some investment quotes

Good Quotes on Investing


Core Investment Principles

"To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses - How to Value a Business, and How to Think About Market Prices. "Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards - so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value."
--Warren Buffett, 1996 Berkshire Hathaway Shareholder Letter


"Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety."
--Ben Graham, The Intelligent Investor.


"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors."
--Warren Buffett, Fortune magazine, 11/22/99


"Our investments continue to be few in number and simple in concept: The truly big investment idea can usually be explained in a short paragraph. We like a business with enduring competitive advantages that is run by able and owner-oriented people. When these attributes exist, and when we can make purchases at sensible prices, it is hard to go wrong (a challenge we periodically manage to overcome).
"Investors should remember that their scorecard is not computed using Olympic-diving methods: Degree-of-difficulty doesn’t count. If you are right about a business whole value is largely dependent on a single key factor that is both easy to understand and enduring, the payoff is the same as if you had correctly analyzed an investment alternative characterized by many constantly shifting and complex variables."
--Warren Buffett, 1994 Berkshire Hathaway Shareholder Letter


"We continually search for large businesses with understandable, enduring and mouth-watering economics that are run by able and shareholder-oriented managements. This focus doesn’t guarantee results: We both have to buy at a sensible price and get business performance from our companies that validates our assessment. But this investment approach -- searching for the superstars -- offers us our only chance for real success. Charlie and I are simply not smart enough to get great results by adroitly buying and selling portions of far-from-great businesses."
--Warren Buffett, 1991 Berkshire Hathaway Shareholder Letter


"An alert investor who has held a good stock for some time usually gets to know its less desirable as well as its more desirable characteristics. Therefore, before selling a rather satisfactory holding in order to get a still better one, there is need of the greatest care in trying to appraise accurately all elements of the situation."
--Philip Fisher, Common Stocks and Uncommon Profits, p.81.


"The investor cannot pinpoint just how much per share a particular company will earn two years from now. As a matter of fact, the company’s top management cannot. Under these circumstances, how can anyone say with even moderate precision just what is overpriced for an outstanding company with an unusually rapid growth rate? If the growth rate is so good that in another ten years the company might well have quadrupled, is it really of such great concern whether at the moment the stock might or might not be 35% overpriced? That which really matters is not to disturb a position that is going to be worth a great deal more later."
-- Philip Fisher, Common Stocks and Uncommon Profits, p.83.


"Even the most thoughtful and steadfast investor is susceptible to the influence of skeptics who yell ‘Sell’ before it’s time to sell…We’ve all been taught the same adages: ‘Take profits when you can,’ and ‘A sure gain is always better than a possible loss.’ But when you’ve found the right stock and bought it, all the evidence tells you it’s going higher, and everything is working in your direction, then it’s a shame if you sell. A fivefold gain turns $10,000 into $50,000, but the next five folds turn $10,000 into $250,000. Investing in a 25-bagger is not a regular occurrence even among fund managers, and for the individual, it may only happen once or twice in a lifetime. When you’ve got one, you might as well enjoy the full benefit."
-- Peter Lynch, One Up on Wall Street, p. 253.


"We try to price, rather than time, purchases. In our view, it is folly to forego buying shares in an outstanding business whose long-term future is predictable, because of short-term worries about an economy or a stock market that we know to be unpredictable. Why scrap an informed decision because of an uninformed guess?
"We purchased National Indemnity in 1967, See’s in 1972, Buffalo News in 1977, Nebraska Furniture Mart in 1983, and Scott Fetzer in 1986 because those are the years they became available and because we thought the prices they carried were acceptable. In each case, we pondered what the business was likely to do, not what the Dow, the Fed, or the economy might do. If we see this approach as making sense in the purchase of businesses in their entirety, why should we change tack when we are purchasing small pieces of wonderful businesses in the stock market?"
--Warren Buffett, 1994 Berkshire Hathaway Shareholder Letter


"The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer.
"None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy. What’s required is thinking rather than polling. Unfortunately, Bertrand Russell's observation about life in general applies with unusual force in the financial world: ‘Most men would rather die than think. Many do.’"
--Warren Buffett, 1990 Berkshire Hathaway Shareholder Letter


"Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to…the operating results of his companies."
--Ben Graham, The Intelligent Investor, p.109.


