MONEY MASTERS: PETER LYNCH
Peter Lynch essentially created the Magellan Fund. After he took charge in 1977, it became the largest mutual fund in history, which it still was twenty years later. It had over a million shareholders, and during his tenure paid Fidelity, its managers, some US$60 million a year in management fees and several hundred million in sales commissions. (The 3% sales commission goes straight into the pocket of the owners of the management company; there are no salesmen.)
Lynch attended Boston College on a golf caddie scholarship, and happened to caddie for Fidelity Investments president D. George Sullivan, which helped him land part-time summer work with the firm. He started full-time with Fidelity in 1971 and by 1974 became director of research. In analyst meetings, Lynch would urge his colleagues not to tear down each others ideas, but rather to explain why their own ideas are good ones.
Lynch says that he has an edge because a lot of people he competes with are looking for reasons NOT to buy: The company is unionized; GE will come out with a competitive product that will kill them; or whatever. There is a whole list of biases that scare most investors away from studying the situation at all, so you miss a lot. To make money, Lynch says, you must find something that nobody else knows, or do something that others wont do because they have rigid mind-sets. He also points out that its all right to make mistakes as the price of catching huge winners: The stock that doubles from 10 to 20 pays twice over for the one that falls in half from 10 to 5.
Lynchs cardinal advantage over the legion of his competitors, besides his basic talent, is simply the enormous dedication he brings to the task. Lynch tries harder. In twenty years of marriage he took two proper vacations. A stockbroker who accompanies him on a trip mentioned that in a country where things barely get going at ten oclock in the morning, Lynch insisted on starting to see companies at eight, and was quite grumpy that none could be found to talk to him at six! When at the end of the day the idea of dinner was raised, Lynch begged off, saying, I gotta read four annual reports by tomorrow. This broker said he had never seen anyone so well prepared for a company visit.
Lynchs basic objective is to catch the turn in a companys fortunes, which might be described as the time-efficient technique of deploying capital. Often, there is a one-to-twelve-month interval between a material change in a company and the corresponding movement in its stock. Thats what Lynch wants to capitalize on.
Lynch believes in an old traders rule: If you buy a stock because you hope something will happen, and it doesnt happen, sell the stock. Wall Street has a sardonic expression for this idea: An investment is a speculation that didnt work out. You had an idea, based on an expectation; you were wrong. So now you really have no reason to hold on to the stock and should sell it cleanly and quickly. Lynch says he often sells too soon. But you dont get hurt by things that you dont own that go up. Its what you do own that kills you.
Of the stocks that I buy, says Lynch, three months later I am happy with less than a quarter of them. So if I like to look at ten stocks, its better for me to buy all ten, and then go on studying and researching. Perhaps I wont like a number of them later on, but I can keep the ones that I do like, and increase those positions. And companies keep changing as you look: Competition may intensify; a problem plant may be sold off or closed; a competitive plant may burn down. So if you stay tuned, you can find that the fundamentals are changing.
Or even if they dont change, the stock may go from 20 to 16. Perhaps I bought 10,000 at 20, and then Ill buy 100,000 at 16. If I look at ten companies, I may find one company that is interesting. If I look at twenty companies then I may find two. If I look at forty, I may find four. If I look at a hundred, I may find ten. If other people saw as many companies as I do, I think that nine out of ten of them, when they heard the same story, would say, Wow, just the way I do, and be able to make the same buyin decision. You have to be a good listener in this business. And of course you may not be able to decide on the first visit. It may happen a year later or two years later.
Lynch thinks the worst traps is to buy exciting companies that do not have earnings. He can remember buying dozens of companies-- where had the story come true-- he would have made 1,000% on his money, and losing every time. And yet, and yet...! Wonderful new stories appear-- the sizzle, not the steak, as he says-- and again he will bite, and again he will lose.
The very best way to make money in a market is in a small growth company that has been profitable for a couple of years and simply goes on growing, says Lynch, who further observes that it is easier to make big percentage gains in stocks of small companies than in those of big ones. It is much harder for a stock in the Dow Jones Industrial Average to triple than it is for a stock in little NASDAQ companies. He is not strictly a value investor by any means, noting that if you get the facts right, you can be justified paying a high PE ratio for a rapidly growing company.
Lynch also discourages market timing. Starting in 1954, he has written, an investor sticking with the S&P for the following 40 years would have made an annual return on his investment of 11.4%. If he was out of stocks for the ten most profitable months, usually as the market bounced sharply from a bottom, the return fell to 8.3%. If he missed the 40 most profitable months, his return collapsed to 2.7%! Lynch is a fanatic about the stock market. Delight in his craft is Lynchs secret to success!
Credits: Much of this article was extracted from Money Masters Of Our Time (John Train, 2000). Lynch has written two bestselling books, including One Up on Wall Street, since his retirement in 1991.
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 2
MONEY MASTERS: PHILIP CARRET
Philip Carret must be the most experienced investment man around: Having entered the field in the early 1920s, he can boast three-quarters of a centurys immersion in the hurly-burly of the market. At ninety, he still arrived at his office early every morning, and he seemed perfectly unimpaired in faculties. (At age 100 he cut down to three days a week!)
Carret started the Pioneer Fund in 1928. It had about twenty-five stockholders: members of his family and a few friends. He ran it for over 50 years, until he retired as its manager. During that 50-year period, Pioneers compound annual total return was 13%, 15% if you start a year later at the depth of the Depression. That means that an original shareholder who had put in $10,000 and reinvested all his income would have been able to withdraw over $8 million when Carret left (if he had held on after suffering a jarring 50% drop in the first two years).
In contrast to margin-hungry leveraged speculators like George Soros, Carret is strongly against the use of debt by investors. In a business, he says, debt is quite reasonable. But margin debt-- stock market debt-- is terribly dangerous, because its so easy to get. You can just pick up the phone and generate debt in the stock market. A businessman has to go to his banker and explain everything: what his assets are, where his cash flow comes from, how the business works, what he wants the money for, and how the loan he wants will generate the cash to repay the bank.
