The Journal – December 24, ​2017

Welcome to the first issue of The Journal. My goal with The Journal is to post once a week a list of everything that I found interesting.

Articles:

CRISPR in 2018: Coming to a Human Near You by Emily Mullin

Why Young Investors Should Hope For a Crash by Michael Batnick

This $5 Billion Encrypted App Isn’t for Sale at Any Price By Stepan Kravchenko, Nour Al Ali, and Ilya Khrennikov

Videos:

A Conversation with Charlie Munger and Michigan Ross – 2017 – 56 min

Mohnish Pabrai Lecture at Boston College (Carroll School of Mgmt) – Nov 30, 2017 – 140 min

Making a Flipbook Machine – 10 min

Vertical Farming

Last year for the first time, I grew vegetable plants in my backyard, and I found fascinating seeing the plants grow and eating fresh plants whenever I want. Now that it is winter, I am looking for a way to grow plants indoors, and I found out about The Smart Farm by Click And Grow. It is a ridiculous 9 900$ indoor farm that can grow 288 plants. When I was doing some research to look at commercial uses of vertical framing and their benefits, I found these two videos very interesting.

Tokyo’s Vertical Farms – The Future of Farming | WIRED – 3 min

This Farm of the Future Uses No Soil and 95% Less Water – 4 min

The Investor Podcast

For about two weeks, I have been listening to The Investor Podcast. I used to listen to some of their podcasts and now, that I am more interested in value investing, I have listened to all their episodes until episode 123. I have learned a lot from listening to their podcasts, and I would recommend them to everybody who wants to learn more about value investing.

The Dhandho Investor

I finished reading this week The Dhandho Investor by  Mohnish Pabra. The book is very interesting and filled with useful information about how to invest in the stock market or a business without losing money and obtaining a high return on your investment. I would recommend the book, like the podcasts, to everybody who wants to learn more about value investing.

SeekingAlpha

For about three years, I have have been very passionate about the stock market and all things business. After acquiring a pretty good knowledge about the stock market, by any mean, I am not an expert I decided to become a contributor to seekingalpha.com. I wrote two articles, one last month and one this week. Please, check it out and any feedback will be really appreciated.

Dream Global REIT: A Low-Risk Company With An 6.74% Yield

Tucows – Ting Is The Future!

Thanks for reading, happy holidays and see you next week!

Balal Rasool

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Book reviewed: Learn to Earn by John Rothchild and Peter Lynch

“Learn to Earn” by John Rothchild and Peter Lynch is a book for any investor and anyone interning to learn how a company earns money.

The book accomplishes on what it sets out to accomplish by showcasing that capitalism is the best economic system.

The author, John Rothchild, is most know for his work as the former editor of Washington Monthly as well as a former columnist for Time and Fortune.

The co-author, Peter Lynch, is an investor know the As the manager of the Magellan Fund at Fidelity Investments between the years 1977 and 1990. Peter Lynch averaged a 29.2% annual return with is mindblowing.

I enjoyed reading the book. The book helps me confirm my thought that the best economic system is capitalism for the company, the consumer and the investor.

I enjoyed the first chapter where the author briefs a quick history lesson of capitalism and explain without a capitalist country like the United-stade would it prosper as it did. I also like the appendix two where the author helps ride a company balance sheet.

The only thing the I did like is that the book isn’t updated and the references are old. Unless this I enjoyed reading the book.

I would recommend this book to anyone interning to learn how a company earn money and to learn about the stocks.

 

Book Review: The neatest little guide to stock market investing by Jason Kelly

 

“The neatest little guide to stock market investing” by Jason Kelly is a book for anyone who wants to learn about the stock market.

The book accomplishes on what it sets out to accomplish by giving a good overview of every step related to becoming a business owner in a public company.

The author, Jason Kelly, is most know for his book “The 3% Signal” and his newsletter “The Kelly Letter” about the stock market and investing.

I liked the book. I had some knowledge about the stock market prior, but reading the book helped me think like an investor. I learnt how to evaluate stocks and all the termer related such as P/E, ROE and all the other measurement.

I enjoyed the third chapter where the author writes about Warren Buffett, Benjamin Graham, Peter Lynch and other investor masters. He summarizes the investor philosophy which is very helpful. I also liked the way the author related all aspects of investing with one example throughout the book.

There is nothing that I didn’t like about the book. Although the book had a dry and academic tone which is expected for these kinds of books, I loved reading this book.

I would recommend this book to everyone because I truly believe everyone should learn the basics of investing even though the invest in an index fund or mutual funds.

A beginner’s guide to investing – best resources – Infographic

A lot of my friends and family members ask what are the best resources for a person who’s starting to invest. So I decided to make this infographic. These are the best resources that I have found.