"The percentage of investors who own 25 or more different stocks is appalling. Investors have been so oversold on diversification that fear of having too many eggs in one basket has caused them to put far too little into companies they thoroughly know and far too much in others about which they know nothing at all. It never seems to occur to them that buying a company without having sufficient knowledge of it may be even more dangerous than having inadequate diversification.
-- Philip Fisher, Common Stocks and Uncommon Profits, pp. 108-9.

Came across these quotes today. I was awed to have such eminent and diverse soulmates, for lack of a better word ********************************************************************************** Great spirits have always encountered opposition from mediocre minds. The mediocre mind is incapable of understanding the man who refuses to bow blindly to conventional prejudices and chooses instead to express his opinions courageously and honestly. Albert Einstein (1879 - 1955), quoted in New York Times, March 13, 1940 

  Men fear thought as they fear nothing else on earth -- more than ruin -- more even than death.... Thought is subversive and revolutionary, destructive and terrible, thought is merciless to privilege, established institutions, and comfortable habit. Thought looks into the pit of hell and is not afraid. Thought is great and swift and free, the light of the world, and the chief glory of man. Bertrand Russell (1872 - 1970) 

 My definition of a free society is a society where it is safe to be unpopular. Adlai E. Stevenson Jr. (1900 - 1965) 

 Everything that is really great and inspiring is created by the individual who can labor in freedom. Albert Einstein (1879 - 1955) 

 To know what you prefer instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive. Robert Louis Stevenson (1850 - 1894) 

 The ideals which have lighted my way, and time after time have given me new courage to face life cheerfully, have been Kindness, Beauty, and Truth. The trite subjects of human efforts, possessions, outward success, luxury have always seemed to me contemptible. Albert Einstein (1879 - 1955) 

 A room without books is like a body without a soul. Cicero (106 BC - 43 BC)

 That best portion of a good man's life, His little, nameless, unremembered acts of kindness and of love. William Wordsworth

interesting quotes on friendships

By Francis Bacon "Of Friendship" : "to whom you may impart griefs, joys, fears, hopes, suspicions and whatever lieth an oppression on the heart". "To rehearse and work through my own thoughts and views in the mirror of another's mind, and gail faithful counsel on the rightness of my judgement". 

 "For without friends", write Aristotle, in the Ethics, "no one would choose to live".

 "Sir, I look upon every day to be lost, in which I do not make a new acquaintance." Samuel Johnson

 "There can be no friendship without confidence, and no confidence without integrity." Samuel Johnson 

"This is the happiest conversation", said Samuel Johnson, "where there is no competition, no vanity, but a calm interchange of sentiments". 

Missing my funnier half. Is away for a business trip. Have been left to my own devices for three weekends now, expecting due recompense for travails.

So, yesterday was a giddy giddy day. I dared to hope to reach pre May 06 levels.

I have done something quite foolish and risky by buying MA yesterday. I know that its had a big run-up, but bought in nevertheless. Am hoping for a quick and dirty small loot to boost the steady state of portfolio, as with PFCB last month, however it seems a bit risky. May stay in till November 1. Wow, these momentum things really need some stomach.

Others going up nicely, am not extremely worried about any other because they I think are at reasonable valuations. HURC is beautiful. Waiting for 32-33 before bailing.

No other insights unfortunately since I wrote the last time. Just hoping the small raid like Ghengis Khan foraying into India and running off with quick loots works for me too..

Stay cool. And luck!

So after a couple of desultory postings on my personal text blog, found that Iam not as motivated to post as Iam posting here online for all to see. I don't think too many people read this but oh well, they can if they want to !


Portfolio is in decent-er shape now. Not negative for the YTD. Still trailing the market, but I have a lot of new ones that need time to bloom :)

CKCM got bought out aat a nice price, actually made some money. Was a good strategy to buy some more when it tanked.

Iam a bit hopeful of natural gas play NBR. I think the weather may play up at some point in the future and may recover some on there. PFCB going up nicely, and also hopeful of HURC.
Followed WB on ?USG and also saw why he may have bought it, P/E of essentially about 5.4!