Carret always favored obscure over-the-counter stocks. Yet, he claimed to be more conservative than most people. Most people think that conservative means General Motors, IBM, et cetera. But Carret always preferred offbeat stuff. Theyre less subject to manipulation than New York Stock Exchange companies, and are less affected by crowd psychology. For instance, he says, I remember the popularity of Winnebago, Coachman Industries, and all the other recreational vehicle outfits. To justify their peak prices you would have needed to have half the population to abandon their houses and ride around continuously. I avoid fads like the plague. When I invest, I gamble with a certain amount of my capital, buying dogs. The usual way I lose is by buying concept stocks. They rarely work.
Carret explains that all sorts of junk is sold over the counter (over the counter trades are a way for companies to create markets for their shares prior to a full listing status on the New York Stock Exchange or Nasdaq), but also some crown jewels. Berkshire Hathaway, for instance-- which later got a NYSE listing. He said he knew Warren Buffett, who runs it. Hes a friend of mine. Hes smarter than I am. He proved that in General Foods. It was a stodgy company, mostly coffee. When Berkshire Hathaway bought the stock, I said to myslef, Well, Warrens made a mistake this time. It was about $60 when I noticed the transaction. In a matter months it went to $120.
For that matter, Carret is in a way an older version of Warren Buffett. They are quite similar in appearance: round-headed men with wide grins. Both have completely contrarian mentality: They seek what nobody wants. When Buffett was still a value investor, both liked dull stocks, such as waterworks or bridge companies, and did not mind if they sat dead in the water for long periods. Especially, both have the patient temperament of the successful value investor. They exchanged ideas regularly for many years.
Carret likes very good balance sheets. He gets floods of annual reports. He looks at all of them, at least briefly. If he sees that the equity ratio is low, or the current ratio is low, he doesnt go any further. He wants no term debt, and a better than 2-to-1 current ratio (current assets twice current liabilities). If its a utility, he wants reasonable financial ratios, a good territory, and a favorable regulatory climate.
Another important criterion for Carret is that he always wants to see management own a significant amount of stock. Once he had some correspondence with the chairman of National Gypsum. He noticed that the president only had 500 shares, so he wrote to the chairman. He was flabbergasted by his reply: How much stock Mr. Brown owns is his business and nobody elses. He doesnt agree with that at all. It may have been true before the SEC required making of officers and directors shareholdings available to everybody, but it certainly isnt true today. An officer should have at least a years salary invested in the business. If he doesnt have that much faith in the company, he shouldnt be a key executive of it. If they dont own a lot of stock why should I own any?, asks Carret, adding that he always looks for large insider shareholdings in proxy statements.
Carrets Principles
Never hold fewer than 10 different securities covering five different fields of business.
At least once in 6 months reappraise every security held.
Keep at least half the total fund in income-producing securities.
Consider yield the least important factor in analyzing any stock.
Be quick to take losses, reluctant to take profits.
Never put more than 25% of a given fund into securities about which detailed information is not readily and regularly available.
Avoid inside information as you would the plague.
Seek facts diligently; advice never.
Ignore mechanical formulas for valuing securities.
When stocks are high, money rates rising, and business prosperous, at least half a given fund should be placed in short-term bonds.
Borrow money sparingly and only when stocks are low, money rates low or falling, and business depressed.
Set aside a moderate proportion of available funds for the purchase of long-term options on stocks of promising companies whenever available.
The Money Mind
Carret has a name for what he says is the particular mentality of the keen investor: the money mind. To illustrate, he cites a story. Years ago, New York went through one of its periodic droughts. You had to ask for a glass of water in a restaurant. Then one day Carret remembered an area in Queens he had learned about, where the city collected its water charges on the basis not of consumption but of the front footage of each residence. He reflected that the city would eventually have to install water meters there, so that a distinction could be made between households that consumed a lot of water-- doubtless wasting a good deal of it-- and those that consumed less. He studied the subject and found that the likely candidate for the business would be Neptune Meter. He looked up the company and saw that one of the directors, an officer of Bankers Trust, held 2000 shares, an encouraging sign. The companys figures were favorable. So Carret bought the stock for his clients and over the years was well rewarded.
The money mind, he says, is just a quirk. There is a story in G.H. Hardys book on the Indian mathematician genius Srinivasa Ramanujan. Hardy was visiting Ramanujan in the hospital and mentioned that he had arrived in a cab numbered 1729... a dull number. Ramanujan instantly expostulated, No, Hardy, it is a very interesting number! It is the smallest number expressible as the sum of two cubes in two different ways. (That is 12 cubed plus 1 cubed and 10 cubed plus 9 cubed). Its hard for the layman to conceive of a brilliant mathematical-- or investment-- mind.
Credits: Much of this article was extracted from Money Masters Of Out Time (John Train, 2000).
Philip Carret must be the most experienced investment man around: Having entered the field in the early 1920s, he can boast three-quarters of a centurys immersion in the hurly-burly of the market. At ninety, he still arrived at his office early every morning, and he seemed perfectly unimpaired in faculties. (At age 100 he cut down to three days a week!)
Carret started the Pioneer Fund in 1928. It had about twenty-five stockholders: members of his family and a few friends. He ran it for over 50 years, until he retired as its manager. During that 50-year period, Pioneers compound annual total return was 13%, 15% if you start a year later at the depth of the Depression. That means that an original shareholder who had put in $10,000 and reinvested all his income would have been able to withdraw over $8 million when Carret left (if he had held on after suffering a jarring 50% drop in the first two years).
In contrast to margin-hungry leveraged speculators like George Soros, Carret is strongly against the use of debt by investors. In a business, he says, debt is quite reasonable. But margin debt-- stock market debt-- is terribly dangerous, because its so easy to get. You can just pick up the phone and generate debt in the stock market. A businessman has to go to his banker and explain everything: what his assets are, where his cash flow comes from, how the business works, what he wants the money for, and how the loan he wants will generate the cash to repay the bank.
