 Good day, fellow investors. We continue with our value investing schools and today we'll discuss the questions that plague all investors. When to buy a stock, how much to buy of that stock, how much cash to have, what is the best cash portfolio exposure, on what that depends and then when to sell a stock. So when to buy, how much cash to have and when to sell a stock. That is I think the question everybody always looks for an answer to and in this video I'll give you my perspective on those things and how I think I can help you. It's a normal value investing business perspective and that's the only perspective you can have to find the answer to those questions. Let's start. So when it comes to buying, selling, holding, Buffett has a cool baseball analogy saying how you should wait for the right pitch. Thus you have to have patience and keep in mind you can't get striked out. So you can say no to 99.9% of the opportunities out there because those come and go and those always come all the time new opportunities. So you have to have confidence that there will be more opportunities. So when to buy a stock there is a two-parted answer but it's pretty pretty simple. Depending on the ratio of patience you have, you don't just buy a good buy you have to wait for it to be in a sweet spot to pitch it. A sweet spot for a value investor is low risk high reward. So when you find that then and only then you buy that would be the value investing let's say core but you need to have a lot of patience, a lot of confidence and the more research you do the more such sweet spot investments you do. If you're not that sure you can buy a little bit buy more if it goes down but with experience I'm seeing okay I really know when to wait and then buy only when I am really certain the investment is at the sweet spot and then you limit your downside and increase your upside. The key is of course to buy below intrinsic value so that you have a margin of safety what does that mean? For example if I have a mine and I know the value of the metals in the ground is 10 billion and the present value of that is 1 billion and I know that everything has been built everything is working given the cycle of the prices and I can buy it now for half a billion but the worth of everything there is 1 billion then I know okay I'm buying at a 50% margin of safety and I'm getting to the 1 billion by looking at average long-term prices so that's a 50% margin of safety and then you simply see okay now it's time to buy some companies have cash per share we recently bought one Chinese stock that had four dollars in cash the price was four dollars okay so I'm practically just exchanging currencies looking for margins of safety and the more research you do the more you find those sweet spots that you can buy and take advantage of the opportunities that the market gives you you constantly compare to all the lists of the portfolio you have and then you buy just what you think is good and when you find that good then you buy how to know what is good well depends on you I am focused on 15% returns per year and higher so when I find 50% with low risk and higher reward 15 or higher then I buy if you don't do so much research as I do if you're happy with 10% 8% when you find a good business with low risk that gives you 8% then you should be happy about it if you're happy with 8% business yield dividend plus earnings plus growth with the moat with a margin of safety then you simply buy that and you are happy with 8% if it goes down 50% and the yield becomes 16% or 12% you simply buy more reinvest the dividends and you are happy owning more of a business so when to buy it depends on you 8% 10% 12% 15% 20% and Buffett says that if he would be managing a million he would be making 50% per year so that is his return threshold so depends on where you are on the list I'm between 15 and 20 now given my experience and my research that is the answer when to buy a stock for Buffett it's 50% with a million to manage now it's between 8% and 10% with 500 billion to manage but it's up to you to decide when a stock is a buy depending on the business yield you are happy with from the investment the second part of the when to buy story is about patience so you can set your thresholds this is it I won't will buy only if something gives me 10% but what happens if in a year you don't find anything you get dividends something gets bought out so you have nothing to buy in an overvalued market something that returns 8% might look very attractive comparing to other things that offer 5% should you buy that 8% that depends on you here it boils down to character if you can hold off not buying that 8% but waiting that it hits your threshold doing more research looking more comparing to other things then you can simply be a value investor it's very hard because you see other gains you see stocks go up and down you see those you hear those okay till right went up ballistically beyond meat I didn't buy it but you look at the risk reward and then you see okay but I avoided so much risk so focusing on the risk helps with patience and then if you don't find anything you simply stash the cash and wait for opportunities how much cash to hold is the next question that depends on the opportunities if I don't find anything at 15% I simply don't buy anything and that's it and I wait because I know the market is so volatile that sooner or later every three six months there will be something that falls into my 15% and that's it something will fall under your 10% if you are just patient because individual stocks are so volatile while businesses aren't so again I have a simple model that tells me okay portfolio exposure I usually start with 10% on the first buy if the stock drops I buy more go to 12 15% if it drops more I go to 20 and then I go on margin if the business yield is much higher than 30% low risk no risk and the portfolio exposure I'm happy to go to 25% if there is really such a situation but that is really March 2009 situations once in a decade or two decades and then when it comes to cash I simply hold enough cash so that I can hold eight positions at 15% yield portfolio exposure 10% for less cash it just depends on the opportunities there if the yield is 20% I'll lower my portfolio exposure rebalance if I can find eight businesses that give me 20% and more with low risk I'll be 100% in cash 25% yield I'll go on margin and that's it it depends on the market how much cash to have and then the final question when to sell you always compare the risk and reward compare it to what else is out there and then see okay when the risk increases I have recently sold Facebook because the stock price went up 48% from my average buying price I have higher risk because risk is a function function of price and lower returns because not much has changed into the Facebook story and on the other side I have similar upside that Facebook offers with limited long-term downside with a margin of safety so I'm simply selling Facebook and then looking at other opportunities in relation to my portfolio exposure so you have to try to be to relinquish emotions yes the stock can go up the stock can go down you'll sell something and it will shoot up 100% impossible to know but the consistency of looking at risk reward over the very very long term is what will deliver sustainable high low risk investment returns that's it that's value investing what you have heard here is from setklarman margin of safety modernized a little bit and applied to myself but I hope I have helped you with this thank you please subscribe if you like this value investing approach to investing business approach looking at the business yield becoming an investor owning businesses please subscribe because this is the channel for you if you're looking for stocks that will go up 100% in the next month two months without thinking about risk then this channel isn't for you thank you and I'll see you in the next video