Stock Market Wisdom

Simon Gordon

Active member
126 1
Hello :cheesy:

These are quotes taken from share investing books I have read. If you have a good quote why not add it to the thread.

Enjoy!

STOCK MARKET WISDOM

Speculart - ‘Latin’ - means to spy out and observe.

He will buy only good businesses with good management and good long term prospects.

Holding quality growth stocks for long periods is the most remunerative strategy for almost everybody.

Think quality. Think long term.

The really big gains in shares come over the long-term - they are the result of conspicuous absence of trading activity. Lethargy is preferable to hyperactivity. Turn off the stock market and the economy: use all that saved energy to find the best companies.

If a positive growth rate appears to be established the stock is almost certain to develop some type of following.

Business is remarkably simple:- get the right management team, cut cost, focus on the core business and get a real strategy.

A major factor that confuses novice investors is that the market anticipates future events, whereas people are designed to react to present events.

He could and did turn in a twinkling, if he found he was wrong.

Buy on the way up.

Sitting tight.

Without faith in his own judgement no man can go very far in this game.

This counsel may be the most important I can suggest: trade alone. Close your mind to the opinions of others; pay no attention to outside influences. Disregard reports, rumours, and idle board-room chatter. If you are going to trade actively and are going to employ your own judgement, then for heaven’s sake, stand or fall by your own opinions.

Figure out supply and demand and you’ll get extraordinarily rich. It’s astonishing how many people cannot grasp this.

Never argue with the tape.

Share performance is ultimately a reflection of the past progress and expected future prospects.

Analysts are supposed to be critics of corporations. They end up being public relations spokesmen for them. What a waste!

The ability to wait - wait for an existing investment to mature, wait for a potential investment to become available at a reasonable price - often demands a degree of patience which is extremely difficult to sustain in the face of contrary interim market behaviour.

Don’t lose money. If you don’t know the facts, don’t play. Something will come along where you know it’s right, then play.

Seek facts diligently; advice never.

You never make big money in the market without getting in the way of danger.

You can sometimes make 20 fold while the most you can possibly lose is 100%.

1. A sound balance sheet.

2. Satisfactory cash flow.

3. An above average return on equity.

4. Able management.

5. A satisfactory outlook for continued growth.

6. An attractive product or an attractive service.

7. A strong market in which to operate.

DISCIPLINE CONCENTRATION PATIENCE

The market is never wrong in what it does; it just is.

The market doesn’t give you money, you give it to yourself based on your ability to perceive opportunity and execute a trade.

Maxim - the market hates uncertainty.

Keep in mind that prices move in the direction of the greatest force (traders fulfilling their beliefs about the future).

Trading is very difficult, a doctor or lawyer goes to school for seven or eight years to learn his profession and then makes a little money and comes into the market expecting to win right away. Remember, trading is by far the toughest game in the world, because you’re competing against the keenest minds in the world.

Diversification is a necessity for the beginner. On the other hand the really great fortunes were made by concentration.

Concentration of investments in a minimum of stocks insures that enough time will be given to the choice of each so that every important detail about them will be known.

One of the immutable laws of investing; you have to take risks to generate rewards and the larger the risks, the greater the potential rewards.

Trading - taking money away from other traders with no services rendered.

Essential motives that drive most ambitious companies in America:

1. A desire for growth.

2. A thirst for marketplace.

3. A hunger for dominance.

Trading - 80% Psychological and 20% Methodology.

He is always searching for investments where the risks are minimised.

Diworseification.

The p/e ratio of any company that’s fairly priced will equal its growth rate of earnings.

Unless I’m confident enough in the company to buy more shares, I ought to be selling immediately.

If companies aren’t going anywhere fast, neither will the price of their stock.

A life without mistakes is a failure.

The only growth rate that really counts - earnings.

Any time you own a security, ask yourself if you would buy it today. If you wouldn’t buy it, you should consider selling it.

The market is the market. If the management doesn’t perform it is reflected in the share price.

The price of a security represents a consensus.

What you need is a crystal ball and the intuition to pick out the new growth stock, the one you can still buy ’almost for free’.

The most important fundamental influence on stock prices is the level of future growth of corporate earnings and dividends.

Picking stocks whose earnings grow is the name of the game.

Buying unrecognised growth stocks whose p/e is not any substantial premium over the market. If the growth does not materialise, damage is likely to be less severe.

Successful investing demands both intellectual and psychological acuteness.

There are three ways of making money:

1. Sell your time.

2. Lend your money.

3. Risk your money.

A growth stock - earnings went up and the dividend went up. The price went up.

The City is not a place to try to make an isolated profit. Rather it is where one goes to set up a continuing and consistent investment or speculation program.

It is the expectation of coming events, rather than the events when they materialise, that moves markets.

Bargains are the holy grail of the true stock picker.

