select Bargain Stocks Benjamin Graham” and read it. If this article makes sense you would then be interested in finding all stocks in today’s market which meet the two criteria I have mentioned above. These two rules comes from “The Simplest Way To Select Bargain Stocks” article which was published in 1976.

Dollar Average Investing – Spread out capital equally across all stocks in portfolio:
I have created a tool to help find this list of stocks in 2015 and made this list available for anyone to BUY. Remember you are not going to buy this list and buy these stocks once, you must research what I have talked about and make sure you are ready to continuously invest into your portfolio every 3-4 months. How do you accomplish this in detail? Lets say you have $100,000 dollars to invest every 4 months. You take one hundred thousand dollars and divide it by the number of companies in the list. For a list of 50 companies I would buy $2000 worth of shares in each company. This way every 4 months you are working out to grow your investment which is protected by a cheap price that you have bought it at, and a fantastic financial position. At this point you can say “YES I HAVE WHAT IT TAKES TO PULL THE TRIGGER AND BUY MORE SHARES” because you have provided a true margin of safety.

NO EASY WAY to get this list of Bargain – Undervalued – Cheap Stocks in 2015?
Make sure to first Google the article mentioned above and read it. Then you can start by scanning for all stocks for a P/E ratio less than 7, and also you have to look at each company’s balance sheet to determine the financial position. To get the financial position of the company divide total shareholder’s equity by the total assets of the company. If this division result is bigger that 0.5, this company is considered to owning twice as much of what it owes, and therefore safe. There is no easy way to get this list, #1 option is to buy it on www.bg2rules1976.com for $199, or put together your own solution for automatically discovering bargain stocks of 2015 backed by Benjamin Graham’s research.

Speculator turned into an Investor – Find out how I did it and what it took

It has been 9 years since i first opened a Forex account and began my speculative trading career lol. I never gave up and always knew that I will make money with FOREX. Many years pass, few account disappear and I find myself wondering why hasn’t my trading returned a profit? I kept changing the strategy, testing and so forth over and over and over again. Nothing worked at all, and all of my dreams of becoming a portfolio manager were fading away. How could I manage other peoples money when i was loosing my own? I decided that in order to become one of these top shots, I had to move to New York and work for a financial institution where I could pick up on how exactly these Hedge Funds, Mutual Funds and Institutions generate returns for their clients. I decided that I wanted to work for a trading desk with a high end investment vehicle like a hedge fund. The biggest dream of working for a hedge fund was squashed as other opportunities came up and I had to make moves or leave NY for good. None the less, I kept writing algorithmic trading systems and again: these were all speculative and had absolutely no basis for any sound investment. I went as far as creating a coin flip algo trading system(OMG) => would you trust me with your money if that system worked? Anyway, I remember looking into stocks and have said to myself that stocks are simple when compared to Forex and are not as profitable, so I ignored stocks all along. Honestly I was not sure which direction to go, all I knew is that I must learn investing to start my portfolio. New York City is a financial hub and places like Baruch College offer certificate programs in Finances and Investments. I began researching this program at Baruch and was getting ready to join.

At around this time I was beginning to realize that in order to understand any subject(Investing) you must go to it’s history. This applied to many subjects in my life at this point, and by accident or not I was researching Warren Buffet. I wanted to know how this Billionaire made this much money. After reading some stuff on Google, Warren Buffet pointed to a pivotal point when he was 19 years old, he read “The Intelligent Investor” by Benjamin Graham. In the end Warren became Benjamin’s greatest student, literally by joining Columbia Business School where Benjamin Graham was teaching.

I bought “The Intelligent Investor” and in a few days, read the book cover to cover. After which I got a copy of “Security Analysis” by the same author and also read it cover to cover. “The Intelligent Investor” chapter 8 and 20 are the chapters which Warren Buffet said to master(make your own decision and have a margin of safety when investing). What is in the parenthesis above is a summary of Chapters 8 and 20 of “The Intelligent Investor” .

I used to worship big shot investors, after all they knew something I didn’t. After reading “The Intelligent Investor” – Wall St became a joke. I was laughing at myself because I used to be in that crowd waiting for the smartest people in the world to tell me how to invest my money. In other words, “you might as well flip a coin” and ignore Wall St advice all together. Flipping a coin is much easier than reading “The Intelligent Investor”, but terms like NCAV, Margin of Safety, Investor vs. Speculator are explained well for the everyday individual. This is the pivotal book in my life when it comes to investing. These days, I always recommend everyone to read “The Intelligent Investor”, as it will clear your mind from the modern “investing” <= speculation. How safe is your investments during an economic collapse, this is the problem that Benjamin Graham was solving. His solution was to purchase undervalued stocks where there was not much room for the price to fall anymore. Once you reach the bottom, how much further can you go?? This is the type of an investment Benjamin Graham, Warren Buffet and now I would make. There are additional things to look at, but in simplest terms I have described how to convert a speculator into an investor. The investor knows why he is buying the stock, the investor is not scared when the share prices fall, the investor cares less about Wall St advice and it’s heavy baggage.

