K's Learning Diary

There are tax advantages for holding on to your investments for longer periods of time. This is a good to know, but not the main focus of this series of blog posts. What's important is that by investing in a good business over a long term, not only do you get dividends along the way, there are often retained earnings that the company keeps and invests back into the business for growth - which in due course improves future earnings in a virtuous circle.  Keywords: Retained Earnings , Capital Gains Tax .

Instead of looking at how the market price of a stock is going up and down, a better indicator for your investment risk is how much debt a company has. Important Keywords from this lesson: Debt to Equity ratio tell you how much debt there is relative to net asset (typically <0.5 is acceptable). Current Ratio tell you the inflow and outflow of cash in the next 12 months, and if there is likely to be needs for new debts. This ratio is not normally shown on websites but is simply the Current Asset (asset likely to be sold in the next 12 months) / Current Liability (debt that has to be repaid in the next 12 months). Typically current ratio > 1.5 is a good sign,

Key Words from this lesson: Financial Risks , Debt , Price , Understanding of Value . Financial Risks in investments can arise from: - Too much debt . - Overpaying with a high inital price . - Lack of understanding of the asset's true value . Important Points: - Debt is borrowed capital to speed-up time (for expanding businesses, make big purchases...etc). - Volatility does not equal to risk for a long term investor, it presents buying opportunites when the price of an asset become undervalued. (It only become a risk if you are forced to sell at a bad price, which can be the case if there is excessive debt - for a person, a comapny, or a country). Great Quote: - Only when the tide goes out do you discover who's been swimming naked. - Price is what you pay, value is what you get.

Key Words from this lesson: Fundamentals , Market Price , Earnings , Bookvalue , Patience , Price to Earnings ratio , Price to Bookvalue ratio . Key Points from this lesson:  4 Rules when looking to buy a business : - pick a stable, understanable business . - pick a business with long term prospect/ enduring economic characteristics . - pick a business with good managers that can also handle debt well. - only buy a business if it's at a good/ reasonable price compared to it's intrinsic value.  Other points : - think for yourself. don't follow because "others are doing it". - typically a reasonable PE should be less than 15. - typically a reasonable PB should be less than 1.5.

Key Words from this lesson: The Stock Market , Limit Orders , Stop Orders , Mr. Market , Buyer's Market , Seller's Market . ********* Do you use wifi in public places or travel abroad often? Do you worry about cyber security? Get added security with a reliable VPN.   Get 63% off your VPN  cost today for less than £3/$5 a month. 

In this video the instructor shows where we can find all the previously mentioned financial data on the Internet. There are many web sites that does this. All the big sites such as Yahoo, MSN, Google have it. As well as the Financial Times and many other investor focused news website such as Investors Chronicle, MoneyAM...etc. Explore for a bit and find one that you like.

Key Words from this lesson: Shares Outstanding , Valuation , Earnings Per Share (EPS) , Price to Earnings Ratio (PE) , Expected Return (annual) .

In addition to the Income Statement, the Balance Sheet, a Cash Flow Statement is another financial statement that tells you if a company might be worth investing.  Essentially, a Cash Flow Statement tells you where all the company's operating profit goes (e.g. dividend payments to share holders, share buybacks, paying off debt...etc), and if the company needed to raise any additional money to make ends meet (by issuing new shares or bonds). It also shows you if the company has reinvested cash back into the business or if the company has other sources of income such as from investments in other companies (making it a holding company ). Cash Flow Statements mainly have 3 sections: - Operating Activities (money generated from different income sources) - Investing Activities (money spent on assets or investments) - Financing Activities (issuance of shares or bonds, debt paid off, dividends) Operating Activities should be a positive number , and hopefully grow

Key Words from this lesson: Income Statement , Balance Sheet , Cash Flow Statement , Liquidate , Asset , Liabilities , Equity , Per Share Book Value , Market Price , Margin of Safety

Key Words from this lesson: Revenue , Cost of Revenue , Income Before Tax , Net Income/ Earnings (per share), Dividend , Board of Directors , Yield & Expected Return .

There is one book that I would consider a must read for anyone that invests or thinking about investing in the stock market, and that is The Intelligent Investor by Benjamin Graham. I owe much of what I know about investing to this particular school of thinking about investment, especially from one of its well known disciples - Warren Buffett.  Amazon.co.uk Widgets I was searching online to see whether there are materials based on this book that can be more easily accessible for beginers in investing or a younger person just getting to know the subject. Luckily I have found a series of excellent videos produced by Preston Pysh that really covers all the fundamentals. I hope you will find these videos instructive and learn more from the book if you wish to explore further. Enjoy! Key words from this lesson: Value Investing , Asset , Liability .

Just a quick post to help others that may be having similar issues when trying to install R packages. When using the install.packages command:  install.packages("package name",lib="/my/own/R-packages/") If you get this error message:  Warning: Unable to access index for repository.. Package is not available for R version 3.2.1... Here is what I did and it worked. On the menu Options at the top of your RStudio, click on Packages, select Set CRAN Mirror . Try changing the location and it should work.

I have recently installed Ubuntu as an alternative Operating System onto my PC. Ubuntu is a version of the free Linux operating system, I thought it was about time for me to try it. However, I do wish to keep my Windows stuff unchanged, hence I went for the dual-boot option. The installation was actually very easy. - First I downloaded Ubuntu for Windows here: http://www.ubuntu.com/download/desktop - Then created a installer on a USB stick with these instructions http://www.ubuntu.com/download/desktop/create-a-usb-stick-on-windows - Restarted the computer, and chose to boot from USB at Setup. And everything worked perfectly. However, the PC will now choose to start Ubuntu by default  if you don't choose Windows at restart (on mine it's the third option down), but I actually wanted Windows as the deafult boot option. Luckily this was not diffuclt to change: - Click on the Ubuntu icon, in the searchbar type Terminal. - Click Terminal to bring up

For those of you that are wondering about the recent news headlines, here is a brief explanation. I do hope that the Greeks can find a solution to their problems soon.