Carret always favored obscure over-the-counter stocks. Yet, he claimed to be more conservative than most people. Most people think that conservative means General Motors, IBM, et cetera. But Carret always preferred offbeat stuff. Theyre less subject to manipulation than New York Stock Exchange companies, and are less affected by crowd psychology. For instance, he says, I remember the popularity of Winnebago, Coachman Industries, and all the other recreational vehicle outfits. To justify their peak prices you would have needed to have half the population to abandon their houses and ride around continuously. I avoid fads like the plague. When I invest, I gamble with a certain amount of my capital, buying dogs. The usual way I lose is by buying concept stocks. They rarely work.
Carret explains that all sorts of junk is sold over the counter (over the counter trades are a way for companies to create markets for their shares prior to a full listing status on the New York Stock Exchange or Nasdaq), but also some crown jewels. Berkshire Hathaway, for instance-- which later got a NYSE listing. He said he knew Warren Buffett, who runs it. Hes a friend of mine. Hes smarter than I am. He proved that in General Foods. It was a stodgy company, mostly coffee. When Berkshire Hathaway bought the stock, I said to myslef, Well, Warrens made a mistake this time. It was about $60 when I noticed the transaction. In a matter months it went to $120.
For that matter, Carret is in a way an older version of Warren Buffett. They are quite similar in appearance: round-headed men with wide grins. Both have completely contrarian mentality: They seek what nobody wants. When Buffett was still a value investor, both liked dull stocks, such as waterworks or bridge companies, and did not mind if they sat dead in the water for long periods. Especially, both have the patient temperament of the successful value investor. They exchanged ideas regularly for many years.
Carret likes very good balance sheets. He gets floods of annual reports. He looks at all of them, at least briefly. If he sees that the equity ratio is low, or the current ratio is low, he doesnt go any further. He wants no term debt, and a better than 2-to-1 current ratio (current assets twice current liabilities). If its a utility, he wants reasonable financial ratios, a good territory, and a favorable regulatory climate.
Another important criterion for Carret is that he always wants to see management own a significant amount of stock. Once he had some correspondence with the chairman of National Gypsum. He noticed that the president only had 500 shares, so he wrote to the chairman. He was flabbergasted by his reply: How much stock Mr. Brown owns is his business and nobody elses. He doesnt agree with that at all. It may have been true before the SEC required making of officers and directors shareholdings available to everybody, but it certainly isnt true today. An officer should have at least a years salary invested in the business. If he doesnt have that much faith in the company, he shouldnt be a key executive of it. If they dont own a lot of stock why should I own any?, asks Carret, adding that he always looks for large insider shareholdings in proxy statements.
Carrets Principles
Never hold fewer than 10 different securities covering five different fields of business.
At least once in 6 months reappraise every security held.
Keep at least half the total fund in income-producing securities.
Consider yield the least important factor in analyzing any stock.
Be quick to take losses, reluctant to take profits.
Never put more than 25% of a given fund into securities about which detailed information is not readily and regularly available.
Avoid inside information as you would the plague.
Seek facts diligently; advice never.
Ignore mechanical formulas for valuing securities.
When stocks are high, money rates rising, and business prosperous, at least half a given fund should be placed in short-term bonds.
Borrow money sparingly and only when stocks are low, money rates low or falling, and business depressed.
Set aside a moderate proportion of available funds for the purchase of long-term options on stocks of promising companies whenever available.
The Money Mind
Carret has a name for what he says is the particular mentality of the keen investor: the money mind. To illustrate, he cites a story. Years ago, New York went through one of its periodic droughts. You had to ask for a glass of water in a restaurant. Then one day Carret remembered an area in Queens he had learned about, where the city collected its water charges on the basis not of consumption but of the front footage of each residence. He reflected that the city would eventually have to install water meters there, so that a distinction could be made between households that consumed a lot of water-- doubtless wasting a good deal of it-- and those that consumed less. He studied the subject and found that the likely candidate for the business would be Neptune Meter. He looked up the company and saw that one of the directors, an officer of Bankers Trust, held 2000 shares, an encouraging sign. The companys figures were favorable. So Carret bought the stock for his clients and over the years was well rewarded.
The money mind, he says, is just a quirk. There is a story in G.H. Hardys book on the Indian mathematician genius Srinivasa Ramanujan. Hardy was visiting Ramanujan in the hospital and mentioned that he had arrived in a cab numbered 1729... a dull number. Ramanujan instantly expostulated, No, Hardy, it is a very interesting number! It is the smallest number expressible as the sum of two cubes in two different ways. (That is 12 cubed plus 1 cubed and 10 cubed plus 9 cubed). Its hard for the layman to conceive of a brilliant mathematical-- or investment-- mind.
Credits: Much of this article was extracted from Money Masters Of Out Time (John Train, 2000).
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 3
MONEY MASTERS: GEORGE SOROS
George Soros is the worlds best-known manager of capital, partly because of the performance record of his offshore funds-- whose day-to-day transactions are largely delegated-- but even more because of his Eastern Europe pro-democracy activities, to which he has so far committed some US$1.5 billion. He probably has the top performance of publicly held portfolio operators: about 33% per year for some 29 years. He is a speculator, betting on short-term movements, not a true investor.
Soros (originally Schwartz) is Hungarian born and educated at the London School of Economics. He immigrated to the US in 1956 and in 1969 joined Jim Rogers to found Quantum Fund-- one of the most successful large funds in history, which speculates in commodities, currencies, stocks, and bonds using massive margin. Soros says that the capital of the fund is kept basically in stocks, while its bets on commodities and currencies are done using futures and/or borrowed money. It went short on major institutional favorites, such as Disney, Polaroid, and Tropicana, and thus made money in 1973 and 1974, which for most investors were horrible years. He went short Avon, the archetypal one-decision stock, at 120-- a brilliant move.
Soros does not spend a great deal of time on economic study, and does not read Wall Street research. He develops his opinions essentially by reading newspapers and dispatches from abroad, and particularly by talking to well-placed sources around the world. Through his participation in the Council on Foreign Relations, he has developed friendships with a number of high-ranking U.S. officials, such as Secretary of State Madeleine Albright and Assistant Secretary of State Peter Tarnoff. In most countries of significance to him, Soros has access to high levels of government.
