How real investors evaluate potential investments?

 

Old-school investors follow a disciplined and conservative approach when evaluating potential investments. Unlike modern traders who often rely on short-term sentiment, algorithms or rapid market swings, traditional investors focus on fundamental value, long-term stability and a deep understanding of the business they are investing in. Their process is careful, methodical and grounded in principles that have worked for decades.

The first step for old-school investors is to study the business itself. They want to understand how a company makes money, what products or services it offers and whether it has a durable competitive advantage. They look for companies with strong brands, loyal customers and business models that can survive different economic cycles. They place great importance on management quality, preferring leaders who act with integrity, allocate capital wisely and communicate transparently.

Financial strength is a central pillar of their evaluation method. Old-school investors examine balance sheets, income statements and cash flow reports with great attention. They focus on earnings consistency, healthy profit margins, manageable debt levels and the company’s ability to generate free cash flow. They avoid firms that rely heavily on borrowing or whose results fluctuate wildly from year to year. Stability and resilience matter more to them than rapid but unpredictable growth.

Valuation is also crucial. Traditional investors believe that even a great business is a poor investment at the wrong price. They use metrics such as price-to-earnings ratios, book value comparisons and discounted cash flow estimates to determine whether a stock is undervalued or overpriced. They prefer companies trading below their intrinsic value, giving them a margin of safety in case market conditions turn unfavorable. This cautious approach protects them from overpaying and helps ensure long-term returns.

Old-school investors also pay close attention to broader economic and industry trends. They try to understand how technological changes, regulation, competition and consumer preferences might affect a company’s future. However, unlike short-term traders, they do not attempt to predict every market move. Instead, they remain patient, waiting for opportunities where the market temporarily misprices high-quality businesses due to fear, uncertainty or short-term disruptions.

Emotion control is another key element. Traditional investors avoid rushing into decisions based on hype, panic or market noise. They focus on long-term performance and are comfortable holding investments for years, sometimes decades. They believe that time in the market, combined with disciplined selection, is more powerful than trying to time the market.

In summary, old-school investors evaluate potential investments by analyzing the business, studying financial strength, assessing valuation, understanding long-term trends and maintaining emotional discipline. Their approach may seem slow compared to modern fast-paced trading, but its foundation in patience, logic and value has made it remarkably effective across generations. Their success lies in recognizing that investment is not about predicting the future perfectly, but about choosing sound businesses at sensible prices and allowing them to grow over time.

Naked True about Investment in Forex

Is Forex trading Investing?

Oh man, who could say why the market is so blind. Why people are so blind and foolish still hanging on the spike of the 'forex' market? Isn't it obvious what a fool game it is??

 

Many investors are saying that Forex is a good investment strategy but only for those who know what they are doing. Well, I have my own meaning about those. Those who know what they are doing in Forex, should know that they are not investing but they are speculating. And of course there is a difference between speculation and investment. The difference is the same like the difference is between gambling and buying a cake for a birthday. 

That sounds strange, but the true often sounds a bit strange. Forex attracts huge amount of people over the world. And the most strange thing, that many of those people are smart enough to avoid such things. Well, another naked true is that smart people are losing money too, especially at investing. Any reasonable investor should avoid Forex market by far.

But it is not so easy to avoid it when you see the ads of Forex traders on every corner. Well, I mean corners of website about investments. If you try to make a little analysis, and visit main websites about investments and financial markets, you will see that most of those are placing ads that are promoting Forex trading. This is naked true too. You see, those website could promote normal investments like good index funds, stock trading platforms or some good bonds. But they don't. All of them are promoting mostly Forex trading. And it is not hard to predict why. They are promoting Forex investments because they pay the best money for those commercials. And why they can pay such money? 

They can pay the biggest money because they earn big money from people. If they earn those money, it means people (clients of brokerage firms) are loosing those money and the cash goes to the Forex trading companies. The key thing in here is that investors are losing money in Forex trading and firms have more money to promote their services for clients who will lose their money again. 

Don't Get Fooled by Forex!!

People, listen to me. Don't get fooled: financial markets are made in the way to make good profits. Good profits from you. You may read a lot of success stories about Forex traders but I'm pretty sure that most of those are part of a marketing to you believe in such possibilities. I know many people, who lost their money on Forex market, personally and I don't know anyone who made real money. 

