Hello World!

Hello world, and welcome to the Philly Value Investor Blog!

 

My name is John, I'm 24 years old, and I began studying value investing about 2-3 years ago. I started out reading Buffett's letters, and was soon off to the races. I’ve been pretty much obsessed with investing ever since. I try to read every investing related book I can get my hands on, run a virtual portfolio, and make occasional real-life investments.  (More on that later) I also recently begun an MBA program, am hoping to end up in a field where I can think about durable competitive advantages all day long.

The purpose of this blog is to serve as an honest record of my picks and thoughts on in investing while I'm in school over the next two years. Due to tuition costs, I'm not going to be doing very much real-life investing, and this blog seems like a swell place to leave a record to look back on in a few years.

My core investment strategy is to achieve superior long-term returns, without taking unnecessary risks, by investing in a focused portfolio of high quality businesses, within my circle of competence, that possess the following characteristics:

1) Mouthwatering Economics

My investment process begins by using a variety of screens (and common sense) to narrow my initial universe of about 5,000 equities to about 300 or so. The common denominator that separates the truly exceptional businesses, from the merely very good, is that they consistently generate very high returns on capital, and display consistent growth in earnings and cash flows, over long periods of time.

 

2) Durable Competitive Advantages

The nature of capitalism is such that the businesses that possess “Mouthwatering Economics” will also be the most vulnerable to competition. The only way a company can keep competitors at bay, and maintain those mouthwatering economics well into the future, is to possess strong durable competitive advantages. Examples include, but are not limited to: brand loyalty, economies of scale, barriers to entry, high switching costs, network effects, patents, regulation, etc.

 

3) An attractive Price

While the previous two qualities are used to separate wonderful businesses from fair businesses, an attractive price (valuation), is what isolates the wonderful investments among the wonderful businesses. I seek to buy wonderful businesses that are selling at a significant discount to their true underlying value. Such an event is a relatively rare occurrence, and taking advantage of such opportunities will almost always require thoughts and actions that are contrarian in nature.

 

 

 

And that's basically it.

 

It's simple, very simple, but not easy.

 

In my next post we'll discuss my first pick. I'll give you a hint, it's a household name.

 

See you soon, and thanks for reading!

-John