Author : Fred Kobrick
Title : The Big Money
ISBN-13 : 978-0-7432-5870-8
ISBN-10 : 0-7432-5870-2

The Main Idea

Each great company has a business model that it should describe in very straightforward terms: how it will grow, be very profitable and protect itself from competitors. Learning to recognize the things that really matter gives you that critical focus and helps you avoid drowning in the flood of information available in this information age.

To be a successful stock investor, we must first learn the basics of how to be a successful stock picker. Similar to the unease which i'm sure you felt when learning to ride a bike for the very first time, investing might seem daunting at first. However, with the proper training of your mindset and emotions, time and knowledge, you too can become a successfully investor and enjoy the exhilaration of earning The Big Money.

This book contains loads of examples, both negative and positive, that makes it a delightful read. It is written in a very layman manner with loads of investment stories that gives us a glimpses of the experiences and thought processes of the author. This is a refreshing book, a fun read, with a new approach that removes many complex obstacles for investors. This book breaks new ground and will undoubtly help you to be a better investor.

Introduction - BASM

"Find great companies to invest in", "This is a great company, you should buy its shares!" I'm sure that everyone would have heard this before but how do we know and find great companies to invest in? Simple as the guideline might seem, most people are not able to tackle this issue well.

According to Fred Kobrick, there are four critical factors that any investor should focus on. These four factors, BASM: Business Model, Assumptions, Strategy and Management, are the keys, or the Golden Goose, as the author will term it, that will help you find great companies and create the greatest gains for you in the realm of investing.

To aid us in using BASM, Fred Kobrick introduces us to the Seven Steps, listed as follows:

1. knowledge
2. patience
3. disciplines
4. emotions
5. time horizon
6. market timing
7. benchmarks

Part 1 - Management

There are many criterias for finding good companies to invest in and there are many books out there, that teaches the common man in the street, how to look for companies to invest in. However, what we are going to focus on here are mainly two types of companies:

1. Companies that have proven themselves
2. Companies with potential but no trackrecords

I'm sure that most of us can cite a few great companies right away, including Yahoo!, Google, Microsoft, Dell, etc. How then, do we identify great companies?

To me, the answer is very simple. Great companies can be identified, first and foremost, by their Management A good company with a mediocre management will never amount to much. On the other hand, an average company with an excellent management will often surprise you!

This brings us to the next question: How then, do we identify great management? The following guidelines will help in this aspect.

1. Vision - Envision great future for the company
2. Repeatability - Articulate cohesive and logical strategy
3. Execution excellence - Execute the details
4. Perserverance, admitting mistakes early and moving aggressively to fix them, showing common sense - Makes promises and projections that they can deliver
5. Driven, passionate

If you are able to find management who exhibits the above criterias, sit up and take note of the companies that they are in. Chances are that they will turn a good company into a great company.

Rule #1 Blog: Phil Town on Investing
Secrets of Self-Made Millionaires
MorningStar
MSN Money

Email : stardust2810@yahoo.com