It always was and always will be the power to understand and the ability to act that turns information into profits.

The greatest safety lies in putting all your eggs in one basket and watching the basket. You simply cannot afford to be careless or wrong. Hence you act with much more deliberation.

The best psychologists are usually the best investors. Successful investment is a matter of experience, information, and judgement and not a matter of pure fact and pure formula.

It has been my experience that the most successful investor is the one who has most of his money committed on his most successful ideas and the least amount of money on his poorest.

Never fall in love with a stock; always have an open mind.

To invest in the stock market is automatically a sign of boldness. The timid fail immediately. The simple act of buying a stock is a bold announcement: my perception of this stock is right and everyone else (who didn’t buy it) is wrong.

Growth does not just happen. It starts in the minds of management. It is a burning obsession.

Unless the Chief Executive is strong on marketing, the company is likely to stumble repeatedly over itself.

Marketing is an art form. A marketer is an artisan.

Enriching yourself in the market can be accomplished only by getting other people’s money.

Privileged information is the goal of most market players.

The forces knocking stock prices about are imbalances in buy and sell decisions.

The thoughts of millions of people concerning the prospects of the many businesses upon which our society relies are mirrored in the market quotations on the financial pages of daily newspapers. What fantastic complexity! What unfathomable, immeasurable forces underlie each of the numbers!

Be in harmony with the market.

Traders, acting in their belief in the future by putting on a trade, are the only force that can act on prices to make them move.

Prices are going to go in the direction of the greatest force.

The market is never wrong it just is.

As long as there is disagreement between individuals about the value of goods and service, prices will fluctuate, thereby creating opportunities for a trader to make money if they will assume the risks.

We are all speculators, except when we lose - then we are all gamblers.

Appreciate and learn the nitty-gritty of buying low and selling high.

Success in any endeavour requires single-minded attention to detail and total concentration.

A (speculator) must think for himself; must follow his own connections; self trust is the foundation of successful effort. (Don’t) follow the mentally lazy habit of allowing a newspaper or broker or a wise friend to do your security market thinking.

Forget about the great prices you could have traded at. Should you enter, add or exit: RIGHT NOW!

The market will always be open. Wait for a good opportunity and then barrel in.

Prices provide the information.

Speculation is an intricate dance between risk and reward.

Many deep thinkers consider the ordering and connecting of discrete data to be the fundamental organizing activity of human nature. The successful human, speculator, or otherwise, must use his ability to adapt to an ever-changing environment.

Trends last longer than expected.

Buffett tried to analyse the long term prospects of individual companies.

Buffett defined investing as an attempt to profit from the results of the enterprise, as distinct from the price action.

The most profitable strategy - long-term growth stock immobilism.

Remember that you are in a contest with yourself and not the market.

The market is an easy game to play.

Playing the market is the hardest way to make an easy living.

Flow with the market’s directions.

The market is our teacher, and it pays to listen.

The market never lies.

The river always wins. Paddle with the stream.

The perfect master is the market itself. The market speaks to us in one language - price.

You have to trade with an empty mind.

One of the wealthiest traders I knew told me it took him twenty years to get it right, and he was a fast learner.

Trust the earnings figures and nothing else.

Sound investing can make you very wealthy if you’re not in too big a hurry.

A lot of great fortunes in the world have been made by owning a single wonderful business.

Stocks are simple. All you do is buy shares in a great business for less than the business is intrinsically worth, with managers of the highest integrity and ability. Then you own those shares forever.

Continually take the high probability bets.

As a trader, professional or part-time, on-or off floor you are competing to make money with the best traders that the largest banks can find. You have to ask yourself what is your edge? How are you going to take money from the full-time professional who has been trained to do this by a team of experts and is paid to be constantly on the ball? Focus on one area, say support services companies and try to become an expert on them.

What is going to drive this stock to move?

I am out, unless I see a reason to be in the stock.

Patiently wait for the greatest reward/risk ratios.

Cultivate patience.

I think great traders certainly have to have a psychological stability about themselves but not too much stability, because one has to have a certain flair for risk.

The market has intelligence that is beyond what our minds can comprehend. The market is the accumulation of all the information that there is and the market indicates that price.

I know that if I am thinking too much about a trade, then it is time to get out.

Powerful businesses are based on strong individuals who build strong teams around ideas that matter to them.

The true speculator is one who observes the future and acts before it occurs.

The keys to success are an accurate analysis, a willingness to take risk, and the ability to act.

The more objective and the less emotionally involved you are, the more successful you tend to be.

I don’t know of a better index of a company’s success than the price of it’s stock.

The future belongs to companies that can come up with a clear and compelling vision of their market and their place in it in five years time and then transform themselves to get there first.

The more complex the information processing and the larger the amount of information to be integrated, the more complex decision making gets to be.

Analysts are supposed to be good configural reasoners, which means they are supposed to be able to take all of the disparate and changing information, put it to together, and come out with an answer.