If you follow all of the rules in “The Intelligent Investor” to become a smart investor you will find yourself in one of these categories: defensive investor, enterprise investor, index fund investor or a bargains investor. I am mostly interested in bargain stocks where I pay 50cents for a $1 dollar stock. I began re-reading what I have read in these books to find all that i can find on selecting bargain stocks. I came across this website http://www.serenitystocks.com where i can scan the entire market for what was outlined in “The Intelligent Investor”. This website offers a scan for the defensive investor, enterprise investor and the bargain investor. I ran the bargains filter on SerenityStocks and found a list of companies that matched the bargain rules. To my surprise most of these companies were in China and I was a little disappointed in this finding. I did not want to overpay for stocks from the defensive and enterprise scans. I kept searching on Google for additional research by Benjamin Graham outside of his books. I FOUND what I was looking for: “The Simplest Way To Select Bargain Stocks” by Benjamin Graham. This article along with others on the internet(“An Hour with Mr.Graham”) dismisses all the defensive, enterprise and bargain rules that were written by Mr.Graham himself, and rather points to a few rules that Benjamin Graham would use for his own portfolio.

In the end I have given up on FOREX and have put all of my money in stocks. I have put together a computer program that scans the entire stock market and returns a list of companies that would be considered bargains by Benjamin Graham based on his article “The Simplest…”. Thus far I have around 45 stocks in my portfolio and the biggest gainers are: GURE, ALN, AREX, ASTC & ATW. This list of 45+ companies offers a margin of safety in my invested capital. Benjamin Graham went through the biggest depression in the United States history. His books are proof of his dedication to generating profits in the worst economic conditions possible. The main principle is having safety in your investments, you achieve this safety by buying undervalued stocks with a super strong financial condition. To give you an example. Why would you buy Amazon for $400 when it is actually worth about $14 on the books???? I do not know either. But why would you buy LeapFrog’s stocks instead of Amazon? Looking at NYSE:LF(LeapFrog) you see that the company is currently trading way below it’s liquidation value(NCAV price is higher than stock closing price). Since LF is trading waaaaaaaaaaaaaay below it’s liquidation value, if you buy this stock your capital is protected by a margin of safety even in the worst situation possible: an economic depression. The price is already low and is not expected to go any lower.

The next big problem is to find a basket of stocks matching undervalued and financial conditions rules, this is where things get interesting. I realized that in order to find this list of bargain stocks and keep updating it every 2-3 months, is a huge undertaking. Finding companies with a strong financial condition is a complicated process because you have to look at each company’s balance sheet to figure out it’s Equity-to-Assets ratio. I knew that instead of manually searching for stocks I needed to write a software program which would get me everything I need to make a great investment decision. Thank god I am a software developer, which allowed me to write this software in about a month. I was very happy to see results with American companies. The generated list does contain Chinese stocks, but they are about 25% of the entire portfolio. The majority of the bargain stocks are American(happy dance).

In today’s world of computers we have lots of garbage stocks, to further filter the true bargain stocks, I added additional data for each company in my bg2Rules1976 report. This data is the actual balance sheet numbers($), financial statement dates, top 10 institutional and top 10 mutual fund holders along with a company profile. Yes this data is available to me on the internet, and i found myself in-front of my screen verifying data integrity of the bargain stocks from sites like MarketWatch, Yahoo Finance, Google Finance, and others.

I like Walmart the store(not the stock) for one reason, that you can go to a single place and find everything you need. My premium stocks list is like a Walmart store, where one report includes core data to make a great financial investment decision. After starting my portfolio and purchasing all of the stocks that were found to be undervalue with a great financial condition , I asked myself if others would be interested in this list of stocks for a premium? The answer I got from all of my colleagues was YES. I set out to start a website which offers this stock list to anyone who is serious about investing and wants to start their own portfolio. My site is http://www.bg2Rules1976.com, and what in the world does it mean?? BG stands for: Benjamin Graham. 2 Rules points to Benjamin Graham’s most undervalued research article i found to date “The Simplest Way To Select Bargain Stocks” and 1976 is the year this article was published and sadly the year Benjamin Graham died. I really want to thank Benjamin Graham for all of his influence on the investment community. He was the original value investor, and today you can manage your portfolio like a true value investor with a little help from www.bg2Rules1976.com