It may be a short time of success but sooner or later you will going to lose. If you don't want to lose cash, don't have any business with Forex trading. System is working on you to make money from you. It is natural and you need to do is not get fooled. And any media will not help you with this because financial media is fed by Forex trading providers and media do not want to lose their income. It is natural. You have to think by your own...

Still, if you really are thinking that you you can do better than the rest of the wolrd. Then try it. There is no other choice.  But have your limit for loss (reasonable), and in no case ever breach this limit!

Better go and learn real investing: www.investingforbeginners.eu

Management of investments is basically about managing money and other assets. This may include shares of stock, real estate, bonds, and currencies. It is usually handled by an portfolio manager, which may be a person or an entity, for a client, which may be an individual or an institution such as a company. 

A proper investment management takes many steps: personal finances, asset allocation, investment tactics, realization of an investment portfolio, investment management consulting, investment risk management, investment result performance measurement. There are a lot of investment management books and other literature that is writing about those processes.  

Investment management is a necessity, especially for big businesses, because of the complexity of the financial processes involved to make them operate, the unpredictability of market indicators, and the changing regulations pertinent to investments. It is as important as profit that the investment is managed properly for it to operate successfully. Hence, the importance of investment management cannot be ignored. 

There are a lot of investment management firms out there offering a wide range of services to both individuals and institutions who may be in need of their service. One need only to reach out to them for a consultation to determine which one will satisfy one’s investment management needs. 

One must discuss first the objectives of one’s investments to come up with the most efficient plan possible to meet these objectives. Next, investing one’s assets and money on the stock market and other possible investments are settled. The performance of these investments is regularly checked to determine if they are attaining their goals as desired. 

The perennial 3 P’s represent the factors as to why an investment manager or firm is successful. The first of these is Philosophy which pertains to the prevailing beliefs of the firm. For example, the way they interpret prevailing market conditions to predict market trends is a sign of their Philosophy. The second is Process which details the steps taken to remain true to the first one. For instance, how they would react if there was a trend on the market in investing the assets of their clients is an indication of the second P. The third is People which refer to the individual/s which make up the firm. Investing in persons who will handle the management of assets is important. If they were a team, this obviously refers to the chemistry of the team and how each one contributes to their success and reaping rewards for their clients.

Investment management for a person or an institution may take on different routes depending on the goals set for the businesses one was investing upon. Investing heavily on a specific segment of the market may not always be a good idea which is why diversification of investments is desired by most investors. This reduces possible risk if a certain segment of the market experiences some lows. That’s how risk management for investing process works. Investing on mutual funds, ETFs, and other areas are considered to have some variations on one’s portfolio. 

Investing in the proper management of one’s money and assets is equally important as these assets. So make sure they are guided well.

If you are looking for good investment management firms, you should look at two main criteria: the result and investment management fee structure. Both are very important and have to measured equally. If you are looking for a investment fund, then should focus on ‘total expense ratio (TER)’ which shows all the fees.

Few Reason to Avoid Investments in Government Bonds

Bonds issued by governments was as a stable investment symbol for many years. But can thing change? Of course, all world is changing all the time only most of the times we are too stubborn to notice those changes. The key of changes is that a person does not change that fast as environment is changing. New people are coming always to the markets and they are changing the attitude to many things. 

Now has come the time when the attitude to government bonds also is changing. Financial markets are never stable and there aren't now. Because all the debts of governments that are huge finally are bringing some consequences. Everything has its limits and debt of a government has those limits too. When limits are breached bad things happen to these countries. The Greece was first example of many that are waiting in the future among developed economies. 

The thing about high debt is that when liabilities are too high it makes look the issuer as unstable one and that makes to increase borrowing costs. High borrowing costs together with high debt make interest payments as huge and no country can afford it for long period. You may check for interest conditions on financial portal Bloomberg. 

The more country has financial liabilities the more problems it is facing. The another thing that politicians have not enough will to change the situation when it is really bad because unpopular decisions are needed and nobody wants to do those unpopular decisions to bring fiscal deficit in balance. That makes investment in governmental bonds quite risky investments and it is no a symbol of the safest investment tool.

However, it is strange that some investment funds or pension funds are still allowed to invest only government bonds which is completely meaningless at these days realities...

Investing When Markets Tumble

You may say that it is not easy to invest when market are jumping up and down. But more experienced investor should tell you that investment markets are always jumping down and up and occasions when market stays at the same place are quite rear.