If a stock is popular and there’s a negative surprise, the perceptions change. We call it an event trigger, but another term could just as easily be a perceptual change.

People think the worst of these unpopular stocks, but if they surprise positively, the market looks at these stocks, and perceptions change.

A good stock should have good earnings. Negative surprises for stocks for which we have high expectations are murderous.

Every investment in the stock market involves making decisions the outcome of which is unknowable and unpredictable.

Uncertainty generates anxiety, a diffuse state of tension that frequently elicits either the illusion of excessive danger or the denial of a danger that should be feared.

The ultimate danger is that the individual company will go out of business.

Fantasies of making an investment so successful that the results will change one’s life is an example of an investment flying fantasy.

Because uncertainty is endemic to the investment process, anxiety (conscious or unconscious) appears to accompany each investment decision.

My own qualities research suggests that those individuals who experience time as passing quickly have more capacity to tolerate volatility than those who experience time as passing slowly.

I believe that the deeply ingrained psychological tendency to function in herds, especially under conditions of risk, was in evolutionary time an adaptive, protective mechanism that remains a built-in part of the human psyche.

To invest successfully means that investors must go against a long and powerful evolutionary history of psychological adaptation, which has not selected them for the task.

Can I tolerate uncertainty without undue anxiety? Do I have more faith in my own judgment than in others?

Those whose greed is fuelled by archaic grandiosity tend to be a continual loser in the market, while appearing outwardly as extremely successful.

It takes time for small caps to become large caps, and therefore small-cap investing requires unusual patience to reap the benefits of the enormous upside potential of some of these companies.

Ability to correctly assess the intrinsic value of a company and the quality of its management.

Logically stocks are bought for the purpose of being sold.

Most individual investors follow no investing plan and are very much prey to their emotions.

Fear quickly takes over if the market begins to go down.

Enforced discipline and the contrarian nature.

Ben Graham had a very correct insight when he said that in the short run the market is a voting machine, but in the long run it’s a weighing machine.

Psychologists discovered years ago that human beings find it impossible to contemplate true randomness.

It’s a game of intelligence in which you pit your knowledge and common sense against others, and if your long-term analysis is correct, you win.

Investment greatness only comes to those who are willing to go out on the limb in a meaningful way.

Ignore the market. Don’t even try to guess its direction. Buy quality stocks at undervalued prices, and just hold on until those values are recognized. It does get any simpler than that.

The most important factor to allow you to let the market’s underlying simplicity shine through is to understand the importance of viewing stocks as operating businesses.

This ability to focus on the long term, more than anything else, is what will position an investor for eventual success.

It requires discipline to hold.

View this not as a stock market but strictly as a market of individual stocks.

Don’t let fear and weakness turn you, a long-term investor, into a short-term seller.

If you want to buy a stock when it is cheap, you have to go against the grain: it is cheap because most people think it should be and will stay cheap.

At big companies you talk too executives. At small companies you talk to owners.

A small company has just one or two businesses, so you can understand it.

It’s the owner who is the risk taker able to conceive and create something that can make him and those who invest in him rich.

As a company grows and prospers, it can cross the threshold of institutional interest. The ugly duckling is pronounced a swan, and its p/e ratio increases.

Warren Buffett and George Soros, two of the greatest investors of the twentieth century.

Buffett - the consummate buy-and-hold strategist.

Soros - the mercurial trader.

The great visionary investments have two primary features: the first is a powerful idea, the second is execution.

A well positioned company can get even better.

If lack of control is an issue for you, then you may need to take some non-standard steps to make the stock market a more comfortable place for you. Shareholder activism is one way: Attend the AGM. Ask questions. Do everything you can to make you feel like part of the active management process.

You want your image of the company to be what you saw on your last visit, not what you’re looking at on Bloomberg.

Leaders who slaved to see their visions become a reality, a shareholder barely has to do anything. It’s an incredible deal, when you think about it.

When Pete Sampras gives a clinic on how to serve, he doesn’t really expect that anyone in the class is going to do it as well as he can. But you or I could literally match Warren Buffett’s stock market performance.

The act of waiting, being characterised by lack of both productivity and control, is one of the most stressful things we humans can undergo.

Keep it simple and consistent.

Ignore the news media.

Clearly understand the Risk/Reward Ratio.

Speculation demands cool judgement, self-reliance, courage, pliability and prudence.

The worst losses in the market come from uninformed people buying greatly overvalued stocks.

Get accurate information. Demand facts, not opinions.

Investigate a stock thoroughly before you buy it.

Remember that it is easier to buy than sell. The saleability of a stock is very important.

The market moves up slowly, but goes down fast.

Remember that the market actually is a barometer of business and credit.

Don’t listen to or give tips.

Fortunes are not easily made in Wall Street. Some professionals give their lives to the market and die poor.