When the next oil runup arrives, if it arrives, COP and STO are going to be history..

Just finished skimming through "John Neff on Investing". Enjoyed the book. Apparently was given a cold shoulder on Wall Street, before going on to manager the Windsor fund. Also no MBA just some courses on finance and investing.

Also espouses low p/e strategy like Dreman. Amazing to me in some ways, if so easy why not more millionaires around ? Anyway, maybe this will lean me more toward value investing in the future.

From the book:
Windsor was never fancy. These were its principal elements:
1) a low P/E ratio.
2) Fundamental growth in excess of 7%
3) Yield protection, enhancement in most cases
4)Superior relation of total return to P/E paid.
5)No cyclical exposure without compensating p/e multiple.
6) Solid companies in growing fields.
7) Strong fundamental case.

"total return" described our growth expectations.
total return = earnings growth + yield.

Without these growth expectations, rational investors do not buy equities.

As a way to measure the bang for our investment buck, total return divided by initial p/e could not have been more succinct.
total return ratio = (total return) / (p/e)

We preferred stocks whose total return ratio exceeded the market average by 2 to 1.

e.g
company earnings growth yield total return p/e total return ratio
--------- ----------------- ----- ----------- ---- -----------------
yellow freight 12% 3.5% 15.5% 6X 2.6
1999 market 8% 1.5% 9.5% 27X 0.35



Inflection points abound!!
However most of these take investors by surprise. The market place always becomes momentum-laden as inflection points draw near. In my experience, markets are continuously foolish thanks to investors who forget the past.

So long as fundamentals remain intact, we were not averse to holding stocks for 3-4 years, but that has not prevented us from taking profits right away. There have been times we have owned shares for a month or less.

When you feel like bragging about a stock, its probably time to sell.

In overpriced markets, we periodically went to as much as 20% cash. (A higher percentage wasn't prudent for an equity fund, in my judgement)

Our maximum progress usually occurred after an inflection point.

Conventional wisdom suggests that more information is a blessing and more competition a curse. I'd say the opposite is true. Coping with so much information runs the risk of distracting attention from the few variables that really matter.

If a stock is as terrific as you believe, catching it a quarter point higher is less hazardous than firing before you aim properly. Do homework! Time spent nosing around usually comes handy.

If one has made not a stellar stock pick, can one also use market's irrationality to some time lift the price of the stock to above its fair value and sell then? This is for stocks that have become too dear to sell, i.e. large loss.

From David Dreman's book

- First goal should be a strong defense : preserve capital ! Never lose money.

-Fundamental research has been no more successful than technical analysis. This is because forecasting is the most important factor in security analysis. However, research analysts forecast poorly. This will mean some earnings misses for some stocks in some quarter on another. Higher p/es are punished more and one miss can devstate the price.

- Just how much information a person can handle effectively has come under intense scrutiny in recent years, with striking results. One is that investor's comprehension of large amounts of data about companies, industries or teh economy may not always give him or her that extra "edge". In fact ingesting large amounts of investment information can lead to worse rather than better decisions. People, when swamped by information, may select ony a small portion of the total, and reach a dramatically different conclusion than what the entire data would suggest. Not unlike juggling, each factor is another ball in the air, increasing the difficulty.

- Rule 2 : Respect the difficulty of working with a mass of information. In-depth information does not translate into in-depth profits.

-Under conditions of anxiety, uncertainty and too much information, the market becomes a giant Rorschach test. The investor sees any pattern he wishes.

-In extensive studies, was found that analysts estimates were way off mark, even though they were made less than three months before the end of the quarter for which earnings were reported. The average error was 44%

- Earnings surprises of even a few percentage points can trigger major price reactions. (especially for high p/es)

-Rule 6 : Analsyts forecasts are usually optimistic. Make the appropriate downward adjustment to your earnings estimate.

-Rule 8 : It is impossible, in a dynamic economy to use the past to estimate the future.

-The more data you get, the less information you have.

-Surprise helps unpopular stocks (with low P/Es) and hurts popular ones (with high P/Es)

- Take advantage of the high rate of analyst forecast error by simply investing in out-of-favor stocks.

