From zero to investor

Warren Buffett is not someone to copy stock for stock. He is a method of thinking, and four of his ideas cover most of the ground:

1. An investor owns a business, not a ticker. If the market shut for ten years, would you be comfortable owning a piece of this company? If not, the bet is on the price, not on the business.
2. Price is not value. Price is what the screen says today. Value is what the company is actually worth. Markets sometimes price a company above its value and sometimes below - and that gap is what a valuation tries to measure.
3. Margin of safety. Estimates are wrong sometimes. A value investor leaves room underneath, so that being wrong still leaves them standing. That room is what lets you carry on after a mistake.
4. Circle of competence. What you don't understand doesn't get your money. There is no shame in not understanding a sector - the mistake is paying for something you don't understand. The limit isn't the problem; ignoring it is.

This is a way of thinking that reduces mistakes. Nothing prevents them.

Example Co.: the screen says 12 and your estimate of its value is 13. The gap is small, so it leaves no margin of safety if the estimate is wrong. And if you do not know the bakery business and the cost of flour, it is outside your circle of competence anyway.

In short: Separate price from value, leave a margin of safety, stay inside your circle of competence.

A handful of numbers, read one after the other:

• Does it earn or lose? The profit margin says how much it keeps out of every pound of sales.
• How much debt? Debt is not a flaw in itself, but heavy debt makes a company fragile in the first downturn.
• How much cash? Companies with liquidity survive the bad years.
• Growing or flat? Revenue growth says which direction the business is heading.
• Return on equity. It says whether management puts the owners' money to good use.
• Does it pay dividends? How much, and exactly when.

Do it now: we compute these for every stock on the screener, and you can filter by them yourself. An empty cell means the source didn't give us the number - not that we removed it.

Example Co. in numbers: sales of 100 million and net profit of 8 million, so a profit margin of 8%. Debt of 20 million against equity of 80 million, and 15 million in cash. Sales grow 6% a year, return on equity is 8 out of 80, that is 10%, and it pays out 3 million a year.

In short: Six numbers, read in order, and each one by comparison, never alone.

"Fair value" is a number we compute two independent ways, then compare against the price:

• When both methods agree, the signal is clearer.
• When they disagree, we label it a mixed signal - which is more honest than one number giving a false sense of precision.

Keep this in mind: fair value is an estimate built on assumptions, not a settled fact. Change the assumptions and the number changes. We show you the number and how we got there - the final call is yours.

You will find this read on every stock in the "strongest by fundamentals" section of your account, next to the closing date it was measured against. When both methods agree you get the percentage; when they disagree you get "mixed signal" and no number at all. That section is part of the investor plan.

Example Co.: the first method (from earnings) puts its value at about 13, the second (from assets and dividends) at about 10. The price of 12 sits between them, so the methods disagree and the read is "mixed signal", with no single number.

In short: Fair value is an estimate, and disagreement between the methods is information, not a flaw.

We are an analysis and education service, not a body that issues religious rulings. What we say is bounded precisely:

• What we do: we run recognised financial screens on the stock - the company's activity, debt ratios, and non-compliant revenue - and tell you whether it is compliant under the screens we ran.
• What we don't do: we never say "halal". And we write out plainly the screens we did not run next to every result, so you know the limits and can ask people of knowledge about the rest.

Example Co.: it bakes bread, so the screen starts from its debt ratios and non-compliant revenue, and the result is written as compliant or not compliant under the screens we ran, with the screens we did not run next to it.

In short: We screen, we do not issue rulings, and we write down what we did not screen.

This part has its own page so it is never written twice and never drifts. The short version:

• Open an account with a licensed broker, and verify the licence yourself on the regulator's own site - not on the broker's.
• Practise on a demo account before any real money.
• Learn three order types and no more: market, limit, and protective stop.
• Withdraw a small amount in the first week before you scale. A slow withdrawal is an early alarm.

We do not recommend a broker, a platform, or a stock. If you find a platform named anywhere in our material, it is written as an example for illustration only - not a recommendation, and we have no relationship with any platform.

Example Co.: if it were listed, any order on it would start with the same steps: a limit order at a price you choose, and a protective stop price you set before the order, not after.

In short: A licensed broker, a demo account, three order types, a small withdrawal first.

• Money with a near deadline has no place in the market. Anything you need this year stays out.
• Position size matters more than stock picking. Our rule is 0.1% to 0.2% of the account per position - not 1% and not 2%.
• Time does the work. Slow compounding beats the quick win, and the difference shows up over years, not months.

Do it now: the calculator turns your balance and entry into an exact position size, and the retirement simulator shows what compounding looks like over years.

Example Co.: in an account of 10,000, risking a tenth to a fifth of a percent means a planned loss of 10 to 20 on one position, however convinced you are about the company.

In short: Money you need soon stays out of the market, and position size comes before stock picking.

The investment clock is a popular idea: it splits the economy into four phases by the direction of growth and inflation (recovery, overheat, stagflation, slowdown) and links each phase to assets and sectors said to lead in it.

Its appeal is easy to see: a simple picture for a hard question, a circle that looks logical, and a story that explains the past with ease.

How we tested it: every three months we read the phase from copper and gold momentum (growth) and oil momentum (inflation), then compared what the phase's assets and sectors did over the next three months with the rest.

We tested the clock with its own rule over 25 years (2001–2026, 102 three-month windows): the assets it links to each phase beat the opposite group by only +0.04%, and its sectors trailed the rest by -0.41%. Result: no ability to call the next period.

The lesson is wider than the clock: a convincing idea needs a test in numbers before any decision rests on it. That is why it sits here as a lesson, and no reading of ours is built on it.

No stock is named here as something to buy, and nothing promises a gain. What is here: a way to decide for yourself, and tools that compute for you, so you never need to take our word for anything.