Thursday, September 29, 2016

John Szramiak

Who is John Szramiak?  I never heard of him before.  He writes the Vintage Value Investing blog and Gurufocus saw fit to ask him 15 Questions.

1. How and why did you get started investing? What is your background?

I got started investing in a sort of roundabout way... actually, I owe it all to Google. In middle school and high school I was probably on Google for several hours every day - searching different topics and learning about whatever I was curious about that day (it was basically my equivalent to hanging out in a library and trying to read every book). I loved Google the search engine and how you could think of any question and then find the answer to it within a few seconds. And I also loved Google the company - its vision, its culture, its philosophy, its other products, and its success.

So when the financial crisis hit in 2008, I remember looking up Google stock on Google Finance. And it was trading somewhere around $150 per share (adjusted for stock splits) compared to a high of $357. I knew next to nothing about investing, but I knew enough to think to myself "there must be something wrong here" So I did a little research and it didn't take long to figure out that (a) Google as a company was doing fine, but (b) we were in a recession - the worst recession since the Great Depression! So I opened a brokerage account and bought as many shares as I could using all the money I had saved from birthdays and summer jobs.

The stock must've gone up a bit soon after I bought it, because I then became very excited about investing and started doing research (using Google of course) about how to become a better investor. And if you want to teach yourself about investing (and you want to do it for free), then you're pretty much required to start with the writings of Warren Buffett - who just so happens to be the greatest teacher of investing of all time, as well as the greatest investor of all time. In college I studied finance and economics, but I continued to read and teach myself all about value investing outside of class (most value investing concepts are actually never even mentioned in business schools), and I would research stocks and manage my portfolio in my spare time.

As it turns out, I still own all the Google shares I bought and have no plans of selling.

2. Describe your investing strategy
I'm a long-term value investor. What does that mean exactly? Well, first it means that I think that every investment decision absolutely must be based on the comparison of price vs. intrinsic value, and that intrinsic value must be calculated using conservative, fundamental analysis. And second, it means that I like to buy-and-hold for very long periods of time.

On a more tactical level, I really try to follow Warren Buffett's strategy as much as possible: find stocks that are attractively priced, with good free cash flow characteristics, with good long-term prospects, and that I'd be happy to own if the stock market shut down for 5 years starting tomorrow.

3. What drew you to that specific strategy?
I think for some people, when they first learn about value investing, it either clicks right away and makes total sense, or it doesn't and they never really get it. I think it might come down to how some people's brains are hardwired. For me, it just clicked. I'm always baffled when I see people trying to time the stock market, or day trading, or speculating - even the people that end up making tons of money using those strategies, because I have no idea how they do it (in my opinion most of these people end up being lucky, rather than good). So I think intrinsically I've always been a value investor.

10. What kind of checklist do you use when investing?
I don't have a standardized checklist, although I recognize the importance of having one and I plan on writing one out for myself in the near future. But I do have a checklist in my head when I invest. Some of the questions I ask myself are: Is the stock attractively priced? Do I have a margin of safety? Does the company generate strong FCF? Will the company be able to generate as much or more annual free cash flow going forward as it has in the past? Would I be happy to own this stock if the stock market shut down tomorrow and didn't reopen for 5 or 10 years?

Finally, and this is my most important piece of advice, I would recommend that you read everything written by and written about Warren Buffett. Like I said before, he is the greatest investor of all time and the greatest teacher of investing of all time - surpassing even his own mentor, Ben Graham, in my opinion. Buffett has also written so extensively on so many topics and has given so many interviews on current events that you could spend almost a lifetime just reading his works.

So always keep price vs. value in mind, invest for the long-term, and read everything by and about Warren Buffett. Do that, and keep learning, and you'll be a successful investor in no time!

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