One can get an idea of Soross methods from the trading diary in his book The Alchemy of Finance, which offers a highly detailed description of his transactions between August 18, 1985, and November 7, 1986. Here are some of Soross principles of speculation:
Start small. If things work out, build up a larger position. This ties in with his view that in a world of floating currencies, trends get steadier and more determinable as they develop.
The market is dumb, so dont try to be omniscient. Investors operate with limited funds and limited intelligence: They do not need know everything. As long as they understand something better than others, they have an edge.
A speculator has to define from the first the level of risk that he dares assume. This is a most difficult judgment.
There are three main theories of stock market behavior, Soros observes: the efficient market theory, the technical, and the fundamental...
He and many others have demonstrated the falsity of the efficient market theory through consistent superior performance-- which, according to the theory, is virtually impossible. Determined professors have written that the Soros phenomenon can be explained by luck; but if so, Mozart can be explained by luck. No one in the business believes it. Soros notes sardonically, The more the theory of efficient markets is believed, the less efficient the markets become.
Technical analysis has a feeble theoretical foundation and does not in fact work consistently.
Fundamental analysis holds that value, defined in terms of earnings power and assets, determines stock prices. But stock prices also change fundamental values, by permitting the sale or repurchase of shares, or mergers and acquisitions, and the like.
Soros concludes that reflexivity is a better approach than any of these. The essence of Soross theory of reflexivity is that perception changes events, which in turn change perception. The usual name for this effect is feedback. If the princess kisses the frog and the frog turns into a prince, she will kiss him some more, he will kiss her back, and... I know not what. If, on the other hand, you chain a good dog and kick it, saying bad dog, the dog will indeed become vicious and bite, provoking more kicks, and more bites.
Switching to money, if speculators are convinced the dollar should rise, their purchases may well push it up. That, in turn, will produce lower interest rates and stimulate the economy, justifying a still higher dollar. Similarly, if many speculators become convinced that Microsoft or whatever is going to rise, then they will bid up the stock, and management can use it as a trading token to buy other companies on advantageous terms, thus justifying a still higher stock price. Soros calls this reciprocal sequence of facts to perceptions to facts to perceptions, and so on, a shoelace pattern, one lace consisting of facts and the other of opinion. Others call it the bandwagon effect.
Soros has published many books, including The Alchemy of Finance (1987), Opening the Soviet System (1990), Underwriting Democracy (1991), Soros on Soros: Staying Ahead of the Curve (1995), and The Crisis of Global Capitalism (1998). Not all critics take Soros the politico-economic philosopher as seriously as might be hoped. The Economist, for instance, observed of his last work, These remarkable distinctions do not satisfy him. He craves recognition as a great thinker... None of this alters the fact that his books are no good. As to his proposal on how to prevent global collapse, the magazine asks, Is this a joke?
Soros is unique among our Money Masters in having first created a substantial fortune for himself and then put it to work in a way that in a small degree changed our world for the good. It is not yet clear that he can establish a permanent operation to run his fund complex, though. His writings are of uncertain value and contain understandable elements of self-justification. While his philanthropies deserve great credit, one must remember that he is giving back to Paul what he extracted from Peter-- Peter being the people on the wrong side of his winning bets. Unlike a manufacturer or a farmer or an artist who creates new value, the speculator moves existing wealth around. Still, very few successful speculators do that as usefully as has Soros. On balance, he is a great figure.
Credits: Parts of this article are extracted from Money Masters Of Our Time (John Train, 2000).
George Soros is the worlds best-known manager of capital, partly because of the performance record of his offshore funds-- whose day-to-day transactions are largely delegated-- but even more because of his Eastern Europe pro-democracy activities, to which he has so far committed some US$1.5 billion. He probably has the top performance of publicly held portfolio operators: about 33% per year for some 29 years. He is a speculator, betting on short-term movements, not a true investor.
Soros (originally Schwartz) is Hungarian born and educated at the London School of Economics. He immigrated to the US in 1956 and in 1969 joined Jim Rogers to found Quantum Fund-- one of the most successful large funds in history, which speculates in commodities, currencies, stocks, and bonds using massive margin. Soros says that the capital of the fund is kept basically in stocks, while its bets on commodities and currencies are done using futures and/or borrowed money. It went short on major institutional favorites, such as Disney, Polaroid, and Tropicana, and thus made money in 1973 and 1974, which for most investors were horrible years. He went short Avon, the archetypal one-decision stock, at 120-- a brilliant move.
Soros does not spend a great deal of time on economic study, and does not read Wall Street research. He develops his opinions essentially by reading newspapers and dispatches from abroad, and particularly by talking to well-placed sources around the world. Through his participation in the Council on Foreign Relations, he has developed friendships with a number of high-ranking U.S. officials, such as Secretary of State Madeleine Albright and Assistant Secretary of State Peter Tarnoff. In most countries of significance to him, Soros has access to high levels of government.
One can get an idea of Soross methods from the trading diary in his book The Alchemy of Finance, which offers a highly detailed description of his transactions between August 18, 1985, and November 7, 1986. Here are some of Soross principles of speculation:
Start small. If things work out, build up a larger position. This ties in with his view that in a world of floating currencies, trends get steadier and more determinable as they develop.
The market is dumb, so dont try to be omniscient. Investors operate with limited funds and limited intelligence: They do not need know everything. As long as they understand something better than others, they have an edge.
A speculator has to define from the first the level of risk that he dares assume. This is a most difficult judgment.
There are three main theories of stock market behavior, Soros observes: the efficient market theory, the technical, and the fundamental...
He and many others have demonstrated the falsity of the efficient market theory through consistent superior performance-- which, according to the theory, is virtually impossible. Determined professors have written that the Soros phenomenon can be explained by luck; but if so, Mozart can be explained by luck. No one in the business believes it. Soros notes sardonically, The more the theory of efficient markets is believed, the less efficient the markets become.
Technical analysis has a feeble theoretical foundation and does not in fact work consistently.
Fundamental analysis holds that value, defined in terms of earnings power and assets, determines stock prices. But stock prices also change fundamental values, by permitting the sale or repurchase of shares, or mergers and acquisitions, and the like.