-Rule 13 : Favored stocks underperform the market, while out of favor companies outperform the market, but the reappraisal often happens slowly, even glacially.

-Avoid stocks that experts or crowds are recommending.

-Sonjoy Basu published a study that found that annual returns decline as one moves from low p/e to high p/e.

-Rule 18 : Invest equally in 20-30 stocks, diversified among 15 or more industries.

-Rule 19 : Buy medium or large sized stocks.

-After picking low P/E, P/B, P/CF or P/Div, don't abandon Security analysis entirely.
1) Check that strong financial position.
2) As many favorable operating and financial ratios as possible
3) A higher rate of earninsg growth than the S&P and the likelihood this will not plummet in the near future.
4) Earnings estimates should always lean to the conservative side.
5) An above average dividend yield which the company can sustain and increase.
Dreman dound indicator 5 above improved performance when used with low P/Es.

-Rule 20: Diversify across industries. Buy the least expensive stocks within an industry regardless of how high or low the general price of the industry group.

-P/E of S&P in 97 was 24.2, P/CF 18.1, P/B 5.4 and yield 1.6%. As a rule of thumb try to use a 20% discount for the first three measures and a yield of atleast 1%. P/CF, P/E and P/B should be available in Value Line.

-Rule 21 : Safest approach is to rely on mechanical guidelines, which filter out much of emotional content. Sell a stock when its P/E approaches that of the overall market, regardless how favorable the prospects may appear. If it reaches that point, grit your teeth and get rid of it. It will probably go higher but why be greedy? Youve made a good gain and that's the whole point.

-How long to wait for a stock to work out? I would say 2.5-3 years or 3.5 years for cyclicals. If after this time the stock still disappoints, sell it. Another important ruke is to sell a stock immediately of the long term fundamentals deteriorate. No matter how much research, things can go wrong. Iam not talking of a temporary surprise or a poor quarter from which a stock will snap back from, but major changes that weaken a companies prospects. Under these conditions, I have found that taking your lumps immediately and moving on results in the smallest loss.

-

Lynch from Investment Guru interview :

You could have bought Wal-mart 10 years after it went public. Let's say you're very cautious. You wait another 10 years. This was not a startup any more, even then you would have made 30 times your money. The reason is that after 10 years it had reached only 15% of te country.

You could say, this company has minimal costs, they're efficient, all competition says they're great, the balance sheet is great, products are terrific and they're self-funding. Why can't they go to 25%? Think of that and buy and hold. You have to ask: why can't this company go from 20 stores to 400 stores?

Q Some people say there is no point in trying to beat the market. Academics say that Lynch and Buffett are the outliers on the right tail of the distribution curve, the lucky orangutans that do things by luck. How do you answer this ?

Lynch : Well you could say that there are going to be a million tennis matches this weekend. And 500,000 people will lose and 500,000 people will win. Therefore should people not practice their backhand or serve? The question is : why not be a winner rather than a loser? You could be a better investor if you look at the balance sheet, if you knew what the company did, if you use the information you have. You would simply do a better job . Just like you would be a better tennis player if you worked on your weakness and improved strengths. The concept is maybe we should ban tennis, since half the people are going to lose so the other half can win.

Q What do you think of technical analysis?

Lynch : I like only one formation. The stock goes from 50 to 8. Then sideways for a few years between 8 and 11. Such stocks may make a nice research list. Now see what the situation is, if you're right it'll go up, if not it'll go sideways and you won't lose money.

PB Remember : The key is to increase your odds. Get more favorable odds. I'd like to believe that my odds are getting better with education. You can't be perfect but can increase odds only.
The fact that you're working with just a small part of the market and avoiding the whole (which includes bad ones) can translate in bettering the market if due diligence is done.

e.g. if I had read a bit about market P/Es etc, would maybe not have purchased tech stocks in 1998-99.

From Benjamin Franklin's autobiography:

-Be encouraged to due diligence in thy calling, and distrust not Providence (and yourself).

-I wish to acknowledge luck and God for setting me down the right path and giving me success. My belief in such guidance leads me to hope that this same goodness will continue to bless me.

