October 22 th 2012

Common Cents Investment Group October, 2012 Agenda  Today in the Market  Picking a Stock  Berkshire Hathaway  Our personal Investment Strategies

Common Cents Investment Group October, 2012 Today in the Market

Common Cents Investment Group October, 2012 Today in the Market  Google…having a bad week…  Did not reach earnings  px?bctid= &odyssey=mod|newswell |text|FRONTPAGE|featured

Common Cents Investment Group October, 2012 Picking a Stock  Find a stock that has potential growth before others find it!  Find an undervalued stock – Fundamental Analysis  Stock whose price currently reflects a trend reversal – Technical Analysis  Nearly 3,000 companies on NYSE alone  Not counting NASDAQ/AMEX/OTC/Pinks/etc..  How do we navigate this mess?

Common Cents Investment Group October, 2012 Picking a Stock  Pick a market that makes sense to you.  Many play the market on gut  I’m not comfortable buying shares of a nuclear fusion business.  Focus on sectors that you know and understand! Cars, technology, clothes, insurance

Common Cents Investment Group October, 2012 Picking a Stock  For now we focus on fundamentals  Financial Ratios Profitability, Leverage, Solvency, Liquidity, Efficiency Comparison to other companies in the same industry  Valuation modeling Is the company’s equity more than its market cap?  Basically, you are looking for stocks with real intrinsic value  We will delve into ratio analysis very soon

Common Cents Investment Group October, 2012 Picking a Stock  Intrinsic Value: The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors  insic-value/#axzz2A3z0FYcc

Common Cents Investment Group October, 2012 Picking a Stock  Avoid Liabilities  By this we mean serious ones… not (necessarily) just accounts payable  Stay away from stocks that are in the news because of large and looming lawsuits.  Legal problems can drag on for years, so your best bet is to steer clear of companies that have these headaches.

Common Cents Investment Group October, 2012 Picking a Stock  At the very least, make sure the majority of analysts are predicting stable or growth in earnings per share.  ***Do not trust what a single analyst believes, but rather the majority. Still need to be defensive and take opinions with a grain of salt. The majority can still be wrong – i.e. housing bubble/bank fallout  Companies need to be profitable to stick around.

Common Cents Investment Group October, 2012 Picking a Stock  Find a stock that is NOT popular  You want to pick a stock that is not popular today, yet could be popular tomorrow.  Stock that is being ignored by the market presently but has the future potential to pull out and up.

Common Cents Investment Group October, 2012 Picking a Stock  Suggested websites to browse:  We have talked about these before  data.html data.html  

Common Cents Investment Group October, 2012 Picking a Stock  The only surefire way to find a stock is to SEARCH  The process WILL take some time!  The more practice, the faster you will become  You tend to know what you want

Berkshire Hathaway

Common Cents Investment Group October, 2012 Warren Buffet  Arguably the most famous Value Investor  Age 82  Influenced by Benjamin Graham  Looks at the Underlying investment

Common Cents Investment Group October, 2012 Berkshire Hathaway  Holding Company: a company or firm that owns other companies' outstanding stock  Business Groups  Insurance Geico – 1995 General Re – Reinsurrance  Manufacturing, Retail, Etc. Fruit of the Loom – 2002 Benjamin Moore – 2000 The Pampered Chef – 2002 McLane – 2003

Common Cents Investment Group October, 2012 Major Investments  Wesco Financial (100%)  ComdisCo Holding Co (38.2%)  Washington Post Co (20.46%)  USG (16.6%)  American Express (12.59%)  Moody’s (12.13%)  Coca-Cola (8.6%)  Wells Fargo (6.41%)

Common Cents Investment Group October, 2012 Stock Structure  Two Share Classes  A Shares (BRK-A)  $132,  Full Voting Rights  Convertible to 1500 B Shares  B Shares (BRK-B)  $88.51  1/10,000 th of Voting Rights of the A Share Rather than 1/1,500 th of the vote  Not Convertible

Common Cents Investment Group October, 2012 Performance  Overall Gain  Berkshire: 362,319%  S & P 500: 4,276%  Compounded Annual Gain  Berkshire: 20.3%  S & P 500: 8.9%  2008  Berkshire: -9.6%  S & P 500: -37%

Common Cents Investment Group October, 2012 Buffet Quotes  “Price is what you pay. Value is what you get.”  “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.”  “Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”  “If you're an investor, you're looking on what the asset is going to do, if you're a speculator, you're commonly focusing on what the price of the object is going to do, and that's not our game.”

Our Strategies

Common Cents Investment Group October, 2012 Membership  Cost is only $20 for the whole year!  Benefits:  Member of a very beneficial and informative club that will inevitably be valuable in your future  A network of friends who share a similar interest in investing and personal finance  A virtual portfolio challenge that will strengthen your confidence in investing

Common Cents Investment Group October, 2012 Membership  Make sure to check out our website for the presentations Monday night | ccig.osu.edu  Get on our Facebook page and like us!

Common Cents Investment Group October, 2012 Questions?  Questions, comments or concerns?