Wednesday 27 February 2013

The stock re-ignition

Spreading the wings to learn to fly

Late in autumn 2011 it then hit me that I needed to do something to secure my future. Since I have my own company I do not give myself a large salary. I also are working as an independent (selbstständig) here in Germany to decrease the costs for the company and at the same time give me slightly more cash out in the end of the month. To work as an independent means that no social security, no unemployment money and no retirement money is paid in to the government. Tax is however paid and then also at a slightly higher rate. Since a health insurance is needed one need to set up a private one which personally I am very unhappy about. As of yet I haven´t once been to a medical doctor here in Germany without them trying to push more and more "products" on me. I find it very hard today to go to the medical doctor since I each time feel cheated by them. It really is not easy when you are ill to have the sense to say no to any doctor trying to make more money out of you. I need to become better at that or fight for changing the system either way happily I am very rarely ill.

So, no social security is slightly inconvenient, unemployment money I really do not care about but for the retirement I considered that something must be done.

So back in autumn 2011 I then took the decision that I must start to invest in stocks once again. I also realised that I can not do like my father has always done but I need to find a different approach where I do not even try to get lucky tomorrow but where my target really is 20 years from now.

So I started to read investment books:

The Intelligent Investor - Bejamin Graham
Contrarian Investment Strategies: The Next Generation - David Dreman
Common Stocks and Uncommon Profits and Other Writings - Philip A. Fisher
A Random Walk Down Wall Street - Burton C. Malkiel
Learn to Earn - Peter Lynch
Beating the Street - Peter Lynch
Stocks for the Long Run - Jeremy J. Siegel
Rich Dad, Poor Dad - Robert T. Kiyosaki
Margin of Safety - Seth A. Klarman
This Time is Different - Carmen M. Reinhart, Kenneth S. Rogoff
Security Analysis - Benjamin Graham, David L. Dodd
The Richest Man in Babylon - George S. Clason
The Snowball - Alice Schroeder
The Warren Buffett Way - Robert G. Hagstrom

The first book I read is also the first one in this list. When I read "The Intelligent Investor" my eyes were opened and I am currently re-reading it to see if I missed or have forgotten anything of importance.

Based on what I learned from these books I then tried to create some rules for myself on how to invest/divest and how to own companies as a small shareholder. To make it as easy for myself as possible, especially as a foreigner in Germany I base my rules largely on the contrarian concept.

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