China is starting to become more important that the US Domestic market for Hollywood.

This year for the first time ever the largest market for films won’t be the Unites State. It will be China, according to Bloomberg the People’s Republic of China is on track to bring $10.4 billion in 2017 compared to $10.2 billion estimates for the US market. A country that was hardly given a consideration as a contender to become a market leader in Hollywood a couple of decades ago will now be the biggest market for movies. If China is not able to surpass the US this year for sure it will surpass next year there is no doubt about it.

How come China is surpassing the US. The answer is quite simple the growth in the middle class in China is creating new opportunities to make money for the film industry. According to IHS Markit, China is building an average of 27 new cinema screen every day. At the end of the third quarter last year, China had 39,194 cinema screens compared to an estimated 40,475 in the US according to the same report. Keep in mind, this was in 2016, probably today China has already more cinema screens that the US.

There are a couple of things that make movies studios scare that China is becoming the biggest market for movies. One of the problems is China has a quota only 34 foreign movies are allowed to be shown each year.

There is good news for movies studios, this year on February 17, China planned to expand their foreign film quota as the Motion Picture Association of America (MPAA) will be re-negotiate the deal with the Chinese government. As of right know, only 34 foreign are allowed but the government has reduced is blackout period compare to years prior. The blackout period is a period where theater only shows Chinese movies. One way for a studio to show their movie in China if there are not selected as one of the 34 movies is to sell their movie to a Chinese distributor were the distributor collect all the revenue.

The quota is a problem for movies studios but the biggest issue by far is censorship, the Chinese government has the right to block the movie in the mainland. This can destroy a movie box office let take “Ghostbusters” for an example, the movie was blocked in China. The movies brought $128,350,574 domestically and $100,796,935 internationally. If the movies were allowed in China it would have brought a bigger box office results. Let take another example, Warcraft only brought $47,365,290 domestic and a whopping $386,311,893 internationally and about $220.8 million was from China. China has the power to make or break a movie.

Nowadays there are a lot of co-production arrangement between U.S. filmmaker and China which is an advantage for China the can learn and adapt their technology and transfer to the rest of movies industry which can help promote the Communist Party of China propaganda.

All this is affecting us, here is North America we will see movies more adapted to the Chinese culture and less the American culture because China will rule the movies market with their bigger box office results.

What I have learn during​ 1 year of investing

This is what I learned after one year and a couple of months investing on the stock market. I have learned a lot from my first, second experience until now on the market.

The biggest mistake that I made when purchasing ownership in a company was buying stock without learning about the company, especially for my first investment. I bought the stock hoping it will go up and I failed terribly. The stock crumbled down. In fact, I lost 48% of my book value. Regardless of my loss, now when I find an interesting company, I research about the company even if I don’t buy the stock.

“The dumbest reason in the world to buy a stock is because it’s going up.”
-Warrant Buffet

I have learned only to invest in an excellent company and for the long-term. Why in the long-term? Because an excellent company will always go up, from the technology industry to the waste industry.

I find it hard to be informed about a company announcement, what the market is saying about the company. To be more informed, I use stock apps as a news feed for the company I follow. This is very useful for me, I personally use Yahoo! Finance.

I have acknowledged being patient because there will be days and even weeks where you are losing money. The key is just to be patient and it will eventually go up. Of course, it applies only if you invest in an excellent company.

I have been able to learn if the market will react in a way that I will be losing or gaining money on a day. For example, during the election day, when Trump was winning, the market went down because of the news that Trump was winning. On the other hand, when Trump has been elected president, the market went up and nowadays is high almost at all time. During the quarter earning, if analyst expects that a company will not perform as the predicted, there will most likely have a sellout. This is a good time to buy a stock at discount prices before it gets back up if you believe that the company will perform in the long-term.

When one of my companies was being acquired, I have learned that a company acquisition is a long process. Indeed, it takes months for the acquisition and any news can affect the company stock prices. In my case, I had to vote for the acquisition.

I learned that I can reinvest dividend every quarter even though the number of shares will not be a lot, in the long run, it will grow. That’s the beauty of compounding.

I have learned utilizing fundamental analysis is better that technical analysis. This is if you want to own a company because technical analysis is entirely unconcerned about the companies from which they are buying stock.

For next year, what I want to do is to diversify more my portfolio. I would like to own 15 to 25 companies, both grown and income companies. I want to read more books about the stock market and especially The intelligent investor by Benjamin Graham, the father of value investing.

If you are willing to learn about investing, I recommend Investment 101 by Michelle Chang. I have written a review about the book just click on this.