And even if stock market stays flat it is never calm. Flat situation can be even more nervous because all investors are waiting for something to happen just they don't know what to expect. Well, investing is not sure thing and many things depend on conditions that are secret for all the market participants.

Well, at least every investor can expect for the best, that bull market will come soon and stocks will maybe rise some day again, just don't loose the hope!

OTC Market and Acquisitions

If we are talking about financial markets and investment markets everybody know about stock exchanges. Most of the investors are buying stocks and other securities they only in stock exchanges and even doesn't know about  other possibilities or stock trading places. 

Other investors only know about they trading platform and even doesn't think about other questions how investments are traded. Te thing is that there are two types of markets: centralized markets as stocks exchanges and non centralized markets that also are called as OTC markets. 

OTC markets are those markets that create themselves naturally and if you would sell some financial instrument to your friend and it will be a transaction of OTC (over the counter) market. The name of OTC market is not very popular but in reality there are trillions of deals made in OTC market and it has very important share in OTC markets and that is natural way to develop even more in the future because of increasing computerization. 

For example acquisition of one big company by another is also an OTC market deals, especially if that acquisition is by privately held company and the target of the acquisition is also private company. Let's say one guy (shareholder) meets another guy (investor) and the last one buys the shares from the first one. That's how financial markets does the job. 

Of course if acquisitions are made for listed companies such acquisitions may get more complicated to explain. However acquisitions in M&A and OTC markets are very closely related and may be interesting to see the developments of these fields in the future. 

Investment: Stock Valuation

Investment isn't an easy thing, especially when you understand what are you doing. If you don't understand the basic finances that lays beyond the surface of investment then you are just skying over the top of water, but when  you lose speed you immediately start to drawn. That's what happens when you you are investing in stocks and other investments but do not really know what are you doing. Believe or not, most of the investors are doing exactly that and almost every investor starts from this stage. 

The knowledge and wisdom comes slowly, after many years of experience in investing; only then some investor can say that he is really understand what is he doing. if you want get closer to that understanding and do it faster, you should get known about investment finances. The main thing in it is stock valuation. The goal of stock valuation is to determine the potential value of an investment (stock) and compare it to the price on stock exchange. If valuation says that the value is higher than stock price on the market it means that it can be a good investment opportunity. 

There are two main types of valuation of shares: relative valuation and DCF valuation. Comparative stock valuation is based on valuation multiples as price earnings (P/E) ratio, EV/EBITDA ratio, EV/S ratio, PEG ratio: investinforbeginners.eu, P/NAV ratio and many other ratios. Those ratios are calculated for the assessed company and for many comparable companies. Comparable companies have to very similar to the valued company. If companies will be different then comparison will be false - it is natural that different companies have different valuation multiples or ratios. Every business is different and valuation of every business is also different. It is a natural thing and every investor has to know it, otherwise he will fail in understanding the value of stocks and investment basics. 

DCF valuation is based on discounted cash flows. This method is very detailed and takes a lot of time ti prepare it. It is not advisable for beginners at investing and mostly is used by professionals. However, you don't have to do everything by yourself because you can find many investment researches on the net, where a lot DCF valuations are available. You may use those DCF valuations for your purpose in investment decisions. Of course you should trust it blindly and get you own analysis, but you won't be needed to do all the work by yourself and it will safe a lot of time, which can be spent for the search of new investments. 

Right valuation knowledge do not guarantees for you good results from investing in stocks, but you at least will know in what stocks you are investing, what is the risk, what is possible return compared to other stock and etc. 

If you are beginner at investing, you obviously have know how to valuate stocks and other investments. It is a basic which will lead you to the new ways later. Don't forget it.

Investing in Mutual Funds

A mutual fund is simply the gathering of money from several people or even companies, managed by an investment manager or an investment company, for the benefit of the shareholders. There are many types of mutual funds, depending on the type of investment the money is used for. The investment portfolio managers or company is paid a certain fee in investing and managing the fund. Because of this, the shareholders save themselves the trouble of trying to analyze market trends or even financial statements. It’s like one gives money to the fund, and the money is used in investing in some form of business or the other. One need not worry about its management.

Investment funds is one of the easiest ways to save money and get returns higher than other investments. One must be wise, though, and begin investing only in the type of mutual fund that one is familiar with. Remember, different mutual funds are placed in investments of different categories. Choose the one that you are more familiar with.

One only needs to have a brokerage account to begin investing in a mutual fund, just like investing in shares.