Soros concludes that reflexivity is a better approach than any of these. The essence of Soross theory of reflexivity is that perception changes events, which in turn change perception. The usual name for this effect is feedback. If the princess kisses the frog and the frog turns into a prince, she will kiss him some more, he will kiss her back, and... I know not what. If, on the other hand, you chain a good dog and kick it, saying bad dog, the dog will indeed become vicious and bite, provoking more kicks, and more bites.
Switching to money, if speculators are convinced the dollar should rise, their purchases may well push it up. That, in turn, will produce lower interest rates and stimulate the economy, justifying a still higher dollar. Similarly, if many speculators become convinced that Microsoft or whatever is going to rise, then they will bid up the stock, and management can use it as a trading token to buy other companies on advantageous terms, thus justifying a still higher stock price. Soros calls this reciprocal sequence of facts to perceptions to facts to perceptions, and so on, a shoelace pattern, one lace consisting of facts and the other of opinion. Others call it the bandwagon effect.
Soros has published many books, including The Alchemy of Finance (1987), Opening the Soviet System (1990), Underwriting Democracy (1991), Soros on Soros: Staying Ahead of the Curve (1995), and The Crisis of Global Capitalism (1998). Not all critics take Soros the politico-economic philosopher as seriously as might be hoped. The Economist, for instance, observed of his last work, These remarkable distinctions do not satisfy him. He craves recognition as a great thinker... None of this alters the fact that his books are no good. As to his proposal on how to prevent global collapse, the magazine asks, Is this a joke?
Soros is unique among our Money Masters in having first created a substantial fortune for himself and then put it to work in a way that in a small degree changed our world for the good. It is not yet clear that he can establish a permanent operation to run his fund complex, though. His writings are of uncertain value and contain understandable elements of self-justification. While his philanthropies deserve great credit, one must remember that he is giving back to Paul what he extracted from Peter-- Peter being the people on the wrong side of his winning bets. Unlike a manufacturer or a farmer or an artist who creates new value, the speculator moves existing wealth around. Still, very few successful speculators do that as usefully as has Soros. On balance, he is a great figure.
Credits: Parts of this article are extracted from Money Masters Of Our Time (John Train, 2000).
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 4
MONEY MASTERS: JOHN NEFF
Which money manager would financial professionals choose to manage their own money? Over the years a frequent answer has been one whose name most nonprofessionals wouldnt recognize: John Neff, of Berwyn, Pennsylvania. He is little known outside the investment community because he is modest, gray, and unspectacular. He looks and acts not at all the Wall Street hotshot, but the Midwestern executive: nice house a little way out of town; wife of over 30 years; simple, unfashionable, and slightly messy clothes; no magnificent paneled office, just the disorderly, paper-strewn den one expects of a college department head.
And yet, John Neff is one of the most eminent financial figures in the United States. He is the longest-running participant in the Barrons Roundtable: over 25 years. For 31 years John Neff ran the Vanguard Windsor Fund, from June 1964 to December 1995. When he retired, the fund had an annual compound return of 14.8%. During that period, $10,000 invested in the S&P 500 would have returned $248,000; the same investment in Windsor would have returned over twice as much-- $587,000. Year in and year out, Neff was likely to be among the top 5% in performance of all funds. So, its no accident.
Neff is a value man: He only buys when a stock is too cheap and acting badly at that moment in the market; and he infallibly sells when, by his criteria, it is too expensive, again always when it is acting strongly in the market. He buys stocks that are dull, or to use his own terms, misunderstood and woebegone, and sells when the market has gotten the point and has bid them up to fair value, or over fair value. In this he is a classic contrarian, and an authentic neo-Grahamite.
He argues the case this way. Suppose you begin on January 1 with a stock whose earnings and thus, eventually, stock price will grow 15% a year, but which has to reinvest essentially all its free cash to finance that growth. So you get almost no income. On December 31 you hope to be 15% richer through capital gain. Now suppose on the contrary you have a stock with a much more modest growth rate, such as 10%, but which, because it does not have to finance high growth, can afford to pay a comfortable dividend-- 5%, say. Here again, at the end of the year you are 15% richer: partly because the stock is 10% more valuable through earnings growth, and partly because you have put 5% in your pocket from dividends. But which of these strategies is the best? Neff is convinced that its the latter, because it is more certain.
Neff shares two characteristics with most other great investors: He was poor as a boy, and he is a compulsive worker now. Not surprisingly, given his conservative techniques, Neffs performance tended to rise more slowly than the market in good times, but also to decline less in a weak market. He tolerates very high concentration in a few industry groups. For instance, in the Vanguard Windsor Fund 1988 annual report the automotive group reached 22.2% of the entire portfolio, while the financial sector (banks, insurance companies, and savings and loans) represented 37%.
In other words, while Neff has relatively few ideas, he backs them heavily. Indeed, in his 1988 report the ten largest positions represented over half the assets in the US$5.9 billion fund. Thus, we see a third of a billion dollars in Citicorp, which many investors shunned for fear it was going broke, over half a billion in Ford, and about three-quarters of a billion in just three insurance companies. Thats real self-confidence! One justification for these high concentrations is that he isnt taking far-out gambles: Since he buys only the very cheapest merchandise, should something go wrong, it hasnt far to fall.
Bargain Hunting
Neff constantly looks at industry groups that are unpopular in the market. He confines his research to stocks with particularly low price-earnings ratios, and, ordinarily, unusually high yields. And, in fact, over the many years that Neff ran Windsor Fund, the average price-earnings ratio of his portfolio has been around a third below that of the general market, while it has on average yielded 2% more. Neff likes low PEs, but unlike Benjamin Graham, he is concerned with the underlying nature of the company. He wants a good company at a low price. Some of the criteria he insists on are:
A sound balance sheet
Satisfactory cash flow
An above-average return on equity
Able management
The prospect of continued growth
An attractive product or an attractive service
A strong market in which to operate
Neff claims that investors tend to pay too much for companies with high growth rates, while no growth means that there is something wrong with the company itself. So the bargains where he does most of his buying often run at about an 8% growth rate. Neff has an interesting way of comparing stocks, or groups of stocks, with other stocks and with the overall market. At a time when Windsors portfolio overall had an estimated 9.5% capital growth rate plus a 4.9% yield, or a 14.4% total, the average PE ratio of the stocks in the fund was 6. So he divides the 14.4% total return by 6, giving 2.3 as what he calls the what you get for what you pay figure.
