Graham & Doddsville Revisted: Why Ive Created This Blog

After being an investor, in the Graham and Dodd tradition, for the past few years, I have decided to start postulating my rational for each investment I make, publicly on this blog.

I hope that by opening up my investment decisions to public scrutiny and criticisms I will gain insight into the thought processes of other like minded investors, share and gain knowledge and improve my investing skills.

I run a real portfolio with real $$$. This portfolio is split in two based on the type of investment which I classify as:

• Undervalued situations - This is where I buy into a business at a reasonable discount (margin of safety) to my calculation of its intrinsic value i.e. pay 50 cents on the dollar and then wait, sometimes for a few years, till Mr Market offers to buy it back from me at fair value
• Special Situations - These are investments which rely on a specific corporate action, within six months to a year, for their profit rather than a ordinary rise in the price of the share as in the case of undervalued situations.

Quite often an investment falls into both of the above categories, or moves from one category to the other e.g. an undervalued situation turning into a special situation.

I also run a virtual fund at Marketocracy following the same general structure as my real money portfolio detailed above. Performance and other details about the virtual fund, which over the past 12 months has outperformed the market by 20%, can be viewed here.

My aim with both my real portfolio and the virtual fund is to outperform the market over the long-term. Unless I achieve this goal it would not be worthwhile to put in the time and effort required to manage my portfolio. In the long run I would consider a year where my portfolios return was down 5% versus the market being down 10% far more superior to a year where both my portfolio and the market were up 10%.

I shall post details of investments I have made recently soon.