Don’t blame the stock exchange for your own mistakes.

Don’t let emotion or prejudice warp your judgement. Base your operations on facts.

Speculation is an art. The first principle of every art is to have at the outset a clear conception of the end aimed at.

Every speculator must think for himself.

Trading, speculating, or investing in the markets, then, is not a science, but an art that is carefully learned, nurtured, and practiced over a long period of time.

History tells us that it is not possible to accumulate a significant amount of money in a brief time unless you are extremely lucky.

Markets are constantly probing for the vulnerabilities and weaknesses that we all possess.

Uncontrolled tape watching or quote gathering is a sure way of losing perspective.

Tickeritis - constant need to watch the market.

Livermore was a great believer in the theory that the real news is not in the headlines but behind them.

The two most important attributes of a successful investor, Livermore said patience and knowledge.

Some of the sharpest minds have spent huge amounts of time and money in an effort to beat the markets.

If you do your homework properly, just relax and let the markets do the rest.

Stock groups move in and out fashion just like styles of clothing.

His belief that if you are right about the company and buy it at a sensible price, you will eventually see your stock appreciate.

Buy a stock only as a share in a good business that you know a lot about.

The market is totally objective, it is the participants who are emotional.

Rising prices, remember, build confidence.

When Soros believed he was right about an investment, nothing could stop him. No investment position was too large. Holding back was for wimps. The worst error in Soros’s book was not being too bold, but too conservative. ’Why so little?’ was one of his favourite questions.

His greatest key to success is his psychology. He understands the herd instinct. He understands when lots of people are going to go for something, like a good marketing man.

$250,000. That was the beginning of the Soros fortune.

The way to attain truly superior long-term returns is to grind it out until you’re up 30 to 40 percent, and then if you have the conviction, go for a 100 percent year. If you can put a few near-100 percent years and avoid down years, then you can achieve really outstanding long-term returns.

When you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. When you’re right on something, you can’t on own enough.

Buy into companies that have disciplined plans for achieving dramatic long-range growth in profits and that have inherent qualities making it difficult for newcomers to share in that growth.

There are a relatively small number of truly outstanding companies. Their shares frequently can’t be bought at attractive prices. Therefore, when favourable prices exist, full advantage should be taken of the situation.

I believe it pays to ignore near-term fluctuations in situations that hold real promise.

In the stock market a good nervous system is even more important than a good head.

Good managements, those most suitable for outstanding investment, are nearly all quite frank in answering questions about the company’s weak points as fully about its strong points.

Practical investors usually learn their problem is finding enough outstanding investments, rather than choosing among too many.

Once a stock has been properly selected and has borne the test of time, it is only occasionally that there is any reason for selling it at all.

Opportunities for attractive investments are extremely hard to find.

The company into which the investor should be buying is the company which is doing things under the guidance of exceptionally able management.

The young growth stock offers by far the greatest possibility of gain. Some times this can mount up to several thousand per cent in a decade.

A great business is one that has a readily identifiable business advantage, which is to say they do things systematically better than the competition and it shows up over and over again.

If you’re in a great company run by a great manager, you can’t imagine how far they can go.

To me identifying great companies and participating in their success over a long period of time is what investing is all about. If you go back hundreds of years it’s what merchant banks did. They went around and found really clever entrepreneurs, gave them some capital, and participated in their success. That’s all the stock market allows us to do. The beauty of it is we don’t have to run the business or manage the minutia and the detail. We just have to identify which people are going to be successful.

You want people who are smart, have a history of delivering, and communicate well.

Investing involves sifting through a lot of a data and trying to figure out what has the highest probability of succeeding.

In real estate, it’s location, location, location. In stocks, it’s quality, quality, quality.

I love inside ownership.

There’s a certain mentality, a certain optimism you must have to be a growth investor.

All the CEO’s who failed didn’t execute in the day-to-day operations. It wasn’t about vision, it was about execution.

I see myself as a big sieve. I’m catching lots of information, and I know the kinds of things I’m looking for. If I find something that looks as if it might be interesting I’ll do a lot more work on it.

The information comes out pretty fast. If you wait for print, it’s too late.

Yacktman is a big believer in equity investing, regardless of one’s age. In fact, he has a 90 year old client who has some 90% of her portfolio in stocks.

Buffett isn’t really a portfolio manager. He’s a businessman who often buys pieces of companies through the stock market.

My feeling is that the only time I feel comfortable is when I’m in stocks. Cash is the unsafe place to be. Stocks are the permanent place. That’s where the returns are.

The Samurai of feudal-era Japan was probably history’s most accomplished ‘professional risk-taker.’

You must first understand that before you can elevate your personal performance in any area, your performance must first be viewed as an art form, and that the pure objective of practicing this art is the refinement of your inner spirit and discipline and ultimately the unconditional enjoyment and appreciation of having done it as well as is currently possible.