The easiest way invariably is the best way. I don't think you can get to be a really good investor without doing a massive amount of reading. Each year at the annual meeting Munger recommends a wide range of reading material. These include Value Line charts, Cialdini's "Influence", Hagstrom's the WB portfolio: Mastering the Power of Focus Investing.

Frequently you look at a business having fabulous results. And the question is "How long can this continue? Think about why the results are occurring now and about what will make these results to stop occurring."

This helps spot a company that has a franchise on a certain product, a so called "moat" around its business.

Observing business over time gives an investor greater perspective on investing. Some simple changes in the way we live can alter the long term value of a business.

"Modern Portfolio Theory? Its demented!" proclaims Munger. "I also ignore Beta since we think it is nonsense. We just want favorable odds, as long as these are in our favor and we're not risking evrything on one throw of the dice, we don't mind volatility"


I have never taken a course in chemistry, economis, psychology or business. Early elemntary physics and math helped me assimilate the fundamental ethos of hard science, which I therafter pushed further and further into softer and softer subjects. Early exposure to hard skills is essential. Mastery of psychology and accounting should be required.

I have been reading "Damn Right!" by Janet Lowe. Some interesting tidbits from the book :

Charlie did not share the special admiration ?Buffett felt for Graham. Munger said "Graham had blind spots.He had too low an appreciation of the fact that some businesses were worth paying big premiums for".

Yet Charlie agreed with his most fundamental teachings and they have been part of the Buffett-Munger success formula from the start. "The basic concept of value to a private owner and beig motivated when you're buying and selling securities by reference to intrinsic value instead of price momentum-I don't think that will ever be outdated", said Munger.

I never want to overpay for an asset i.e pay more than its intrinsic value. Howeverthere are very rare exceptions for whom it is worth paying up a bit to get in with for the long term advantage.

Buffett : Charlie shoved me in the direction of not just buying bargains, as Graham had taught me. It took a powerful force to move me on from Graham's limiting view. It was the power of Charlie's mind. He expanded my horizons. Boy, if I had listened only to Ben, would I have been a lot poorer. Now I became interested in buying a wonderful business at a moderate price".

Charlie to his daughter when she was rebellious "I see you've decided to raise yourself, I hope you'll do a good job".

It was a relief to Munger to quit the law. I preferred making my own decisions and gambling my own money. I usually thought I knew better than the client anyway, so why should I have to do it his way? So partly, it was having an opinionated personality and partly it was a desire to get resources permitting independence". Munger came to understand that to be truly wealthy, a person needed to build up an ownership in a business.


By the time he quit law in 1965, " I had more confidence that Wheeler, Munger would work out, and I had much greater wealth" - Munger. I was not very surprised when he gave up the law said Munger's sister Carol, "That'swhat happens when someone finds something that is his real love".

What Charlie finds interesting is how few big decisions were involved in creating billions of dollars, fewer than one every three years. "I think the record shows the advantage of a particular mind-set-not seeking action for its ow sake, but instead combining extreme patience with extreme decisiveness".

The lesson of his business life is that you don't want to do business with people you can't trust. The economis are irrelevant if yoo don't have trust.

When See's turned out to be an excellent ongoing business, M & B realized how much easier and pleasanter it was t obuy a good business and just let it roll along, than to buy a deeply discounted but struggling business and spend time, energy and more money to set it straight.

Munger says he and Buffett should have seen the advantages of paying for quality much earlier.
"IF we hadn't bought See's, we wouldn't have bought Coke", says Buffett, "I've had windmills and second rate department stores, pumps and textile mills and all these were as problematic as windmills".

Munger told Berkshire that there are a lot of companies in America that throw off a lot of cash but which can't be expanded very much. To try and expand would be to throw money down a rat hole. Such businesses don't stir acquisition desires but they are welcome at Berkshire because he and Buffett can take the capital and invest it elsewhere.

The rally from yesterday continued today. Trying hard not to become very exuberant. Checked on scottrade balances more than I would have liked to.

BBI also went up to $4.80. The options are now worth $2000, doubled since purchase. But, I doubt the price will go to $5 + by Friday. It helped that Jim Cramer praised BBI today.

