Some good summary of some of the core principles of value investing. I left a couple comments on value investing in the comments section. Using fundamentals on the future and sometimes even the past will get you into trouble a lot. Most of the time I feel you are either a total contrarian or dead.
Simmons below wants to change some things. Yes, Glass Steagall! I read my college history paper thoughts on the present at the bottom here a couple times since the panic...I really was on to this crisis there...and my China call. Maybe if I remind myself and type this enough I'll figure out what held me back from selling my shirt to leverage up on shorts last year.
If you Google " 1907 Crash " that paper is 2nd out of over 1 million just to Wikipedia. It ranks for some other keywords to. When the crisis was raging at its height last year I got dozens of hits a day for those keywords as people were freaking out I guess. Funny as the stock market bounced a little the searches went to almost none a month. These past few days I've gotten 2 or so views a day and there was an increase before the sell-off. Could be insignificant and spurious correlation but interesting.
Ideas for fixing the $11 TRILLION of debt the US owes
Half the volume on the exchanges now is program trading and Goldman's system might have gotten out. I heard Goldman is notorious for manipulating Level II with disguising size.
Paul van Eeden is right again
Mohnish Pabrai lecture at Columbia U
July 12, 2009
July 9, 2009
Family Dollar FDO
Family Dollar FDO looks like growth at a reasonable price and is still a recession resistant company. Institutions really loaded up yesterday with some nice blocks. That volume was higher than it has been for 5 months.
Forward EPS is looking like atleast $2.20 so there is a 14 PE multiple. EPS growth will probably be low double digits. I think it could easily make it to 34 a share. Not sure how much follow through there will be if the market takes a major dive here. I'd bet on 34 atleast though. I like this stock here. click below or post title to continue
I like the steady uptrend that always reacts to the trend lines I drew. The circles I made are gap up days. Very consistently after a strong gap up day like we had yesterday and big volume spike the stock has kept getting picked up. Guess what this gap up and volume spike on trend line support yesterday tells me the stock is going to do? Take that with the fundamentals and this is a good entry.
full disclosure: no position
Forward EPS is looking like atleast $2.20 so there is a 14 PE multiple. EPS growth will probably be low double digits. I think it could easily make it to 34 a share. Not sure how much follow through there will be if the market takes a major dive here. I'd bet on 34 atleast though. I like this stock here. click below or post title to continue
I like the steady uptrend that always reacts to the trend lines I drew. The circles I made are gap up days. Very consistently after a strong gap up day like we had yesterday and big volume spike the stock has kept getting picked up. Guess what this gap up and volume spike on trend line support yesterday tells me the stock is going to do? Take that with the fundamentals and this is a good entry.
full disclosure: no position
July 8, 2009
Oil Double Short DTO ETF
Oil is dead right now technically. I put my DTO oil double short ETF entry up on Twitter the other day. I put it on at 89.50. I noticed there was a messy double top and that oil was a leading indicator of the stock market on the way up. I'm real bearish here on stocks because nothing seems to have really changed enough. On the chart I also noticed oil made a big breakdown on a gap day that I drew the arrow to around 35 which is a powerful signal. I entered the trade on that breakdown gap. There was actually a gap down the day before to which was key as well.
I drew some key support lines. It looks like it is already starting to take out the next support at 33. I'd imagine there will be a little bounce here soon. I'll probably tighten my stop loss here tomorrow or just take my profit.
full disclosure: long DTO
I drew some key support lines. It looks like it is already starting to take out the next support at 33. I'd imagine there will be a little bounce here soon. I'll probably tighten my stop loss here tomorrow or just take my profit.
full disclosure: long DTO
July 6, 2009
Net Cash Stock MATH Special Situation
Thanks to a reader who left a comment on MathStar MATH in the last post. They look poised to liquidate for $1.25-1.40 a share. Tiberius Capital just upped the offer to $1.25 a share this morning. It's 7:58 am EST right now. Stock closed at $1.18 Friday. I just found a couple more net cash potentials one seemed to be in the liquidation process. I'll post them up later.
full disclosure: no position at time of writing
full disclosure: no position at time of writing
May 17, 2009
Great Investor Quotes from John Maynard Keynes, Warren Buffett, Ben Graham, Jason Zweig
There is this saying, "A foolish man learns from his mistakes. A wise man learns from other peoples mistakes." Many great investors and intellectual minds have given some great advice. Why not learn from them?
"To carry ones eggs in a great number of baskets without having time or opportunity to discover how many have holes in the bottom is the surest way of increasing risk and loss."
-John Maynard Keynes
Focus investing before Buffett. What you can get from this quote is that over-diversifying or even diversifying without having the "opportunity" to do the right analysis is foolish and will hurt returns.
