A shrewd investor is a person that uses reasoning, facts, and wit to position their capital into investment assets. These types of investors are buying when others are selling, and selling when others are buying. In the long run, a shrewd investor will outlast and outperform the average person because they are able to use foresight, common sense, and contrarian points of view to position themselves into an investment before the general public.

Warren Buffett:

Warren Buffett is one of the most successful icons of Wall Street. At age 19, Buffett adapted his investing philosophy around Benjamin Graham's method of value investing. Value investing is the act of purchasing stocks that are undervalued in market price when compared to their book value and buying assets that are depressed.

Benjamin Graham wrote the book, Intelligent Investor, as an outline of principles for investors to base their investment decisions off of. This book emphasizes that the average person cannot time the market and that it is best to stay consistent with his investment strategy. The book also talks about calculating company balance sheets and earnings reports to make an informed decision on purchasing a stock or bond. A stock with a market price lower than that of the book value, this stock is selling at a discount. These are the types of stocks Graham preached for individuals to go after.

Buffett Used this strategy and his work ethic to build his net worth up to $87.5 billion to-date.

So what does Warren Buffett recommend to new investors?

1. "Be fearful when others are greedy, and greedy when others are fearful." At first glance this sentence might make no sense to you. But, just think about it for a minute. If you are doing what the majority of people are doing in the market, you are bound to lose. You have to invest like the banks and institutions do.
2. "The stock market is a no-called-strike game. You don't have to swing at everything - you can wait for your pitch." The average person has the tendency to FOMO (fear of missing out) for most investments. In other words, they watch an asset go up and up and up, fear that they are going to miss the gains, and end up jumping in feet first at the top. This is how people get fleeced and lose trust in the market. In reality, they shouldn't be losing trust in the market, but in their own ability to handle their money responsibly. Warren Buffett stresses the importance of being patience and waiting for a 'pitch' that you know you can knock out of the park.
3. "Someone is sitting in the shade now because someone planted a tree a long time ago." Warren is proof that the moves you make with your money today will reflect later in life. If you are dumping your money into speculative investments trying to get rich quick, you will lose in the long run and end up with a wilted bush while you neighbor relaxes under a strong and shaded oak tree.

If you want to be a successful and shrewd investor in the long term, you must master 3 things:

• Find value in the markets
• Remove your emotion from your investments and money
• Have Patience

Finding Value: 

Finding value in the markets is much more simple than you might think. All it takes is a little bit of research, a calculator, and a stock screener.

There are two methods that I find advantageous to use (I use both). One method is to find depressed sectors that have long been in a bear market. The next method is to find stocks that are undervalued when compared to their book value. These are called value stocks.

Depressed Sectors:

A depressed sector is an industry or market that has lingered in a bear market for quite sometime. As all of you may know based off of my previous articles, the most depressed sector of all at this moment is in the precious metals sector.

The gold price has been in a bear market for 7 years now. Some are saying that a new bull market because in July of 2015.

The gold miners are also in a 7 year bear market.

Keep in mind that silver tracks with the price of gold, but with a slight delay. Silver and Silver miners are also depressed and have much potential upside, but with the caveat of less stability and more volatility.

But, gold and silver are not the only sectors that are depressed right now. Pretty much all commodities are trapped inside brutal bear markets.

Check out Uranium.

Uranium and it's respective stocks have the potential for some great upside. However, I prefer to wait until given a reason to invest into this sector. It is still currently in a downward trend.

Do your own research, and find some commodities that you think may awake from their bear market slumber.

Value Stocks:

Finding the book value of a company stock is as simple as taking it's total assets, subtracting liabilities and then dividing that number by the number of shares outstanding. This gives the book value per share or BVPS. 

When evaluating a stocks value, it is also important to consider the history of it's earnings and cash flow. If it has a history of consistent or growing earnings with free cash flow, then it may be considered as a value buy.

I break down how I personally evaluated a mining stock that I found to be a great value buy in my article "Yamana Gold (AUY): An Undervalued Stock with a lot of Potential."

I want you to do some stock searching, and find a stock that you consider a value stock. Then, leave a comment below with your case for purchasing that stock. I'm interested to see what you all find!

Removing Emotion: 

This goes without saying, but if you can't enter a trade or investment yourself without constantly checking the price every day, worrying whether it's going to go up or down:

1. You probably should have done more research to make a more confident trade
2. You probably shouldn't invest your money on your own

You must emotionally detach yourself from your money, and be okay with taking a loss in the short term for huge gains in the long run. 

Patience:

In this day and age, everyone out there is looking for a microwave solution. There are no microwave solutions when it comes to investing and speculating. If you expect to get rich quick without any effort, I have news for you: You are about to lose a ton of money. If you can't research, make a trade with confidence, and wait for the moment when you are rewarded for being correct, you shouldn't invest or speculate with your own money. Leave it to the pros.

With that note, I'll leave you with a quote from the great Benjamin Graham...

Thanks for Reading!

 

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Yamana Gold (AUY): An Undervalued Stock with a lot of Potential

 

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