Speaker 1: You’re looking to buy stocks for the December 2017. This video outlines three potential stocks to invest in now. First, I thought it would be prudent to outline the investing style that I use. I try to stick to Warren Buffett’s value investing approach where I follow the simple rules that Buffett uses when investing in stocks. So let’s get straight to it. Stock pick one Volkswagen Volkswagen as a car company, Feminin, Germany, nineteen thirty seven.
The cars are sold across the world, having ten point three million cars delivered worldwide and 12 and 16. Volkswagen has plans to invest nearly 12 billion dollars by 2025 in electric cars throughout China, along with two other Chinese companies. The electric car market is thought to be the next big thing for cars in China. It’s obviously a lucrative area to enter into. Volkswagen’s vision with electric cars is to sell to the mass population with the CEO, although big and don’t hold me to that pronunciation saying we believe we need to bring electric mobility for millions, not just million is. Volkswagen has also recently unveiled its electric vehicle that will be released by 2020. The idea is, let’s take a look at the numbers. Volkswagen has a p e ratio of ten point four for you newbies to investing. This means that for every ten point eight dollars invested, one dollar and profit has been made. This fits in with one of Buffett’s main roles where he likes to buy companies that have a PE ratio of fifteen or less. Buffett also like stocks with a high margin of safety.
Volkswagen has a high price the book value ratio of zero point eight to meaning for every one dollar and price there is one point two dollars in book value. Warren likes to invest in companies with a price. The book value of one point five or less and Volkswagen by all means fits within this category stock back to Bank of America. So Bank of America is the second largest bank in the good old United States. The annual report has stated that they are buying back shares. This is generally quite a good sign, as management obviously believes the shares are undervalued. Warren Buffett only buys back Berkshire Hathaway shares if he believes that the price is cheaper than the intrinsic value of the company. Buffett’s company, Berkshire Hathaway, has also purchased six hundred and seventy nine million shares in Bank of America, which is always a sign for a good stock pick. A quick look at the numbers. Bank of America has a price to earnings ratio of sixteen point one nine, which is quite a good p e for this day and age, the price to book value is one point one, which gives us a very good margin of safety for the price of twenty eight point to a dollar. That’s a pretty good shift in Eastern long term. Now, my stock pick number three is a bit of a curveball, a low cost that the Vanguard index fund for the S&P. Five hundred. Now, for those of you who don’t know an index fund that seems to replicate the performance of a whole bunch of stocks in this case, the S&P 500 is the largest five hundred companies in the United States. It’s a very safe option to go with. And using Vanguard, you can get away with fees that are next to nothing. So some people might question why I recommend investing in this type of fund. First, it’s extremely low risk compared to investing in a single firm. And mitigating risk is such an integral part to investing.
As Buffett eloquently puts it. Rule one, don’t lose money, Rotha. Don’t forget rule number one. Second, you’re going to get the average return of the five hundred largest companies in America. So for all those general investors out there, I would highly, highly recommend at least considering this option. Tony Robbins has actually just wrote a book called Uncheckable Your Financial Freedom Playbook. One of the main points in this book was how amazing index funds are and how as an average investor, you should be looking to invest in one of these low cost index funds.