What is the contract size of an equity option? The contract size of an option refers to the amount of the underlying asset covered by the options contract. For each unadjusted equity call or put option, 100 shares of stock will change hands when one contract is exercised by its owner. These 100 shares of underlying stock are also referred to as the contract's "unit of trade."

So 200 options == 200 X 100 == 20,000 shares

to exercise, you have to purchase 20000 * strike price.

IF the stock goes up by $1, then you have just made 20000 * 1 = $20,000

Discovered the Value Line Investment Survey newsletter in the library the other day. Turned out that UPL and GWR have current timeliness ratings of 2. Also was pleased to find BTU and EXP with timeliness rating of 1. Seemed a bit of a confirmation for picking these.

Am going to check these out in the future for new issues to investigate and buy.

In a little bit of a dilemma about UPL, wondering if should sell, P/E is 44 which seems a bit high.

Also got an email from Logan, was encouraging regarding investing so far but also advised against margin and options. Advised to stay put on longer term strategies and not quick money.
Also was encouraging about the fact that have started on this part-time and not full-time.

Tried to read "Random Walk on Wall Street". Didn't enjoy it at all and think it'll be a waste of time. Better to re-read my blog and accounting instead I think. Also re-reading Phil Fisher in more detail.

Had gone to downtown MV last evening and happened to come across John Rothchild's "The Bear Book- Survive and Profit in Ferocious Markets" in the used bookstore. Seems interesting, picked it up and started reading it on the way back in the light rail. From it :

* Lynch sell signal:
When the yield on the thirty-year government bond exceeds the yield on the stocks in the
S&P 500 by more than six percentage points, sell stocks and buy bonds.

* Dow Theory
Not really a theory. Based on some editorials written by this WilliamHamilton- a disciple of Charles Dow. He tried to separate the momentary advance or retreat from a long march that carried stock prices in one direction for a meaningful stretch. A long march, he believed could only occur if the averages were heading in the same direction together and therefore confirmed each other's ups and downs. If the Industrials reached a new high while the Trasports faltered, it put the future progress of both indexes in doubt.
Soon after writing the obituary for the bull market on Oct 25, 1929, he died.
Robert Rhea, George Schaefer, Richard Russell are followers of this. Richard Russell's Dow Theory newsletter has a huge following. These three folks had correctly predicted oncoming bear and bull markets.


* Sell small cap if :

T Rowe New Horizons P/E
----------------------------
s&p 500 P/E

much greater than 1. Varies between 0.4-2+. Lower numbers are better times for small caps.
Called New Horizons small-cap gauge.

* Inverted yield curve
Problem may be present if short term interest rates higher than long term interest rates.
Colonel Ayres observed that stocks declined whenever the short-term interest rates rose higher than long-term rates-the "inverted yield curve" sell signal, which he issued in January 1929.

* Zweig's 3 key characteristics of a bear market : bear markets share atleast one of these three :

1. Extreme Deflation Things are getting cheaper, and the CPI is falling fast. Whenever consumer prices have dropped 10% over six months, bear market alert
2. Extravagant Multiples If Dow or S&P is selling for 20 times earnings, setback likely. Only applies in a perky economy when earnings are robust. In a recession when earnings are sub-par, high p/e's may not be a cause for concern.
3. Inverted yield curve Temporary is ok but if lingers, then stocks will disappoint. Only one bear market had all three strikes (1929-1932). Every bear since 1929 had atleast 1 strike.

I completed Siegel's book so no more tidbits from there. 

Some other interesting quotes I read in Warren Buffett Speaks. -

Everybody engaged in complicated work needs colleagues. Just the discipline of having to put your thoughts in order with somebody else is a very useful thing. -

Munger has mastered short answers. "Charlie is not paid by the word" explains Buffett. -

Retirement plans? About 5-10 years after I die. -I feel like tap-dancing all the time. We tap-dance to work. -Any string of impressive figures multiplied by a single zero is still a zero. -

With enough insider information and a million dollars you can go broke in a year. -

That which is not worth doing is not worth doing well. -

I went to Dale Carnegie not to prevent my knees from knocking when public speakig but to do public speaking while my knees were knocking. -

Rule No. 1: Never lose money. Rule No.2 : Never forget Rule No. 1 -

-I has been helpful to me to have tens of thousands (of students) turned out of business schools taught that it didn't do any good to think (EMT) -Its only when the tide goes out that you learn who's been swimming naked. -Forecasts usually tell us more of the forecaster than of the future. -

When you combine ignorance and borrowed money, the consequences can get interesting. -do a lot of reading. I read annual reports pf the company Iam looking at and of competitors, that is the main source of material. -

I'd rather have a $10 million business making 15 percent than a $100 million dollar business making 5 percent. -Don't take the performance of your stock personally, after all : A stock doesn't know you own it. -Never buy an airline stock.

