Accounting is often called the language of business

Accounting is often called “the language of business” because it provides much of the information that owners, managers, and investors need to evaluate a company’s financial performance. According to the world’s most successful investor (and secondrichest person), Warren Buffet, the best way to prepare to be an investor is to learn all the accounting you can. [382] Buffet, chairman and CEO of Berkshire Hathaway (a company that invests in other companies), turned an original investment of $10, 000 into a net worth of $35 billion in four decades, and he did it, in large part, by relying on financial reports prepared by accountants. [383]

I’ve gotten a lot of questions. So, I’ll just answer them.

Questions • How do you calculate PEG? • Are you factoring in elements like inflation hedges to your value calculation, or is that just a perk? • Do you use any of the “fancy investment strategies” like a covered call? Why / why not? • How much research do you do about the industries these companies are in? Just enough to confirm how underpriced they are? Or are you specifically looking for deals in these industries?

Alright, how did I Start?

Grade School (1 Hour a week) • Bought Stocks, one my grandfather picked and one my mom picked, went bankrupt. Bye bye lawn mowing money.

Middle School (1 hour a week) • Picked AOL and NFLX, woohoo!

High School (5 hours a week) • • Broke out serious analysis Technical Highest rating score from various agencies Zacks rating CAPS rating This all sucked, I was trading ideas Finally my future mentor Doug helped me out

College (40 Hours a week) • Wasted 2 years trying to automate Doug’s thing and mix it with pulling and sorting automatically. • Sat down one summer worked 40 hours, and 40 hours for stock research. Got things cooking.

Who cares about failures? • Here’s what finally got me going on what I has evolved into what I have today. • 1. FSB 100, and other various lists • 2. Analyze them all fundamentally • 3. Buy • 4. Rinse and repeat.

Great! First month +30% • Then the market crashed. Ouch. • My friends told me to sell and cut losses, my family told me to sell and cut losses, everyone was panicking. Meanwhile, I was finding companies that were 10 x as attractive as the ones that I currently owned.

Here’s how I did it. • Sort through 100 companies a day, really analyze few them. Watch • abt • aig • ahr • fas • cop • mro

Here’s how I do it. • Social Networking, only look at 10 a day.