Attention fully on the flawless execution of the act - the trade.

Trading Samurai - one who serves and protects his capital.

Your ability to live comfortably in the present moment, which of course is the only moment you have any real control of in your life.

The validity of viewing market engagement as a war game and viewing trading as warriorship.

If your beliefs or positions are such that you are willing to risk all or even die for them, then you can count on them as being valid.

Any trader worth his salt knows it is imperative to first get in sync (aiki) with the market flow.

There are two kinds of people in this world. First, there are those who follow life’s lead and spend their time and energies defending against whatever life might throw at them, then living off the leftovers of the battle. Then there are those who courageously attack life by taking advantage of every opening and opportunity that may prevent itself, thereby setting the pace of life and living off the spoils of victory.

The Samurai would never have considered going into battle to test some new technique or system of fighting before thoroughly practicing it in controlled scenarios.

The true warrior knows that he must practice his methods and techniques to a point of near-perfection before ever trying to trust them to serve him in battle. He knows that there is simply no other way besides dedicated practice to acquire enough mastery of a particular technique to honestly be able to call it an unconsciously competent skill.

The Samurai did acknowledge and experience fear. The difference between a samurai and the average man, however, was that the samurai never let fear stop them from taking action.

Accept all possible losses before entering the battle.

Study and learn about money management and the statistical nuances of the (war) games.

The more you know about a situation or an opponent, the less likely you are to become fearful or doubtful.

LAW OF EVOLUTION - creation (reality) is in a constantly evolving state of being! Thus it is imperative that you understand that, within the Law of Evolution, there exist two antithetical sub laws that have a dramatic effect on your existence: the Law of Progression and its ‘evil’ counterpart, the Law of Regression.

Regression can work its universal magic twice as fast as progression.

The true Way of the samurai was really quite simple and uncluttered.

It is perfectly normal for stock prices to show considerable fluctuation, or volatility, within a given year.

Money is an emotional currency that can relate to an individuals’ needs for security, power, respect, love, esteem, and self-determination. If you don’t know who you are, the stock market can be the most expensive place to learn.

The Bailard, Biehl & Kaiser Five-Way Model divides investors into five categories:

Adventurers - are risk takers and are particularly difficult to advise.

Celebrities - like to be where the action is and make easy prey for fast-talking brokers.

Individualists - tend to avoid extreme risk, do their own research, and act rationally.

Guardians - are typically older, more careful, and more risk averse.

Straight Arrows - fall in between the other four personalities and are typically very balanced.

Greed moved stocks beyond their intrinsic value.

Fear moved prices below intrinsic value.

On one side of each speculative trade is a participant who believes he or she has superior information and on the other side is another participant who believes his/her information is superior. Yet they can’t both be right.

If the blind lead the blind, both fall into the ditch. Many of the actions in the stock market, despite having a large following, often get reversed frequently.

Mass behaviour is often fickle.

Many tricky issues in the stock market are based on little information. But when the decisions made on the basis of so little information are imitated by other investors, an information cascade is created.

With tens of thousands of investment professionals around the world keeping tabs on the market every microsecond of every trading day - not to mention hundreds of thousands or more amateurs - the likelihood that any one of them is going to be able to beat the market consistently is highly remote. While there will always be extreme exceptions, on average, performance will narrow over the long term.

The standard argument against the Efficient Market Hypothesis goes something like this: the stock market is not efficient because there are many bad opinions, incorrect interpretations, and emotions such as pride, doubt, fear, and hope. Sometimes there are simply bad or shallow judgements, numerous complex variables, and fast-changing events, which investors do not properly weigh. Even when they possess all relevant information, which is the exception rather than the rule. Basically, the market is not efficient because too many wrong opinions and strong investor emotions can create trends sending stocks far below or above reasonable values.

Trading decisions on price have to be made without knowledge of future prices.

Understanding liquidity means understanding the markets’ internal workings.
 
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rossored

Senior member
2,103 56
Simon Gordon said:
Hello :cheesy:

These are quotes taken from share investing books I have read. If you have a good quote why not add it to the thread.

Enjoy!


Add it to the thread??? :LOL: I think thats a fairly exhaustive list of quotes there (and very hard to read I'm afraid!) - Is there anything left to add??? :LOL:
 

Buk

Established member
615 6
Is there anything left to add???

hope not........me eyes are swirling round & round like maniac marbles on a tilt & swing rollercoaster.........managed to catch the 2 BOLD TYPE quotes tho, so will leave it there for now :eek:

ps: phewwww, I'm tuckered, gonna have to go have a lie down - and I'm only 20 lines into it......must have the (limited) att'n span of a Forex punter :LOL:

either that - or it reminds of 'finals cramming' from school days :confused:
 
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Simon Gordon

Active member
126 1
We stay fully invested as possible. Research shows that 80 to 90 percent of returns occur during just 2 to 7 percent of your total holding time.