In early 1989 the overall market had a growth rate of 8.5% and a yield of 3.7%, for a total return of 12.2%. Dividing this by the markets PE ratio of 11 gives 1.15 as the comparable what you get for what you pay result. So, by this reckoning Neffs whole portfolio was twice as attractive as the market as a whole.
In determining the price he is prepared to pay for a stock, Neff projects earnings over a number of years. Then he determines a reasonable PE ratio that a normal market should put on those future earnings. This, in turn, gives him a target price several years out. He then calculates the current markets percentage discount from that price, from which he derives the indicated percentage-appreciation potential. Of course, subjective factors have to enter in to some extent. Since the stock groups that Neff considers to be good value will virtually always be out of favor in the market and viewed with suspicion by investors, they generally partake of a common characteristic: A stockbroker would have trouble selling them to a customer.
These examples of Neffs strategy, plus the description of his extremely meticulous methodology explain why other professionals think so highly of him and like him to be their manager. Its slow and its dull, but its strictly based on value, and it almost always works.
Credits: Part of this article was extracted from Money Masters Of Our Time (John Train, 2000). John Neff has also written his own book for your reference in our Sage Library.
Which money manager would financial professionals choose to manage their own money? Over the years a frequent answer has been one whose name most nonprofessionals wouldnt recognize: John Neff, of Berwyn, Pennsylvania. He is little known outside the investment community because he is modest, gray, and unspectacular. He looks and acts not at all the Wall Street hotshot, but the Midwestern executive: nice house a little way out of town; wife of over 30 years; simple, unfashionable, and slightly messy clothes; no magnificent paneled office, just the disorderly, paper-strewn den one expects of a college department head.
And yet, John Neff is one of the most eminent financial figures in the United States. He is the longest-running participant in the Barrons Roundtable: over 25 years. For 31 years John Neff ran the Vanguard Windsor Fund, from June 1964 to December 1995. When he retired, the fund had an annual compound return of 14.8%. During that period, $10,000 invested in the S&P 500 would have returned $248,000; the same investment in Windsor would have returned over twice as much-- $587,000. Year in and year out, Neff was likely to be among the top 5% in performance of all funds. So, its no accident.
Neff is a value man: He only buys when a stock is too cheap and acting badly at that moment in the market; and he infallibly sells when, by his criteria, it is too expensive, again always when it is acting strongly in the market. He buys stocks that are dull, or to use his own terms, misunderstood and woebegone, and sells when the market has gotten the point and has bid them up to fair value, or over fair value. In this he is a classic contrarian, and an authentic neo-Grahamite.
He argues the case this way. Suppose you begin on January 1 with a stock whose earnings and thus, eventually, stock price will grow 15% a year, but which has to reinvest essentially all its free cash to finance that growth. So you get almost no income. On December 31 you hope to be 15% richer through capital gain. Now suppose on the contrary you have a stock with a much more modest growth rate, such as 10%, but which, because it does not have to finance high growth, can afford to pay a comfortable dividend-- 5%, say. Here again, at the end of the year you are 15% richer: partly because the stock is 10% more valuable through earnings growth, and partly because you have put 5% in your pocket from dividends. But which of these strategies is the best? Neff is convinced that its the latter, because it is more certain.
Neff shares two characteristics with most other great investors: He was poor as a boy, and he is a compulsive worker now. Not surprisingly, given his conservative techniques, Neffs performance tended to rise more slowly than the market in good times, but also to decline less in a weak market. He tolerates very high concentration in a few industry groups. For instance, in the Vanguard Windsor Fund 1988 annual report the automotive group reached 22.2% of the entire portfolio, while the financial sector (banks, insurance companies, and savings and loans) represented 37%.
In other words, while Neff has relatively few ideas, he backs them heavily. Indeed, in his 1988 report the ten largest positions represented over half the assets in the US$5.9 billion fund. Thus, we see a third of a billion dollars in Citicorp, which many investors shunned for fear it was going broke, over half a billion in Ford, and about three-quarters of a billion in just three insurance companies. Thats real self-confidence! One justification for these high concentrations is that he isnt taking far-out gambles: Since he buys only the very cheapest merchandise, should something go wrong, it hasnt far to fall.
Bargain Hunting
Neff constantly looks at industry groups that are unpopular in the market. He confines his research to stocks with particularly low price-earnings ratios, and, ordinarily, unusually high yields. And, in fact, over the many years that Neff ran Windsor Fund, the average price-earnings ratio of his portfolio has been around a third below that of the general market, while it has on average yielded 2% more. Neff likes low PEs, but unlike Benjamin Graham, he is concerned with the underlying nature of the company. He wants a good company at a low price. Some of the criteria he insists on are:
A sound balance sheet
Satisfactory cash flow
An above-average return on equity
Able management
The prospect of continued growth
An attractive product or an attractive service
A strong market in which to operate
Neff claims that investors tend to pay too much for companies with high growth rates, while no growth means that there is something wrong with the company itself. So the bargains where he does most of his buying often run at about an 8% growth rate. Neff has an interesting way of comparing stocks, or groups of stocks, with other stocks and with the overall market. At a time when Windsors portfolio overall had an estimated 9.5% capital growth rate plus a 4.9% yield, or a 14.4% total, the average PE ratio of the stocks in the fund was 6. So he divides the 14.4% total return by 6, giving 2.3 as what he calls the what you get for what you pay figure.
In early 1989 the overall market had a growth rate of 8.5% and a yield of 3.7%, for a total return of 12.2%. Dividing this by the markets PE ratio of 11 gives 1.15 as the comparable what you get for what you pay result. So, by this reckoning Neffs whole portfolio was twice as attractive as the market as a whole.
