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Stocks vs. Options: Which Vehicle to Use?

Following on from my earlier post about the dangers of owning put options without owning the stock, I would like to summarize some of the different arguments for using one vehicle over the other. General Advantages of Stocks over Options Stocks are easier to get right — For stocks you just need to get the … Continue reading

Book Review of Value Investing: Tools and Techniques for Intelligent Investment

Just finished going through “Value Investing: Tools and Techniques for Intelligent Investment” by James Montier. Took me a long time and lots of sporadic reading to finish this book. This book, as its title suggests, is all about value investing. There are some books out there where the title is not really reflective of the … Continue reading

Valuing Financials

In James Montier’s "Value Investing: Tools and Techniques for Intelligent Investment" book, he has an article on whether Financials are a good opportunity at that time or are they a value trap (previously in Mind Matters (13 August 2008) from his time at Societe Generale). It has some good statistics about the banking sector, and … Continue reading

Dangers of Owning Puts Without Owning the Stock

Some risks of owning put options while not owning the stock, are typically not well highlighted in mainstream options education materials. This is beyond the standard issues with options such as needing to be right in the direction (puts or calls), timing (before expiration), and magnitude (must cover the premium) of the stock movement. If … Continue reading

Piotroski F Score

This is designed by an accounting professor Joseph Piotroski at University of Chicago to evaluate a company’s financial strength. A “F score” is calculated for each company/stock by starting with a score of 0, then adding 1 to the score for each of the 9 criteria met. A score of 9 is the best. Assumptions … Continue reading

Always Two Ways to Interpret Anything

In investing, you can always interpret something in two completely opposite ways. For example, a drop in the interest rate can be interpreted positively — lower cost of funds for businesses, or negatively — it will lead to inflation which will be bad for the economy. The fact is that the economy is an intricate … Continue reading

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