Warren Buffett
Buffett was a student of Benjamin Graham and Graham had a big influence on him as an investor. He always kept Graham's teachings but Phil Fisher and Charlie Munger had a big influence on him later.
Risk comes from not knowing what you're doing.
-Warren Buffett
Paying attention to contemporary theories like beta, volatility, risk of loss are barriers to the investor that knows what they are doing and has a sound thesis for buying a stock. Are so called growth stocks riskier than so called value stocks? What does risk mean? The market is not efficient, just do your damn homework! When Buffett bought The Washington Post you could have sold it to many investors for more than the market price but beta said it was risky. Is buying a $1 for $.60 risky just because the price fluctuates? No!
"There seems to be some perverse human characteristic that likes to make easy things difficult. The academic world, if anything, has actually backed away from the teaching of value investing over the last 30 years. It's likely to continue that way. Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper."
-Warren E. Buffett from speech at Columbia Business School 1984
This is from an essay by Warren Buffett in response to disproving the efficient market theory. He showed the market beating results of all the students of Ben Graham and proved that it is no coincidence. I really recommend that speech "The Super Investors of Graham and Doddsville." Excerpts are all over the Internet. "The Intelligent Investor" I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
-Warren Buffett
Armed with a contrarian view an investor who finds real value in stocks others are scared to own will do well. Fear and greed cloud investing judgement and will always be around to be taken advantage of.
The stock market is a no-called-strike game. You don't have to swing at everything--you can wait for your pitch.
I think this is a great quote not only for professional investors but for the individual investor. The individual investor can sit on a bunch of cash or not invest much in an over-valued market. They aren't always invested like fund managers who have to be as well as diversified. If a small investor sees an opportunity they can put as much as they please into a stock. I think this also applies to buying great companies at great prices, what Buffett loves to do. Sure you can get a good price every year or so in some great companies but it may take some big bad news or a slip-up by the company to get that great long-term price.
"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact."
The competitive landscape and how businesses live doesn't have mercy on great managers. Don't put to much faith in management to help a poor company. To much else is involved. This is a little off the topic of the quote but management can be underestimated and can do powerful things to companies. Just look at Apple Computer and how it has changed over the last 6 year.
"At some point in its life, almost every stock is a bargain; at another time, it will be expensive. Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go. "
-Jason Zweig
Exploiting the inefficient market works. One can't get to attached to the stock price. It is just a price. The value is what one should concentrate on and understand how the market gets greedy and gives a bad price and how it gets fearful and gives a good price.
Benjamin Graham
"Confronted with the challenge to distill the secret of sound investment into three words, we venture the motto: Margin of Safety."
-Benjamin Graham
Calculating intrinsic value of a stock and company is not precise so if you can allow for some discrepancy you will do fine. It also means that even if you are right a margin of safety will increase ones returns and is a sound strategy. It definitely applied to his net quick liquidation stock portfolio he held but to other investments as well. Would you rather pay $10,000 for a $10,000 car or $6,600?
"The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgment."
-Ben Graham
"In the short term the market is a voting machine, in the long-term it is a weighing machine."
-Ben Graham
The market is not efficient, eventually the true value of a company will be reflected by the stock price. I have actually struggled with this idea that the business fundamentals have to be reflected by the stock price over a year or so. I think this quote applies to the lifetime of a stock and company but stocks are a reflection of the future discounted to the present. Yes, eventually the stock price will catch up to value with a buyout or say a huge panic induced fall or a bankrupt companies shares trading for 0 but years can pass until then. This quote also reinforces the psychology behind stock prices and that fear can be exploited if you look into it.
Peter Lynch
"Stockpicking is both an art and a science, but too much of either is a dangerous thing. A person infatuated with measurement, who has his head stuck in the sands of the balance sheets, is not likely to succeed. If you could tell the future from a balance sheet, then mathematicians and accountants would be the richest people in the world by now."
-Peter Lynch
You have to understand the dynamic environment of business and economics and understand how to invest and at the right prices. You have to take everything into account but not every ratio, analysis, possible short-coming is the end all. Experience and knowing WHAT math to put the most emphasis on is the most important part of investing in stocks.
"Investment is most intelligent when it is most businesslike"
-Ben Graham
I have only read a newer version which is really good of The Intelligent Investor Security Analysis,The Intelligent Investor: The Classic Text on Value Investing
and Peter Lynch's first book One Up On Wall Street : How To Use What You Already Know To Make Money In The Market
. I only read Beating the Street
.
This is a good book with Buffett quotes, Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor
.
"To carry ones eggs in a great number of baskets without having time or opportunity to discover how many have holes in the bottom is the surest way of increasing risk and loss."
