Smart Business Magazine, December 2019
16 Smart Business Cleveland December 2019 Timeless tips Once youve made a decision have the courage of your convictions Schloss investment philosophy was simple He once said Investing should be fun and challenging not stressful and worrying He published a one page note back in 1994 that explained some of his tenets Here are a few worth sharing 1 Price is the most important factor to use in relation to value 2 Try to establish the value of the company Remember that a share of stock represents a part of a business and is not just a piece of paper 3 Use book value as a starting point to try to establish the value of the enterprise Be sure that debt does not equal 100 percent of the equity 4 Have patience Stocks dont go up immediately 5 Dont buy on tips or for a quick move Let the professionals do that if they can Dont sell on bad news 6 Dont be afraid to be a loner but be sure that you are correct in your judgment You cant be 100 percent certain but try to look for weaknesses in your thinking Buy on a scale and sell on a scale up 7 Have the courage of your convictions once youve made a decision 8 Have a philosophy of investment and try to follow it 9 Dont be in too much of a hurry to sell 10 When buying a stock I find it helpful to buy near the low of the past few years 11 Try to buy assets at a discount rather than buying earnings Earnings can change dramatically in a short time Usually assets change slowly 12 Listen to suggestions from people you respect This doesnt mean you have to accept them Remember its your money and generally it is harder to keep money than to make it Once you lose a lot of money it is hard to make it back 13 Try not to let your emotions affect your judgment Fear and greed are probably the worst emotions to have in connection with the purchase and sale of stocks 14 Remember the word compounding For example if you can earn 12 percent a year and reinvest the money you will double your money in six years taxes excluded Remember the rule of 72 Your rate of return into 72 will tell you the number of years to double your money 15 Prefer stocks over bonds Bonds will limit your gains and inflation will reduce your purchasing power 16 Be careful of leverage It can go against you Theres no magic bullet or hidden formula to his success just good old fashioned common sense Much of what Ive learned about entrepreneurial investing comes from reading talking with people and through trial and error As you think about dealmaking there is some sage advice from a gentleman whom Warren Buffett once labeled a super investor the late Walter Schloss ENTREPRENEURIAL INVESTING UMBERTO P FEDELI UMBERTO P FEDELI CEO The Fedeli Group a Cleveland based firm specializing in employee benefits consulting as well as property and casualty risk management solutions Since 1988 Umberto has served as CEO ufedeli@ thefedeligroup com www thefedeligroup com
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