Books on Investing:
- The New Contrarian Investing Strategies by David Dreman
- The Investor’s Anthology by Charles Ellis
- New Prudent Speculator by Al Frank
- The Intelligent Investor by Benjamin Graham
- The Warren Buffett Portfolio by Robert G. Hagstrom
- The Art of Contrarian Thinking by Humphrey Neill
- Guerilla Investing by Peter Siris
- Spiritual Investments by John Templeton
- The Money Masters by John Train
- The New Money Masters by John Train
Investing Nuggets
- Achieve superior long-term results by systematically exploiting the judgmental biases and behavioral weaknesses that influence the decisions of many investors. These include tendency to extrapolate the past too far into the future, to wrongly equate a good company with a good investment irrespective of price, to ignore statistical evidence and to develop a “mindset” about a company.
- Seek companies with wide “moat” or sustainable competitive advantage. This means companies with special advantages that create barriers to competition: patents, trade secrets, relationships, market dominance, etc.
- Once you are satisfied a company has advantageous business, look for a reasonable stock price. The volatility of the tech sector usually rewards the patient investor with buying opportunities.
- Apply Benjamin Graham’s defensive investing and margin of safety to all investments.
- Favor small and mid cap stocks because they tend to be more conservatively valued than large-caps. Historically, their returns top large-caps though with more volatility.
- Favor management holding a substantial ownership interest for a natural alignment of interest.
- Don’t be “in” or “out” based upon guesswork as to market direction. Be ready to invest in new opportunities and take reasonable profits when they are available, especially in tax deferred accounts.
- Do not attempt to follow every equity, nor experiment with fancy strategies, options or gimmicks. Buy like a private business owner what is safe and cheap, just as famed money manager Martin Whitman would do.
- Don’t forget investing is all about capital preservation, diversification, and steady accumulation. The difference between a good company and a bad investment is the price you pay for it.
- Initiate small position near 52-week low and be prepared to add on the way down but constantly assess risks, position size, and sector weighting.
Quotable Quotations
Men think in herds, go mad in herds, but recover their senses one by one. –Charles Mackay
Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery. — Charles Dickens
Life is all about mitigation and management of risk and not of its elimination and avoidance — Unknown
Buy when the cannons are firing, and sell when the trumpets are blowing. –Nathan Rothschild
The greatest man is he who in the midst of a crowd keeps with perfect sweetness the independence of solitude. — Ralph Waldo Emerson
Outperforming the majority of investors requires doing what they are not doing. Buy when pessimism is at its maximum — Sir John M. Templeton.
Be fearful when the world is greedy and be greedy when the world is fearful. — Warren E. Buffett
There are two requirements for success in Wall Street. One, you have to think correctly; and secondly, you have to think independently. — Benjamin Graham
I’d be a bum on the street with a tin cup if the markets were efficient. — Warren E. Buffett on the efficient market hypothesis
There are two ways to conquer and enslave a nation. One is by the sword, the other is by debt. — President John Adams
All currencies, not only the American dollar, but all currencies, always go down, mainly because of democracy. — Sir John M. Templeton
Incompetent central bankers are more lethal even than incompetent generals. — Lord William Rees-Mogg
The modern mind dislikes gold because it blurts out unpleasant truths. — Joseph Schumpeter
In a social democracy with a fiat currency, all roads ultimately lead to inflation. — Bill Flackenstein, Fleckenstein Capital
More money has been lost reaching for yield than at the point of a gun. — Ray DeVoe, The DeVoe Report
Most people try to maximize the number of times they are right, the real question is how much you make when you are right. — Bill Miller, Legg Mason Value Trust
The list of qualities [an investor should have] includes patience, self-reliance, common sense, a tolerance for pain, open-mindedness, detachment, persistence, humility, flexibility, a willingness to do independent research, an equal willingness to admit mistakes, and the ability to ignore general panic. — Peter Lynch
The best investors are like professional socialites. They always know where the next party is going to be held. They arrive early and make sure that they depart well before the end, leaving the mob to swill the last tasteless dregs. — The Economist
Investing is a lot like sailing – you can go anywhere you wish without forecasting the wind. What is essential is to measure the wind properly and often, and align yourself with prevailing conditions. — John Hussman, Hussman Funds
The first principle of winning is not to lose. Never worry about what we don’t make, worry about what we might lose. — J. Dennis Delafield, Delafield Fund
It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors). — Warren E. Buffett
History of business shows that advances in technology are not reaped by those that make technology but rather those who use it. — Ralph Wanger
They’re cyclical businesses with unsustainable competitive advantages. — Ron Baron on most techs
Volatility does not represent risk but creates opportunity for alert investor — Robert Olstein, The Olstein Funds