Category: DIY Investing
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In The Intelligent Investor, Graham outlines suggested requirements for defensive investors (aka passive investors) in selecting stocks and building a stock portfolio. These guidelines could be passed along to a financial advisor as a way of specifying requirements. The big idea is to develop a checklist or screen of some sort that enables me to rely on reason rather than emotion when buying and selling stocks. Here we’ll consider how to find large, prominent, and conservatively financed companies.
Over the past few weeks, I’ve been updating my portfolio. The good news is that I locked in a gain with NVDA by selling 100 of my shares for $212 per share, which I had bought at an average price of $25 about two years ago. The bad news is that I lost money on other investments. I sold shares in a few stocks that had declined in price and didn’t seem to hold potential for gain even when priced low. The good part of my bad moves is that I’ve honed my ability to know what not to buy when investing.
When presented with general concepts or rules of thumb relating to personal finance, my brain resists automatic acceptance. My look-under-the-hood tendencies rebel when I hear a statement like “it’s always better to invest rather than pay off debt” or vice versa.
To truly understand an idea (and prove or disprove its claim), I love to design a spreadsheet. Using this tool, I can break down a concept and illustrate how it works or demonstrate where it falls apart.
In this article, I’ll explain the basics of setting up personal finance spreadsheets, including how to design formulas with financial functions like PMT (payment), FV (future value), and PV (present value).