In determining the price he is prepared to pay for a stock, Neff projects earnings over a number of years. Then he determines a reasonable PE ratio that a normal market should put on those future earnings. This, in turn, gives him a target price several years out. He then calculates the current markets percentage discount from that price, from which he derives the indicated percentage-appreciation potential. Of course, subjective factors have to enter in to some extent. Since the stock groups that Neff considers to be good value will virtually always be out of favor in the market and viewed with suspicion by investors, they generally partake of a common characteristic: A stockbroker would have trouble selling them to a customer.
These examples of Neffs strategy, plus the description of his extremely meticulous methodology explain why other professionals think so highly of him and like him to be their manager. Its slow and its dull, but its strictly based on value, and it almost always works.
Credits: Part of this article was extracted from Money Masters Of Our Time (John Train, 2000). John Neff has also written his own book for your reference in our Sage Library.
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 5
MONEY MASTERS: MARK LIGHTBOWN
Mark Lightbown, who runs Londons Genesis Chile Fund, has intermittently held the title of being the worlds most successful emerging market investment manager, among those operating in the classic style. Lightbown was born in London, son of an art scholar, and attended Christ Church, Oxford, where he studied French and German. Thereafter he relinquished the world of scholarship and art in favor of a career in investments, holding positions at Morgan Grenfell and Templeton in London, whence he was recruited by the Genesis family of emerging markets funds to launch a Chile Fund.
Good Countries
Good companies are the foundation of investment, but in evaluating a promising country, Lightbown likes to check that the president and the congress are in alignment. For instance, when Menen, newly elected president of Argentina, resolved to free the economy from the controls and restrictive practices of his Peronist predecessors, he had control over a congress that was prepared for these steps. Good ideas about structural economic reform are not enough: the individuals advancing them must have consistent political backing.
A country with abundant natural resources may well have trouble developing consistently, since it may focus its attention on extracting and redistributing what is already there, rather than on creating new wealth. The agent of change in a country must come from within an existing political grouping, but be quite different from that groupings traditional policies. This is a striking insight. One can turn to Argentina or Russia: Menem was an old Peronist, and Gorbachev and Yeltsin were Communists; each recognized the bankruptcy of those doctrines.
The people in a good country must want to save and invest, rather than spend money on more Mercedes. Lightbown cites the example of Chile in the 1980s: The country enjoyed a large trade surplus, which, he observes, is really a form of national savings. The educational level in a good country must be high. People must be confident that better ways of doing things can be found, be confident enough to want to act on them, and have a sufficient supply of educated people to do so. Not having sharply different ethnic groups is a considerable advantage. A relatively homogeneous population is more likely to advance together toward common goals, rather than quarrel internally.
One requires mechanisms for stimulating and channeling domestic savings, so as to avoid being reliant on the kindness of strangers in order to finance growth. A developing country needs a high savings and investment rate to install the highways, metro systems, airfields, plumbing, and power plants that we, since previous generations paid for them, take for granted.
A system to permit capital movement should already be in place, however primitive it may be, rather than having to be created. For instance, there must be a banking system that at least knows how to take deposits and possesses credit analysis skills, however crude. A legal system that one can live with should have been created.
In a propitious country for investment, the government must keep its hands off business. It should not run enterprises directly, or impose price controls, or dictate how businesses acquire capital or recruit labor. All these practices militate against the principle that things should be done better in the future than they are being done already, which is how productivity rises and new wealth is created.
Another criterion Lightbown seeks is that a country should have low, stable tax rates. They should give the incentives needed to retain profits for reinvestment, without skewing the location of plants or development of industry by providing incentives for irrational investment. Low tax rates, he believes, may be more appropriate for a rapidly growing than for a mature economy, in which very low tax rates may be an incentive to misallocate capital. Labor must be deregulated, since this makes it possible to pay workers according to their productivity, rather than according to legal privileges that they have acquired but that may not help the company or the economy.
Good Companies
It is, of course, essential for an investor to talk to company managements. Most executives tell the truth most of the time, if a question is phrased to be neutral. One needs to be a good listener. Also, though, one should ask the backers of the company, or bankers and brokers, about the reputation of the owners and managers. Are these people straight or not? To learn about a business or a sector, talk to people in the private equity or deal business, since they know about a company and its competition--listed and unlisted--in a way that mere financial agents usually dont. To understand a specific company, one must go up and down it: Talk to owners, the managers, and workers in the plant. Central to the process is casting a wide net to gather many pieces of information. Much of the investment craft is assembling all these fragments into a more complete picture--often over time.
The ultimate prize in emerging market investing, Lightbown emphasizes, is the medium-sized company with a solid position in its economy that is on the way to becoming a big company, and eventually a regional or world-class company through a combination of organized growth and intelligent allocation of free cash flow. Find that-- another Andina, say-- stay with it, and youll make a huge killing: a hundred for one, even. Dont spend too much time looking for minor opportunities.
One must examine the barriers to entry in the particular arena a company is operating in and appraise how these are likely to persist. That should lead to the question: Why is a company doing well? Is it in the right place at the right time? Is it doing something so well that others cant keep up? This applies particularly in emerging markets. One often encounters a company with a large market share in an attractive sector. One must then determine whether this is due to its acumen and energy, or just because powerful competition-- from strong multinationals, for instance-- hasnt arrived yet. What will happen to profit margins when it does?
Patience is a central trait of the good investor. Dont worry if the stock hasnt gone up yet, as long as the business continues to thrive. This attitude explains a singular feature of Lightbowns portfolio management: His turnover is only about 15% a year-- as low as it gets.
Credits: Much of this article is extracted from Money Masters of Our Time (John Train, 2000).
Mark Lightbown, who runs Londons Genesis Chile Fund, has intermittently held the title of being the worlds most successful emerging market investment manager, among those operating in the classic style. Lightbown was born in London, son of an art scholar, and attended Christ Church, Oxford, where he studied French and German. Thereafter he relinquished the world of scholarship and art in favor of a career in investments, holding positions at Morgan Grenfell and Templeton in London, whence he was recruited by the Genesis family of emerging markets funds to launch a Chile Fund.
