Oops, shalom is my sister's account. I forgot to log out:)

Some people are a bit "obssessed" with analyst recommendations. If the stock is recommended by analyst, he will buy. But if it is not, he will not buy. If the target price set by analysts is high, the more some people will buy. He buys without bothering to read about what the company is doing and importantly about the company's financials. The information available in the internet are all free but somehow people do not bother to read. They prefer to rely on analyst reports.

Some of you might know that every Monday in Business times on page 2 there is a page on broker recommendation. Some months back they put Noble Group with a mean target price of 85c. At that time Noble Group was above $1. So this friend of mine said," Noble no good. Broker say mean target price is 85c." My dear friend, Noble Group is now about $1.60.

On the other hand, if you had bought on the first buy rating given by analyst on Cosco, you would have made money as this stock has gone through many buy ratings.

So the important thing is have an open and independent mind. Don't keep looking at target price. To me target price has no meaning. When the valuation is not cheap and you think the company cannot grow significantly any more, that is when you sell. How to know? Read the company's plans and monitor their results.

Look at Labroy Marine. Its target price keeps changing. I heard there was some newspapar report on Swissco target price as being 85c. It is now $1. ASL Marine target price was $1.50, but today it is $1.54. Sometimes target price is set high to fool you and you fall right into it

Actually the best analyst is actually you yourself if one takes the effort to read and learn.

Some people are a bit "obssessed" with analyst recommendations. If the stock is recommended by analyst, he will buy. But if it is not, he will not buy. If the target price set by analysts is high, the more some people will buy. He buys without bothering to read about what the company is doing and importantly about the company's financials. The information available in the internet are all free but somehow people do not bother to read. They prefer to rely on analyst reports.

Some of you might know that every Monday in Business times on page 2 there is a page on broker recommendation. Some months back they put Noble Group with a mean target price of 85c. At that time Noble Group was above $1. So this friend of mine said," Noble no good. Broker say mean target price is 85c." My dear friend, Noble Group is now about $1.60.

On the other hand, if you had bought on the first buy rating given by analyst on Cosco, you would have made money as this stock has gone through many buy ratings.

So the important thing is have an open and independent mind. Don't keep looking at target price. To me target price has no meaning. When the valuation is not cheap and you think the company cannot grow significantly any more, that is when you sell. How to know? Read the company's plans and monitor their results.

Look at Labroy Marine. Its target price keeps changing. I heard there was some newspapar report on Swissco target price as being 85c. It is now $1. ASL Marine target price was $1.50, but today it is $1.54. Sometimes target price is set high to fool you and you fall right into it

Actually the best analyst is actually you yourself if one takes the effort to read and learn. 

An American sage's Tao of investment

This week, we begin a new series on the world's greatest investors and their trading strategies. JASON LOW turns the spotlight on the best known of them all - Berkshire Hathaway's Warren Buffett

Published June 11, 2007

FOR Warren Buffett, the third richest person in the world according to Forbes (2007), his sense of business emerged as early as the age of six, when he sold cans of Coke to earn some decent pocket money. With his drive and spirit of enterprise, he went on to start his first business with his good friend Don Danly at age 15, earning a keep from the used pinball machines that their company purchased. And he has never looked back since.

Born in Omaha, Nebraska, in August 1930, Mr Buffett holds his hometown close to his heart. Despite being involved in many high profile deals in Wall Street, he still lives in Omaha today, in the very same house which he purchased in 1958. Renowned for his humble and unpretentious lifestyle, he has always lived far below his income, a trait that many successful investors have in common.

With a net worth of around US$52 billion, Mr Buffett is the largest shareholder and chief executive officer of his holding company, Berkshire Hathaway. The company has been acquiring many undervalued, fundamentally-sound and well-managed companies ever since he took over the reins in 1965.

The rationale of him investing in companies that are undervalued relative to their intrinsic value is that in the long-term, the market will eventually realise their intrinsic values and thus bring about gains for the value investor.

Mr Buffett's philosophy is simple enough for young investors to understand: Find out how much the business will pay you between now and a point in time in the future where you want to sell the stock. Discount that amount back to today and attempt to buy the company's stock cheaper.

Let's look at some of the investing strategies that Mr Buffett, the Prophet of Profit, used for Berkshire and himself, en-route to becoming the greatest investor of our time.

Invest only in what you truly understand

Investing only in what you know and ignoring the rest has always been the cornerstone of Mr Buffett's investing philosophy. He makes it his habit to only invest in the businesses that he has in-depth knowledge in. Thus, it is not surprising to discover that almost all of his wealth has been made in easy to understand, old economy companies like Coca-Cola, the Washington Post Company and Geico.

One's circle of competence must be clearly defined so that the person will have a pretty good idea on which industry/sectors he is most proficient in researching, analysing and understanding the business model.

'Draw a circle around the business you understand and then eliminate those that fail to qualify on the basis of value, good management, and limited exposure to hard times,' Mr Buffett asserts.

For young investors who are starting out, acquiring some simple knowledge about accounting and simple financial analysis would be a good starting point. Mr Buffett has never believed in complex equations, thus having a good understanding of financial management 101 would be good enough for someone starting out.

Don't follow the herd, have a mind of your own

Mr Buffet never took the advice of the so-called gurus or famous stock analysts even when he was much younger and less experienced. He always had a mind of his own, deciding for himself whether the business was worth buying into, and trusts his own analysis and research.

In the global market today where research reports by top analysts' firms can virtually move a stock or even the market, herd investing is indeed very prevalent. Investors should be cautious of this way of investing.

Research reports may be a good starting point for young investors to learn more about the analysis done in such reports, but it is not recommended that such information and recommendations be taken at face value.

More in-depth research and analysis is required to determine whether the company is worth investing in or not. A rule of thumb: Remember that you should be the one making the decisions on how to invest your own money after all, not others.

Buy into a business, not the market

Mr Buffett has always considered himself a business analyst and is only interested in determining whether the company is undervalued. He cautioned against becoming a market follower by allowing the market to determine whether it is a good time to enter the stock or not.

Indeed this could be seen from his astute investment in the Washington Post Company in 1973 despite the adverse market conditions caused by an energy crisis that particular year.

So given the current scenario in the Singapore market where most analysts believe that the market is overvalued, if one is able to identify an undervalued and well-managed company, he can still go ahead and invest despite 'the market being too expensive'.

Go long in a good company and never ever be tempted into trading

Mr Buffett always believed in owning a company he invests in for life. That is to say, he never believes in trading in the market. In fact, he does not understand the mindset of traders who value the price movements of the stock more than the true value of the company.

Mr Buffett is a very patient individual who holds on to his fundamentally strong and undervalued companies, expecting them to realise their intrinsic value before he ever decides to sell them off.

He believes that 'time is the friend of the wonderful business and the enemy of a mediocre one'. Thus, if he ever invests in a company, it must be undervalued and with time (and patience), the market will eventually realise its true value.

For young investors out there, it must be made clear that every individual's investing philosophy and time horizon is different from another's. Following someone else's investment philosophy will help, but only to some extent.

One has to be enlightened that the best investment philosophy that he can have is an investing philosophy that will suit his investment principles and time horizon. Only then can he be considered a savvy investor who truly understands his own philosophy and thinking.