Running any business is mostly a matter of trying to see and seize opportunities. It’s not a matter of having a long-term plan.

Gipson thinks patience is a virtue most investors lack. He believes the pursuit of getting rich quick leads mostly to inferior returns.

For best results, we have found you need to be in a stock for 18 to 36 months because it takes a while for low expectations to become moderate expectations, and then for moderate expectations to transform to high expectations.

This a business where most people are well above average intelligence, but they tend to become average performers because there's safety in crowds. If you're part of the crowd, ultimately you're only going to be average because the market is so efficient.

Many people don't have a core philosophy, which I think is the biggest killer because you'll be whipped by the market.

If anything grows too fast, I get nervous because fast growth is unsustainable most of the time. The company must also have management that I really trust, who treat me like a partner, whose motives and aspirations match up with mine as investor.

I want companies that have recurring revenue, insulation from competition, and control over their destiny, and that are not particularly capital intensive. That way, when they do generate cash, they have a choice of whether to reinvest or give it back to shareholders.

Growth managers tend to make mistakes by paying too much. Value guys tend to make mistakes by buying junk.

When you buy a stock because you think something is going to happen and it happens, get rid of it.

If you're the kind of person who spends money freely, never buys anything on sale, and doesn't pinch pennies, it will be harder for you to truly adopt the value philosophy.

Great investing requires an independent spirit, and the courage to acquire assets the crowd disdains. Disdain creates bargains.

He turned $50,000 into $900 million. He'd multiplied his original stake 18,000 times. This former freelance writer started investing in middle age and became a near billionaire in his lifetime.

His habit of living beneath his means freed his capital to make the most of itself.

History taught him great civilisations are built by great leaders, he looked for great leaders in executive suites.

A self-taught investor, Davis cobbled together his maxims and his modus operandi from a variety of experiences and sources.

The US economy has a habit of doubling in size every 16 to 18 years, going back more than a century. If history repeats itself, the economy will expand eightfold during the adult life of an average investor.

Davis's financial life had three phases: learn, earn and return. The learn phase lasted into his early forties, and the earn phase stretched from his forties into his late seventies.
Names he owned in 1950 still occupied his portfolio in 1990.

Davis lived comfortably on small, anticipatory with drawls along the way. Once he'd bought winning companies, his best decisions were never to sell.

He sat through mild bear markets and severe bear markets, crashes, and corrections.

As long as he believed in the strength of leadership and the company's continual ability to compound, he held.

A few big winners are what count in a lifetime of investing, and these winners need many years to appreciate.

GAPP - growth at prudent prices.

GASP - growth at silly prices.

The Davises never overpaid for clothes, houses, or vacations. Why should investors overpay for earnings, which after all, are what they're buying whenever they invest in a company.

An individual company can have its own bear market when bad news (an oil spill, a class action lawsuit, a product recall, and so on) sinks the stock. This is a buying opportunity, as long as the calamity is short-lived and doesn't hinder the company' long-term prospects.
 
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Simon Gordon

Active member
126 1
The art of successful speculation consists of thinking in the future, and of thinking contrarily. To be successful in speculation requires:

1. An extraordinary amount of general and specific knowledge.

2. A keen sense of 'money' and, perhaps most importantly of all

3. A temperament that thrives on the strains and tension of speculative money-making (and money losing, be it added!).

When you stop to realise how unprepared most people are when they attempt to speculate you marvel they don't lose more money. Professions require postgraduate education before one is qualified to practice - whether it be as a physician, an engineer, a lawyer, or a certified public accountant.

Yet, you find people who cannot read or understand the simplest balance sheet or comprehend the profit-and-loss system. The significance of static versus ladderlike earnings is lost as they grasp eagerly for tips.

According to Webster, speculation comes from the Latin, speculare, meaning intuition, vision, perception, the faculty of intellectual examination - and especially, reasoning in the form of systematic analysis. To speculate, means to spy out, to observe; hence a speculator is a contemplator and an observer, one who looks ahead intelligently, intutively, and perceptively.

I stess the definitions because the art of successful speculation means to cast your mind into the future, while observing the present.

From: The Ruminator by Humphrey B. Neil
 
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wobbles

Junior member
20 2
"October. This is one of the peculiarly dangerous months to speculate in stocks.
The others are July, January, September, April, November, May, March, June,
December, August, and February." Mark Twain 1835-1910
--------------------------------------------------------------------------------------
Here are some quotes from Richard Russel's newsletters:-
Most people become wealthy not by trying to put everything they have into what we like to call "10 baggers," but by
1. properly identifying the primary trend of the markets,
2. investing in those trends and then
3. compounding earnings. and
4. staying away from the really big losses is an important part of the strategy of accumulating wealth slowly.

