NOTE: If you want to know all of my secrets on how to research stocks and find the right company, as well as all of my special resources for WHERE to find them, then go and read THIS:

http://www.independentvalueinvestor .com/MultiplyYourMoney.html

Tra der,

I promised in the last issue that I’d talk about the first secret to successful value investing - Finding the Right Company

So, let’s go deeper…

And as I do, I’m going to give you a story about why finding the right companies to invest in is such a valuable secret.

For me, I’ve learned from experience how valuable it is…

I probably lost $40,000 on one investment in one company by not following my own advice…

Yes, that’s right - $40,000!

Now, you might be asking — who is this guy? He claims to know to know the secrets of value investing, and he’s LOST that much money?

Well, yes, you can lose money (anyone who says they make money every time is lying and is not trying to make you a better investor — they’re probably just trying to sell you something

However, this loss is actually an example of what can happen when you DON’T know the secrets of value investing, because this loss had NOTHING to do with value investing…

I made the mistake of getting cocky with my own investment abilities and thought that I could just push things past my value investing knowledge…

I thought that I understood how to invest, so I started looking for other things to invest in…

So I started investing in STORIES as opposed to COMPANIES.

What’s the difference? The first secret of value investing is finding the right company, which means looking for COMPANIES that are worth investing in, not STORIES that seem worth investing in.

COMPANIES are worth something — STORIES are not.

When you invest in a STORY, you’re investing in people’s opinions about whether a company is good or not. These opinions generally aren’t based on what the company is actually doing, or what their track record is.

Sometimes these stories do involve what the company is doing, but there’s A LOT more information that goes into a person’s story.

And for me, while an expensive one, this was a VERY valuable lesson for me, and hopefully it can be one that you can learn from (at MUCH less cost…)

What I did was listen to someone else’s story about a stock. This company was relatively successful at their current area of business.

But the STORY was that this company was going to move into a new and more lucrative area of their market. And, believe me, the story sounded great!

However, here was where I didn’t listen to my own advice…

This company had NO history doing what they said they were going to do. They knew their current business, but only had HOPES about doing well in this new area.

They set targets for how this new business would explode and the Wall Street analysts LOVED it. They loved the story, so they retold that story to others.

Now, it wasn’t a bad story, in fact, it was a GREAT story! But it’s not a story that I should have bought into. I should have used my discipline and stayed away.

(This is the tough part about value investing, too — staying away from investment opportunities that sound fantastic, and even watching ones that you’ve passed on actually go up and up and up… But value investing is not just about making a lot of money, but also preventing you from losing everything you’ve made by not making bonehead mistakes — like investing in STORIES…)

(More on that in a future issue…)

Value investing is not about following a story. It’s about dealing with the facts.

- Does this business make money?

- Does this business CONTINUE to make money?

- Does this business know what it’s doing?

- Does this business have good prospects to grow in their existing business area?

- Does this business focus on what works instead of looking for the next big thing?

These are the questions you need to answer when finding the right company. These companies probably will not be the ones making headlines about being the first into a new market — that’s more of a hype story.

I could go into much, much more detail in this area alone, but there’s so much more about understanding how to really make value investing work for you.

In fact, I’ve put everything I know into my eBook on successful investing called “Multiply Your Money”. If you want to find out everything that my book touches on, then go and download my eBook right now:

http://www.independentvalueinvestor. com/MultiplyYourMoney.html

Thanks so much for continuing this journey with me. I really want to help you become a better investor, and I really believe in the value investing approach.

It’s been a real success for me, and I want to make it a success for you.

I am going to wrap this up now, but I did have one more thing to mention. In my last e-mail I asked for you to send me your biggest fear or frustration when it comes to investing.

And I was pretty much inundated with questions. They are about neck deep in my inbox!

And as much as I would like to, there is just no way I can answer all of them individually. So I will gradually be answering them in upcoming editions of “Independent Value Investor”… that way everyone can learn from them.

That being said, I still want to know what your questions are. I want to know what is unclear for you, and what are the really burning topics that you want to know about. So keep sending in the questions! Send them to me at micfarris@independentvalueinvestor.com.

T hat’s all for now, see you in the next issue of the “Independent Value Investor”…

Your friend, Mic

P.S. You can forward this newsletter to your friends… and they can get their own copy at http://www.IndependentValueInvestor.com.

P.P.S. I get lots of questions about recommendations. I have a list of some of my favorite resources at this page: http://www.IndependentValueInvestor.com/resources. html

CF Media, 3217 Peppermint Street, Thousand Oaks, CA 91320, USA