A mutual fund has two types based on the number of shares. A closed-end mutual fund has a specified number of shares that is bought and sold to shareholders. An open-end mutual fund has no specified number of shares; hence, many can actually join the fund and its pool of money increase.

Based on the costs for selling or buying mutual funds, there are three types. These are the Front Load, Back Load, and the No Load mutual fund. The first one charges a fee for buying a share; the second type charges only a fee once you sell a share; and the third one imposes no such fees. Remember, though, that all mutual funds charge a management fee depending on the type of fund and length of commitment to the fund.  

If you intend to purchase a share of a mutual fund, do some research first about its past performance. Compare it with the mutual funds of the same type. Also consider the period you plan to commit yourself to the mutual fund. Check also the reputation of the investment manager and his length of stay in overseeing the investing of the mutual fund. When managed properly, one can expect good returns from a mutual fund. But remember, that isn't easy to perform investment management performance measurement correctly.

However, investing in mutual funds is best choice only for small retail investors that chose passive way of investing. When investing in mutual funds you don’t need to much by yourself, but you have to pay for that.

Such investment funds normally have higher fees than ETF (exchange traded) funds or other index funds. So if you trust investment manager of the fund and you are sure that he will calculate all the valuation multiples as price and earnings ratio (also called as P/E ratio) and P/NAV ratio (price to NAV) and chose stocks properly, then it is ok. Otherwise, better look for other investment alternatives. 

How to Invest in Stocks

If you are thinking about trying your hands in the stocks market, then you have to find out everything that you can about investing in this field and making a killing out of every transaction that you take on. There are a lot of tools that you have to acquire before you try your hands in the investment field, to ensure that you would not have to deal with losses that are too big for you to handle. See to it that you keep the following considerations in mind as you try your hands in this very challenging field as stocks investments. As long as you stick to these pointers, you should be able to gain a stable career in the field of stocks investing. 

First and foremost, you have to establish the type of return that you are aiming for prior to investing on any type of stocks. If you aiming for short-term gain, then you have to see to it that you invest on stock options that will allow you that luxury. Make sure that you stick to investing on stable stocks if you are more interested in long-term gains, on the other hand. There are a lot of tools that you may use to assess how the choices that you have will most likely turn out. Make sure that you use as many of them as you can before you place your money on any type of stocks, to ensure that you would be able to meet the profit margin that you are after. 

In order to ensure that you will be investing your money on the best possible stocks, you have to prepare yourself to perform the necessary amount of research that will give you information as to how your options have fared in the past. After all, this is the best way though which you can gauge how they will work out for you in the future. Make sure that you spend enough time and effort in looking into the background of the investment options that you are considering to take on, for you to be able to gauge which ones will give you the profit that you want for your career. 

Factors to Consider When Investing

Investing entails a keen feasibility study.  Making a decision on investing should not just rely on the amount of money that you can invest, because solving an investment problem can’t be done in just a snap.  You cannot magically replace a lost investment.  It takes a long process and a series of systems improvement to get back in the game.

Here are some significant factors to consider when investing:

1.      Management Perspective.  If there is an aggressive management and a positive marketing perspective with an opened eye for innovations then there is a better chance for favourable results, success and productivity.  Electronics and communication is an example of industry that needs to aim for continuous improvement and latest innovations.  There should be no room for idleness when investing.

2.      Tactics of the competitor.  The tactics and marketing strategies of your competitor should be hardly taken into consideration.  If your competitor is very aggressive in investing modern machines and gadgets to increase profitability, make sure that you can cope with it or else your investments will eventually turn down and be wholly swallowed by the competitor. 

3.      Different opportunities presented by a higher technology.  You should know when to salvage your present equipment in order to cope with the demands of your customers.  Be sure to have reached your desire rate of return (ROI) by the time that you need to upgrade your whole system. 

4.      Sales Forecast.  Whether it is for short term or long term, your market study should always be visited and forecasted to ensure, maintain and increase sales.  To avoid putting your investment on critical phase, potential market should always be taken into consideration.

5.      Taxes.  Every investment entails a certain amount of tax to be paid.  Make sure to consider those in doing your feasibility study. 

6.   Budget and Cash flow.  Aside from determining the right budget to capitalize business, investing should know how that certain budget will flow during the actual business itself.  Cash flow should include proper timing of expenditure and the in and out of money should be properly anticipated.