“Wall Street people learn nothing and forget everything.” Ben Graham
“ Buy on the cannons, sell on the trumpets.” Old French Proverb
“A stock broker is one who invests other people’s money until its all gone.” Woody Allen
“It is fortunate for Wall Street as an institution that a small minority of people can trade successfully and that many others think they can.” Ben Graham (more…)
1. “Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.” ~ Mark Twain
2. “The market can stay irrational longer than you can stay solvent.” ~ John Maynard Keynes.
3. “I never buy at the bottom and I always sell too soon.” ~ Baron Rothschild
4. “When the facts change, I change my mind. What do you do, sir?” ~ John Maynard Keynes
5. “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” ~ Warren Buffett
6. “It is not our duty as speculators to be on the bull side or the bear side but upon the winning side.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator
7. “The principles of successful speculation are based on the supposition that people will continue in the future to make the mistakes that they made in the past.” ~ Thomas F. Woodlock
8. “It never was my thinking that made the big money for me. It was always my sitting tight. Got that?” ~ Mr. Partridge in Edwin Lefevre’s Reminiscences of a Stock Operator
9. “They say you never grow poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator
10. “Remember that prices are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don’t make a second unless the first shows you a profit.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator
11. “A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss – that is what does the damage to the pocketbook and the soul.” ~ Jessie Livermore in Edwin Lefevre’s Reminiscences of a Stock Operator (more…)
This is a tough book to review, because I generally respect the author, but there are many things I don’t like about the book. Let’s start with the main one:
My friend Alice Schroeder came to speak to the Baltimore CFA Society early in November. It was a great talk, and afterward, I took her back to the Amtrak station. What was our main topic of conversation? The many authors with limited or no dealings with Warren Buffett who invoke his name in order to get better sales. I won’t name names. I have relationships with a number of them.
I will review “The Snowball” soon. Alice Schroeder spent around five years creating that lengthy book, and I can see why she would be upset over those that use Buffett for their own personal gain.
This book is another example of that. Only chapters 1 and 2 have anything to do with Buffett, and there he is quoted extensively to the point where he should be listed as a secondary author, and get a cut of the royalties. But in the next nine sections have almost nothing from Buffett; it is all the philosophy of Larry Swedroe. (more…)
1. “An investor looks for safety… The speculator looks for a quick profit.” Livermore is saying that what differentiated him and other speculators from investors was: (1) a willingness to make bets with short duration and (2) not seeking safety. Anyone reading about Livermore must remember that he was not a person who often/always followed his own advice. He eventually shot himself leaving a suicide note which included the sentence: “I am a failure.”
2. “A professional gambler is not looking for long shots, but for sure money…Since suckers always lose money when they gamble in stocks – they never really speculate…” Livermore believed he was not a gambler since he only speculated when the odds were substantially in his favor (“sure money”). Livermore’s statement reminds me of a quotation from Peter Lynch: “An investment is simply a [bet] in which you’ve managed to tilt the odds in your favor.” Livermore’s statement also reminds me of the poker player Puggy Pearson who famously talked about need to know “the 60/40 end of a proposition.” When the odds are substantially in your favor you are not a gambler; when the odds are not substantially in your favor, you are a sucker.
3. “I trade in accordance to my means and always leave myself an ample margin of safety. …After I paid off my debts in full I put a pretty fair amount into annuities. I made up my mind I wasn’t going to be strapped and uncomfortable and minus a stake ever again.” Livermore is not referring here to seeking a Benjamin Graham style “margin of safety” on each bet but rather to this: once you establish a big financial stake as a speculator, setting aside enough money so you don’t need to “return to go” financially is wise. Livermore wanted a margin of safety in terms of safe assets so that he would always have a grubstake to start over in his chosen profession of speculation. On this point and others, he failed to follow his own advice.
4. “Keep the number of stocks you own to a controllable number. It’s hard to herd cats, and it’s hard to track a lot of securities.” There is only so much information a single person can track in terms of stocks whether you are in investor or a speculator. By focusing on a smaller number of stocks you are more likely to (1) know what you are doing (which lowers risk) and (2) find an informational advantage you can arbitrage.
5. “Only make a big move, a real big plunge, when a majority of factors are in your favor.” Only bet when the odds are substantially in your favor. And when that happens, bet in a big way. The rest of the time, don’t do anything. (more…)
There’s nothing like getting a big bang for your buck, and no one knows that more than billionaire investor Warren Buffett.
He advised investors to “keep things simple” by “accumulating shares over a long period, and never sell when the news is bad and stocks are well off their highs”.
Potsdam – Unveiling of a monument in front of the new cemetery for WWI fallen paramedics, from left: Kurt von Hammerstein-Equord, Prince Eitel Friedrich of Prussia, Otto Hasse, Erich Raeder
“You’re looking for three things, generally, in a person,” says Warren Buffett. “Intelligence, energy, and integrity. And if they don’t have the last one, don’t even bother with the first two.”
Ideally you want all three but people don’t always cooperate. These qualities tend to be difficult to judge in hiring someone.
So we end up with all sorts of combinations and permutations in organizations.
A lot of people feel that stupid people are the ‘worst’ problem. (I’d argue that intelligent people without integrity are even worse. They know the system, play politics well, and often end up in grey areas.) With or without integrity, it’s easier to get rid of an unintelligent person than an intelligent one.
Simplifying greatly (and removing integrity from the equation), we end up with four combinations: stupid and hard-working, stupid and lazy, intelligent and hard-working, and intelligent and lazy.
So what happens with smart lazy people? (more…)
Check out this video featuring Warren Buffett. Goes to show you are never too old to rock!
The cost of the average restaurant meal has risen 2.7 per cent in the past year, according to the US Bureau of Labor Statistics, but if that looks steep against an economy wide inflation rate of 1.1 per cent, it is nothing compared to the rising cost of lunching with Warren Buffett.
An anonymous bidder has paid $3,456,789 for a lunch date with the investment guru and founder of Berkshire Hathaway, some 47 per cent more than the winner of the charity auction last year.
Mr Buffett will meet the winning bidder and up to seven friends for an intimate meal, in what has become an annual tradition that has netted more than $23m in total for the San Francisco charity, Glide.
Mr Buffett’s late wife Susan used to be a volunteer at Glide, which offers meals, medical testing and other services to homeless and low-income people in the San Francisco’s Tenderloin district. Volunteers and supporters sang and cheered as the five-day auction moved into its final minutes on Friday night, and a late bid swelled the proceeds from $2.8m, where bidding had hovered for most of the day, to a final total that matched the all-time record from 2012. (more…)
There’s no doubt that Warren Buffett is ridiculously rich but if you made a few pips on the USD/JPY dip today and you’re feeling flush, then take a quick look at this tool that shows how much of a drop in the bucket your salary is compared to the $13.5 billion Uncle Warren made last year.
And if you’re admiring Messi’s magnificence today note that it took Buffett less than two days to earn Messi’s $64m paycheck last year.
Today’s Smart Investor tip comes from billionaire investor Warren Buffett, who outlined the biggest mistakes amateur investors make for Adam Shell at USA Today.
The Oracle of Omaha warns investors against an incredibly common mistake: You shouldn’t try to time the market. He says it’s a mistake to predict or listen to others who predict the short-term movement of stocks. By the same token, he says you shouldn’t try to flip stocks like high-frequency traders do.
Instead, Buffett says the best thing the average investor can do is buy an index fund over time. That’s it. From USA Today: (more…)
