October 22 th 2012

1. Common Cents Investment Group October 22th 2012

2. Agenda • Today in the Market • Picking a Stock • Berkshire Hathaway • Our personal Investment Strategies

3. Today in the Market

4. Today in the Market • Google…having a bad week… • Did not reach earnings • http://www.firstcoastnews.com/video/default.aspx?bctid=1911685171001&odyssey=mod|newswell|text|FRONTPAGE|featured

5. Picking a Stock • Find a stock that has potential growth before others find it! • Find an undervaluedstock –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?

6. 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

7. 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

8. 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 • http://www.investopedia.com/video/play/intrinsic-value/#axzz2A3z0FYcc

9. 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.

10. 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.

11. 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.

12. Picking a Stock • Suggested websites to browse: • We have talked about these before • http://online.wsj.com/mdc/public/page/marketsdata.html • http://finviz.com/ • http://www.valueline.com/

13. 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

14. Berkshire Hathaway

15. Warren Buffet • Arguably the most famous Value Investor • Age 82 • Influenced by Benjamin Graham • Looks at the Underlying investment

16. 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

17. 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%)

18. Stock Structure • Two Share Classes • A Shares (BRK-A) • $132,609.00 • Full Voting Rights • Convertible to 1500 B Shares • B Shares (BRK-B) • $88.51 • 1/10,000th of Voting Rights of the A Share • Rather than 1/1,500th of the vote • Not Convertible

19. Performance • Overall Gain 1964-2008 • Berkshire: 362,319% • S & P 500: 4,276% • Compounded Annual Gain 1965-2008 • Berkshire: 20.3% • S & P 500: 8.9% • 2008 • Berkshire: -9.6% • S & P 500: -37%

20. 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.”

21. Our Strategies

22. Membership $20 • 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

23. Membership • Make sure to check out our website for the presentations Monday night | ccig.osu.edu • Get on our Facebook page and like us! www.facebook.com/ccigosu

24. Questions? ? • Questions, comments or concerns?