Session 2 of the Individual Investing Workshop. Meant to be viewed in conjunction with https://youtu.be/bgfAlW56o1Q

1. Individual Investing Workshop - Session 2
Presented by: Phillip Hulme, President Finance Club

2. Agenda
Margin of Safety
Economic Position
Personal Knowledge/Circle of
Competence
Narrow Focus
Company Health

3. 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
Years
SavingsRate
Savings Rate and Duration to Retirement
15% ROI 10% ROI 5% ROI
Why Invest?
Save 50% @ 15%
ROI, 5.8 Years
Save 10% @ 5%
ROI, 51.4 Years

5. Margin of Safety

6. Margin of Safety

7. Margin of Safety
S&P 500 P/E
Ratio

8. Margin of Safety
Cyclically
Adjusted 500 P/E
Ratio

9. Margin of Safety
S&P 500 P/B
Ratio

10. Book Value
Reconstruction
Cost
DCF / EVA
Liquidation
Value
DCF / EVA with
Growth
Observable
Reasonable
Estimation
Guessing Game
Margin of Safety

11. Consumer Habits
/ Perceptions
Size – Low Cost
Position
Legal Protections
/ Monopoly
Economic Position

20. Margins, Profit and Cash Flow
Company Health

21. Debt Ratios
Company Health

22. Company Health

23. Narrow Focus
Attention Span
Total Risk of Loss
/ Diversification

24. Attention Span

26. Individual Investor:
12 hours / 6 companies =
2 hours / company
Wall Street:
60 hours / 30 companies =
2 hours / company

27. Narrow Focus

28. 0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
1 2 3 4 5 6 7 8 9 10 11 12
Total Risk of Loss Profile
Total risk of loss Difference in risk
Total Risk of Loss
/ Diversification

29. Localized Knowledge

31. • The Little Book That Still Beats the Market by Joel
Greenblatt
• One Up on Wall Street by Peter Lynch
• Common Stocks and Uncommon Profits by Philip
Fisher
• The Most Important Thing by Howard Marks
• Security Analysis by Benjamin Graham
Books

32. • Individual Investing Workshop – Session 3 February
6th 6:00 pm
• An MBA Guide to Buying a House – Time and
Location TBD
Upcoming Workshops