-John Maynard Keynes
Focus investing before Buffett. What you can get from this quote is that over-diversifying or even diversifying without having the "opportunity" to do the right analysis is foolish and will hurt returns.
Warren Buffett
Buffett was a student of Benjamin Graham and Graham had a big influence on him as an investor. He always kept Graham's teachings but Phil Fisher and Charlie Munger had a big influence on him later.
Risk comes from not knowing what you're doing.
-Warren Buffett
Paying attention to contemporary theories like beta, volatility, risk of loss are barriers to the investor that knows what they are doing and has a sound thesis for buying a stock. Are so called growth stocks riskier than so called value stocks? What does risk mean? The market is not efficient, just do your damn homework! When Buffett bought The Washington Post you could have sold it to many investors for more than the market price but beta said it was risky. Is buying a $1 for $.60 risky just because the price fluctuates? No!
"There seems to be some perverse human characteristic that likes to make easy things difficult. The academic world, if anything, has actually backed away from the teaching of value investing over the last 30 years. It's likely to continue that way. Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper."
-Warren E. Buffett from speech at Columbia Business School 1984
This is from an essay by Warren Buffett in response to disproving the efficient market theory. He showed the market beating results of all the students of Ben Graham and proved that it is no coincidence. I really recommend that speech "The Super Investors of Graham and Doddsville." Excerpts are all over the Internet. "The Intelligent Investor" I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
-Warren Buffett
Armed with a contrarian view an investor who finds real value in stocks others are scared to own will do well. Fear and greed cloud investing judgement and will always be around to be taken advantage of.
The stock market is a no-called-strike game. You don't have to swing at everything--you can wait for your pitch.
I think this is a great quote not only for professional investors but for the individual investor. The individual investor can sit on a bunch of cash or not invest much in an over-valued market. They aren't always invested like fund managers who have to be as well as diversified. If a small investor sees an opportunity they can put as much as they please into a stock. I think this also applies to buying great companies at great prices, what Buffett loves to do. Sure you can get a good price every year or so in some great companies but it may take some big bad news or a slip-up by the company to get that great long-term price.
"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact."
The competitive landscape and how businesses live doesn't have mercy on great managers. Don't put to much faith in management to help a poor company. To much else is involved. This is a little off the topic of the quote but management can be underestimated and can do powerful things to companies. Just look at Apple Computer and how it has changed over the last 6 year.
"At some point in its life, almost every stock is a bargain; at another time, it will be expensive. Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go. "
-Jason Zweig
Exploiting the inefficient market works. One can't get to attached to the stock price. It is just a price. The value is what one should concentrate on and understand how the market gets greedy and gives a bad price and how it gets fearful and gives a good price.
Benjamin Graham
"Confronted with the challenge to distill the secret of sound investment into three words, we venture the motto: Margin of Safety."
-Benjamin Graham
Calculating intrinsic value of a stock and company is not precise so if you can allow for some discrepancy you will do fine. It also means that even if you are right a margin of safety will increase ones returns and is a sound strategy. It definitely applied to his net quick liquidation stock portfolio he held but to other investments as well. Would you rather pay $10,000 for a $10,000 car or $6,600?
"The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgment."
-Ben Graham
"In the short term the market is a voting machine, in the long-term it is a weighing machine."
-Ben Graham
The market is not efficient, eventually the true value of a company will be reflected by the stock price. I have actually struggled with this idea that the business fundamentals have to be reflected by the stock price over a year or so. I think this quote applies to the lifetime of a stock and company but stocks are a reflection of the future discounted to the present. Yes, eventually the stock price will catch up to value with a buyout or say a huge panic induced fall or a bankrupt companies shares trading for 0 but years can pass until then. This quote also reinforces the psychology behind stock prices and that fear can be exploited if you look into it.
Peter Lynch
"Stockpicking is both an art and a science, but too much of either is a dangerous thing. A person infatuated with measurement, who has his head stuck in the sands of the balance sheets, is not likely to succeed. If you could tell the future from a balance sheet, then mathematicians and accountants would be the richest people in the world by now."
-Peter Lynch
You have to understand the dynamic environment of business and economics and understand how to invest and at the right prices. You have to take everything into account but not every ratio, analysis, possible short-coming is the end all. Experience and knowing WHAT math to put the most emphasis on is the most important part of investing in stocks.
"Investment is most intelligent when it is most businesslike"
-Ben Graham
I have only read a newer version which is really good of The Intelligent Investor Security Analysis,The Intelligent Investor: The Classic Text on Value Investing
and Peter Lynch's first book One Up On Wall Street : How To Use What You Already Know To Make Money In The Market. I only read Beating the Street.This is a good book with Buffett quotes, Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor
.
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