Saturday, January 20, 2007
From James Stewart, Common Sense, some good rules to live by :
-When the market falls and stock values decline, focus on buying rather than the current value. When favorite stock falls in price, most paralyzed. Phenomenon not limited to neophytes. Ibankers seem comfortable spending billions only when high prices. e.g. M&A pick up during market peaks.
-Remember that stock represents fractional ownership in an ongoing enterprise.
Interesting Barron's section this week. Round-table II. After the scolding last week, they left us 2 copies of the paper this morning, guess am shrewish after all ;) Also signed up for brokeragelink at Fidelity. Might as well manage retirement funds as well. Have a couple of good ideas for those funds. Advising T to buy VGENX and fuggedaboutit for 1 year. Also thinking of going to Omaha this year for the annual meeting, may be fun.
Need to do some regular work today. Lagging pitifully behind on that. Atleast it provides the steady, if unspectacular steady-state and gives me something to do during the day.
Nice Quote :"The happiest conversation is one where there is no competition, no vanity, but a calm interchange of sentiments". - Samuel Johnson
-When the market falls and stock values decline, focus on buying rather than the current value. When favorite stock falls in price, most paralyzed. Phenomenon not limited to neophytes. Ibankers seem comfortable spending billions only when high prices. e.g. M&A pick up during market peaks.
-Remember that stock represents fractional ownership in an ongoing enterprise.
Interesting Barron's section this week. Round-table II. After the scolding last week, they left us 2 copies of the paper this morning, guess am shrewish after all ;) Also signed up for brokeragelink at Fidelity. Might as well manage retirement funds as well. Have a couple of good ideas for those funds. Advising T to buy VGENX and fuggedaboutit for 1 year. Also thinking of going to Omaha this year for the annual meeting, may be fun.
Need to do some regular work today. Lagging pitifully behind on that. Atleast it provides the steady, if unspectacular steady-state and gives me something to do during the day.
Nice Quote :"The happiest conversation is one where there is no competition, no vanity, but a calm interchange of sentiments". - Samuel Johnson
Tuesday, January 16, 2007
"Be extremely skeptical, and stay with what you know. The great success stories in life are people who figure out what they know, stay with it, put their eggs in that basket and watch it very carefully. Don't listen to me or anybody else." - Jim Rogers
The stock market is the only place where customers will run away from a bargain. Someone once said that and it remains true. I did some buying this afternoon - nothing very big, but nevertheless, I'm putting money to work. I think that attention will blow over shortly. The market's concentration span is quite limited, so while it may be the key focus now, next week it won't be. In a few days we'll all be focused on something else.
Always Be An Early Seller
Don't worry about leaving some money on the table. As the saying goes on Wall Street - the only person who always buys at the bottom and sells at the top is a liar.
The stock market is the only place where customers will run away from a bargain. Someone once said that and it remains true. I did some buying this afternoon - nothing very big, but nevertheless, I'm putting money to work. I think that attention will blow over shortly. The market's concentration span is quite limited, so while it may be the key focus now, next week it won't be. In a few days we'll all be focused on something else.
Always Be An Early Seller
Don't worry about leaving some money on the table. As the saying goes on Wall Street - the only person who always buys at the bottom and sells at the top is a liar.
When To Sell Winners
When To Sell Winners
Professionals sell stocks only when the reasons they bought them are no longer valid. e.g a stock selected because it was undervalued is considered ripe for selling when it reaches "a reasonable valuation." Start with the stock's fundamentals, its P/E, P/S ratio, book value, and cash flow. Is it more expensive than its peers? If you're still the least bit bullish, it's probably too early to sell. The bottom line is that you have to always ask yourself why you bought a particular stock in the first place and if that reason is no longer valid, then it may be time to move on.
Another one : would you buy it again at this price? If answer is no, SELL!! and RUN!!
Professionals sell stocks only when the reasons they bought them are no longer valid. e.g a stock selected because it was undervalued is considered ripe for selling when it reaches "a reasonable valuation." Start with the stock's fundamentals, its P/E, P/S ratio, book value, and cash flow. Is it more expensive than its peers? If you're still the least bit bullish, it's probably too early to sell. The bottom line is that you have to always ask yourself why you bought a particular stock in the first place and if that reason is no longer valid, then it may be time to move on.
Another one : would you buy it again at this price? If answer is no, SELL!! and RUN!!
Thursday, January 11, 2007
Some Munger pearls
Found these today..
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IT PAYS TO BUY QUALITY: Munger persuaded Buffett to embark on the new investment strategy with the 1972 acquisition of South San Francisco's See's Candies for $25 million -- a tiny fraction of what it's worth today.
"See's candy company was the first high-quality business we ever bought," he observed. See's also demonstrated to the value of building a "seamless web of trust" between a company and its customers and suppliers, he said in making the point that doing the right thing can pay big dividends both personally and professionally.
One has to have a lot of patience in waiting for the right investment opportunities to come along, and similar patience and selectivity can be useful in one's personal life as well, Munger said.
"When you have doubts about a person, you can pass," he said. "There's enough nice people to interface with."
Other observations Munger shared:
• Strategic plans prompt people to do something when sometimes the best course of action is no action.
"Strategic plans cause more dumb decisions than anything else in America."
• Their mistakes tended to be "great losses of omission.
"If we had invested in McDonald's in its infancy ..." he ruminated. Berkshire recently acquired a significant stake in the nation's largest restaurant chain.
• Know your limits.
"A money manager with an IQ of 160 and thinks it's 180 will kill you," he said. "Going with a money manager with an IQ of 130 who thinks its 125 could serve you well."