Jeremy Siegel book takeaways

Some things I read in Jeremy Siegel's book yesterday :

10) If there is significant evidence that a sector has become overpriced relative to its fundamentals then alter. A warning sign is when a sector achieves a 30% or greater weight in S&P500 Index. Oil in 1980 and technology in 2000 are examples. Subsequent returns to both sectors were very poor.

13) Investor's Intelligence has published one of the long-standing indicators of investor sentiment. They have evaluated scores of newsletters determining if bullish, bearish or neutral.
When investor sentiment is lowest, the returns have ben highest. And when investor sentiment has been highest, worst returns in the market. Sentiment = bullish newsletters/bearish newsletters

Sentiment Return (70 thrugh 00)
0.2-0.3 Return = 20%
0.9-1.0 Return = -10%

14) It is of note that the volatility index (VIX) the measure of implied market volatility computed from option prices, spikes upward at virtually the same time that investor sentiment drops. Anxiety in the market which can be measured from the premiums on options prices, is strongly correlated with investor bearishness.

15) Another indicator of investor sentiment :
Whenever the recommended allocation to stocks falls below 50% by portfolio managers, returns in actuality have been high. (Richard Bernstein)

16) Out-of-favor stocks : Dogs of the Dow (Dow 10 strategy)

I finally found the AWESOMEST tool to calculate the return of my portfolio. I had been losing a lot of sleep over this and was trying to figure out whether I should even keep actively investing at all or just leave it all (the meagre all ;) in index funds... But all my doubts are resolved for now!!!

Anyway this absolutely sublime tool is called XIRR. A nice description of it is at :
http://www.fool.com/ddow/1998/ddow980227.htm

Over the past 3 years, my return was 18.2% . Its probably not the best and have been very lucky so far and it may go down from now on, but still is encouraging enough to continue to invest myself. :)

Am so incredibly happy. Love XIRR and finally see the point of Excel.

Jim Cramer apparently mentioned SVI last night, had exchanged emails with someone at NBC about the possibility of calling and speaking to him about it on air. On balance Iam glad they didn't call, not sure if I would have managed to sound loud and hearty convincingly.

Hmm, it seems to me that the fewer things I do, the more constructive Iam. Gives me time to think and act rather than just running around at full speed, getting tired and not being very productive. Also tend to lose perspective if am doing too many things at the same time.

Just started my blog today. Need to start my device driver code this evening. Going to fiddle around with the Linux PC which I setup last week. Got the company's website up and running on the other machine. Need Windows on webserver PC since it is T's computer and he has tons of stuff stored on it. Website looking elegant but need to work on portfolio and misc links. So now let's work on building an actual product. Looked at craigslist and am amazed how many Linux "experts for hire " there are out there. That model ain't gonna work.

Meeting A and daughter in the evening, long overdue on that too. Just bought CMG today, hopefully a good decision. Sold PLCE at about 31 percent gain, thought it was overpriced. PLCE stores don't look very crowded to me, and was looking at a good exit price which I thought was today. Hmm, let's see if sell a good idea or not, but anyway as Buffett says, stick to your guns after doing your own analysis. My analysis said overvalued. (unlike CRI sell which was a sub-optimal decision but was made before reading The Intelligent Investor and Common Stocks, Uncommon Gains) . Let's see if these books help my portfolio any or as dad says, maybe its all luck in which case I should just get my horoscope done ;)

Going to Kabul for lunch on Friday with K. Should be fun, should get some news about the higher-ups. Not that it matters, except for gaining an insight into the latest corporate silliness
in my company.