If we are buying stocks within the context of a primary bear market, we are buying overvalued stocks - and buying them against the primary trend.
This is, to my mind, tantamount to gambling. It certainly is not investing.

Knowledgeable investors opt for safety first, income second, and potential appreciation last. Is there any investment or vehicle that provides all three at this time? My answer is a flat "No." This places you and me in a very difficult situation.
In the present situation, my answer is that we have to chose safety.

In assessing “value” Dow placed his main emphasis on yields, or the return on the investment. Earnings as we have seen, can be manipulated and tweaked - but dividends are real money, and there is nothing more heartening to true investors than owning a stock that raises its dividend year after year.

Trends: In my experience, primary trends always take much longer than anyone thinks possible - and ultimately, they go much further than anyone thinks possible.
This applies to the stock market, the gold market, the money market, the currency market.

I pay a lot of attention to new 52-week highs and new 52-week lows on the NYSE.
I run five-day totals of each, and I take careful note of these totals, particularly on the rare reversals.

Markets can and often do perform the unexpected and that no one is smarter than the collective wisdom of markets.

Unfortunately, when stocks go past historic parameters, they have a habit of making up for those extremes by going past historic parameters in the opposite direction.
"Thus, once the bear market resumes, I'm afraid we're going to see stocks descend to almost unbelievable under-valuations.

The market always does what it's supposed to -- but NEVER WHEN."

The “Commercials” operate on the thesis of “regression to the mean.” In other words, when they think that the speculators have taken any market too far in one direction, they wiil take the other side. The Commercials almost always win in the end, because of the financial resources backing them.
After they have whacked the Speculators, the Commercials take their short profits, and the game starts all over again.
 

wobbles

Junior member
20 2
Looks like not too much wisdom out there. So here are a few of my favourite sayings
by Jesse Livermore. They have stood me in good stead.

1. I began to realise that the big money must necessarily be in the big swing. Whatever might seem to give a big swing its initial impulse, the fact is that its continuance is not the result of manipulations by pools or artifice by financiers, but depends upon basic conditions. And no matter who opposes it, the swing must inevitably run as far and as fast and as long as the impelling forces determine.

2 The big money is not in the individual fluctuations, but in the main movements - that is, not in reading the tape, but in sizing up the entire market and its trend.

3. The thing to determine is the speculative line of least resistance at the moment of trading; wait for the moment when that line defines itself, because that is the signal to get busy.
Establish your resistance points and be ready to trade along the line of least resistance as soon as you determine it.

4. It never was my thinking that made the big money for me. It always was my sitting. Got that?
My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets.
Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn.
The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing what he figured it must do.

5. People don't seem to grasp easily the fundamentals of stock trading. I have often said that to buy on a rising market is the most comfortable way of buying stocks.
Now, the point is not so much to buy as cheap as possible or go short at top prices, but to buy or sell at the right time. When I am bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don't buy long stock on a scale down, I buy on a scale up.

Let us suppose, for example, that I am buying some stock. I'll buy two thousand shares at 110. If the stock goes up to 111 after I buy it I am, at least temporarily, right in my operation, because it is a point higher; it shows me a profit. Well, because I am right I go in and buy another two thousand shares.
 

TheBramble

Legendary member
8,394 1,170
Came across these on another board - can't remember (to my lasting shame) which or who, but hope you all find them as useful/interesting as I do.
 

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halldorpb

Junior member
17 1
Trading Wisdom

It´s a bull market, you know...
 

Blether

Junior member
35 0
This is one of my favourites - http://www.crestmontresearch.com/pdfs/Stock Matrix Index5 11x17.pdf

- S&P index, 1900-2003, year of selling on the X-axis, year of buying on the Y. Showing for example that if you sold it in 2003 (rightmost column), then if you'd bought between 1978-1985 (excluding 1983) you made 10% or more; if you'd bought in any other year since 1900, you made less.

And other interesting patterns.
 
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Simon Gordon

Active member
126 1
A reputation for delivering on promises remains one of the key criteria he applies to all the managements he has backed.

The more you know about a company, and the more you can surprise the management with your knowledge, the more information they are likely to give you.
 

Simon Gordon

Active member
126 1
What makes trading so fascinating and, at the same time, difficult to learn is that you really don't need lots of skills; you just need a genuine winning attitude.
 

Simon Gordon

Active member
126 1
A few major opportunities clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.
 

wobbles

Junior member
20 2
Some Trading Rules by Richard Rhodes'

I must admit, I am not smart enough to have devised these ridiculously simple
trading rules. A great trader gave them to me some 15 years ago. However, I
will tell you, they work. If you follow these rules, breaking them as infrequently
as possible, you will make money year in and year out, some years better than
others, some years worse - but you will make money. The rules are simple.
Adherence to the rules is difficult.

