Common Stocks and Common Sense: The Strategies, Analyses, Decisions, and Emotions of a Particularly Successful Value Investor by Edgar WachenheimDeep insight and candid discussion from one of Wall Streets best investorsCommon Stocks and Common Sense provides detailed insight into common stock investing, using a case-study approach based on real-world investments. Author Edgar Wachenheim is the 28-year CEO of Greenhaven Associates, boasting an average annual portfolio comparable to Warren Buffets. In this book, he shares his knowledge and experiences by providing detailed analyses of actual investments made by himself and other investors. The discussion covers the entire investment process, including the softer, human side, with candid insight into the joys and frustrations, intensities and pressures, and risks and uncertainties. The unique emphasis on behavioral economics and real-world cases set this book apart from the herd--but its Wachenheim himself and his deeply-examined perspective that elevates the book beyond a mere investing guide.
Between 1990 and 2014, a typical portfolio managed by Wachenheim enjoyed an average annual return in excess of 18%, achieved using relatively conservative stocks and no financial leverage. As a proponent of evidence and example, his analysis of real cases serve as a valuable education for anyone looking to improve their own investment practices.
Understand investment through the lens of a Wall Street leader
Dig into the details of real-world common stock investing
Learn how to invest creatively and minimize risk
Go beyond theory to study strategy on a case-by-case basis
Investment principles and strategies are easy to find--entire libraries have been written about theories and methods and what should happen. But this book goes beyond the typical guide to show you how these ideas are applied in the real world--and what actually happened. Investors seeking real insight, real expertise, and a proven track record will find Common Stocks and Common Sense a uniquely useful resource.
Understanding Gaps: Common, Breakaway, Runaway, and Exhaustion Gap
How to Create a Stock Analysis Strategy
Step 2: Break Down the Data Points
A few investors often successful business owners, executives or academics prefer to select individual stocks, building a portfolio brick-by-brick based upon an analysis of the individual firms. In case you were wondering, Benjamin Graham was an investor and author. As I mentioned above, he is considered the father of investing because he was one of the first people to use financial analysis to invest in stocks. And he did so successfully. Graham created many of the standards and principles that many modern investors are still using today. In fact, he's also known as Warren Buffett's mentor. Graham goes on to address the specific quandary every active investor will face in determining how to manage his or her portfolio saying, "Whether the investor should attempt to buy low and sell high, or whether he should be content to hold sound securities through thick and thin—subject only to periodic examination of their intrinsic merits—is one of the several choices of policy which the individual must make for himself.
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Stock analysis is the evaluation of a particular trading instrument, an investment sector, or the market as a whole. Stock analysts attempt to determine the future activity of an instrument, sector, or market. Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. There are two basic types of stock analysis: fundamental analysis and technical analysis. Fundamental analysis concentrates on data from sources, including financial records, economic reports, company assets, and market share.