"Old Rules...but Very Good Rules"

If I've learned anything in my 17 years of trading, I've learned that the simple
methods work best. Those who need to rely upon complex stochastics, linear
weighted moving averages, smoothing techniques, fibonacci numbers etc.,
usually find that they have so many things rolling around in their heads that
they cannot make a rational decision. One technique says buy; another says
sell. Another says sit tight while another says add to the trade. It sounds like a
cliché, but simple methods work best.

1. The first and most important rule is - in bull markets, one is supposed to
be long. This may sound obvious, but how many of us have sold the first
rally in every bull market, saying that the market has moved too far, too
fast. I have before, and I suspect I'll do it again at some point in the
future. Thus, we've not enjoyed the profits that should have accrued to
us for our initial bullish outlook, but have actually lost money while being
short. In a bull market, one can only be long or on the sidelines.
Remember, not having a position is a position.

2. Buy that which is showing strength - sell that which is showing
weakness. The public continues to buy when prices have fallen. The
professional buys because prices have rallied. This difference may not
sound logical, but buying strength works. The rule of survival is not to
"buy low, sell high", but to "buy higher and sell higher". Furthermore,
when comparing various stocks within a group, buy only the strongest
and sell the weakest.

3.When putting on a trade, enter it as if it has the potential to be the
biggest trade of the year. Don't enter a trade until it has been well
thought out, a campaign has been devised for adding to the trade, and
contingency plans set for exiting the trade.

4.On minor corrections against the major trend, add to trades. In bull
markets, add to the trade on minor corrections back into support levels.
In bear markets, add on corrections into resistance. Use the 33-50%
corrections level of the previous movement or the proper moving average
as a first point in which to add.

5.Be patient. If a trade is missed, wait for a correction to occur before
putting the trade on.

6.Be patient. Once a trade is put on, allow it time to develop and give it
time to create the profits you expected.

7.Be patient. The old adage that "you never go broke taking a profit" is
maybe the most worthless piece of advice ever given. Taking small profits
is the surest way to ultimate loss I can think of, for small profits are
never allowed to develop into enormous profits. The real money in
trading is made from the one, two or three large trades that develop
each year. You must develop the ability to patiently stay with winning
trades to allow them to develop into that sort of trade.

8.Be patient. Once a trade is put on, give it time to work; give it time to
insulate itself from random noise; give it time for others to see the merit
of what you saw earlier than they.

9.Be impatient. As always, small loses and quick losses are the best losses.
It is not the loss of money that is important. Rather, it is the mental
capital that is used up when you sit with a losing trade that is important.

10.Never, ever under any condition, add to a losing trade, or "average" into
a position. If you are buying, then each new buy price must be higher
than the previous buy price. If you are selling, then each new selling
price must be lower. This rule is to be adhered to without question.

11.Do more of what is working for you, and less of what's not. Each day,
look at the various positions you are holding, and try to add to the trade
that has the most profit while subtracting from that trade that is either
unprofitable or is showing the smallest profit. This is the basis of the old
adage, "let your profits run."

12.Don't trade until the technicals and the fundamentals both agree. This
rule makes pure technicians cringe. I don't care! I will not trade until I am
sure that the simple technical rules I follow, and my fundamental
analyses, are running in tandem. Then I can act with authority, and with
certainty, and patiently sit tight.

13.When sharp losses in equity are experienced, take time off. Close all
trades and stop trading for several days. The mind can play games with
itself following sharp, quick losses. The urge "to get the money back" is
extreme, and should not be given in to.

14.When trading well, trade somewhat larger. We all experience those
incredible periods of time when all of our trades are profitable. When that
happens, trade aggressively and trade larger. We must make our
proverbial "hay" when the sun does shine.

15.When adding to a trade, add only 1/4 to 1/2 as much as currently held.
That is, if you are holding 400 shares of a stock, at the next point at
which to add, add no more than 100 or 200 shares. That moves the
average price of your holdings less than half of the distance moved, thus
allowing you to sit through 50% corrections without touching your
average price.

16.Think like a guerrilla warrior. We wish to fight on the side of the market
that is winning, not wasting our time and capital on futile efforts to gain
fame by buying the lows or selling the highs of some market movement.
Our duty is to earn profits by fighting alongside the winning forces. If
neither side is winning, then we don't need to fight at all.

17.Markets form their tops in violence; markets form their lows in quiet
conditions.

18.The final 10% of the time of a bull run will usually encompass 50% or
more of the price movement. Thus, the first 50% of the price movement
will take 90% of the time and will require the most backing and filling and
will be far more difficult to trade than the last 50%.

There is no "genius" in these rules. They are common sense and nothing else,
but as Voltaire said, "Common sense is uncommon." Trading is a common-sense
business. When we trade contrary to common sense, we will lose. Perhaps not
always, but enormously and eventually. Trade simply. Avoid complex
methodologies concerning obscure technical systems and trade according to
the major trends only.
 
 
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