Good Countries
Good companies are the foundation of investment, but in evaluating a promising country, Lightbown likes to check that the president and the congress are in alignment. For instance, when Menen, newly elected president of Argentina, resolved to free the economy from the controls and restrictive practices of his Peronist predecessors, he had control over a congress that was prepared for these steps. Good ideas about structural economic reform are not enough: the individuals advancing them must have consistent political backing.
A country with abundant natural resources may well have trouble developing consistently, since it may focus its attention on extracting and redistributing what is already there, rather than on creating new wealth. The agent of change in a country must come from within an existing political grouping, but be quite different from that groupings traditional policies. This is a striking insight. One can turn to Argentina or Russia: Menem was an old Peronist, and Gorbachev and Yeltsin were Communists; each recognized the bankruptcy of those doctrines.
The people in a good country must want to save and invest, rather than spend money on more Mercedes. Lightbown cites the example of Chile in the 1980s: The country enjoyed a large trade surplus, which, he observes, is really a form of national savings. The educational level in a good country must be high. People must be confident that better ways of doing things can be found, be confident enough to want to act on them, and have a sufficient supply of educated people to do so. Not having sharply different ethnic groups is a considerable advantage. A relatively homogeneous population is more likely to advance together toward common goals, rather than quarrel internally.
One requires mechanisms for stimulating and channeling domestic savings, so as to avoid being reliant on the kindness of strangers in order to finance growth. A developing country needs a high savings and investment rate to install the highways, metro systems, airfields, plumbing, and power plants that we, since previous generations paid for them, take for granted.
A system to permit capital movement should already be in place, however primitive it may be, rather than having to be created. For instance, there must be a banking system that at least knows how to take deposits and possesses credit analysis skills, however crude. A legal system that one can live with should have been created.
In a propitious country for investment, the government must keep its hands off business. It should not run enterprises directly, or impose price controls, or dictate how businesses acquire capital or recruit labor. All these practices militate against the principle that things should be done better in the future than they are being done already, which is how productivity rises and new wealth is created.
Another criterion Lightbown seeks is that a country should have low, stable tax rates. They should give the incentives needed to retain profits for reinvestment, without skewing the location of plants or development of industry by providing incentives for irrational investment. Low tax rates, he believes, may be more appropriate for a rapidly growing than for a mature economy, in which very low tax rates may be an incentive to misallocate capital. Labor must be deregulated, since this makes it possible to pay workers according to their productivity, rather than according to legal privileges that they have acquired but that may not help the company or the economy.
Good Companies
It is, of course, essential for an investor to talk to company managements. Most executives tell the truth most of the time, if a question is phrased to be neutral. One needs to be a good listener. Also, though, one should ask the backers of the company, or bankers and brokers, about the reputation of the owners and managers. Are these people straight or not? To learn about a business or a sector, talk to people in the private equity or deal business, since they know about a company and its competition--listed and unlisted--in a way that mere financial agents usually dont. To understand a specific company, one must go up and down it: Talk to owners, the managers, and workers in the plant. Central to the process is casting a wide net to gather many pieces of information. Much of the investment craft is assembling all these fragments into a more complete picture--often over time.
The ultimate prize in emerging market investing, Lightbown emphasizes, is the medium-sized company with a solid position in its economy that is on the way to becoming a big company, and eventually a regional or world-class company through a combination of organized growth and intelligent allocation of free cash flow. Find that-- another Andina, say-- stay with it, and youll make a huge killing: a hundred for one, even. Dont spend too much time looking for minor opportunities.
One must examine the barriers to entry in the particular arena a company is operating in and appraise how these are likely to persist. That should lead to the question: Why is a company doing well? Is it in the right place at the right time? Is it doing something so well that others cant keep up? This applies particularly in emerging markets. One often encounters a company with a large market share in an attractive sector. One must then determine whether this is due to its acumen and energy, or just because powerful competition-- from strong multinationals, for instance-- hasnt arrived yet. What will happen to profit margins when it does?
Patience is a central trait of the good investor. Dont worry if the stock hasnt gone up yet, as long as the business continues to thrive. This attitude explains a singular feature of Lightbowns portfolio management: His turnover is only about 15% a year-- as low as it gets.
Credits: Much of this article is extracted from Money Masters of Our Time (John Train, 2000).
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 6
MONEY MASTERS: BENJAMIN GRAHAM
Benjamin Graham was the greatest investment theorist of his day. He loved mathematics and his approach to investment is mathematical, or quantitative in nature. In fact, he may well have been concerned with security analysis primarily as a branch of mathematics. Certainly no earlier investment thinker approached the subject solely through figures, without concern for the quality of the business or the character of management.
Grams magnum opus is his Security Analysis. More useful for almost all readers, however, is The Intelligent Investor. Almost every investor should read its three hundred pages. Graham can give a feeling for investment reality. Most of what you hear in Wall Street is blather; Graham helps you see it all in perspective and sense where to look for objective truth.
Benjamin Graham (originally Grossbaum) came to New York from England with his parents in 1895 when he was a year old. He grew up in Manhattan and Brooklyn, the youngest of three boys. After the death of his father, when Ben was nine, the family was quite poor--which likely accounts for Bens subsequent preoccupation with achieving financial security. Ben attended Columbia University in the class of 1914 and was offered a teaching fellowship in English and Mathematics, but chose to work as a messenger in Wall Street for Newburger, Henderson & Loeb. He soon progressed to doing write-ups and analyses, and during this period he married the first of three wives. By 1917 he was earning respect as an analyst and was published in several financial magazines. He became a partner of the firm in 1920.
By Wall Street standards, Graham had unusually wide interests: the Greek and Latin classics, philosophy, languages, and Marcus Aurelius. Graham was wiped out by the 1929 Great Crash, but persisted and later distinguished himself as an investor and investment manager. From 1928 to 1956, he taught a popular evening course at Columbia Business School. In 1934, with Professor David L. Dodd, he published the monumental Security Analysis, a basic text for serious students of investing. In 1944, Graham published Storage and Stability, offering a plan to stabilize food surpluses, world commodities, and world currencies. The Interpretation of Financial Statements, an excellent book, appeared in 1947, and in 1949 The Intelligent Investor, his most useful book for the nonspecialist.
Just Show Me the Balance Sheet
All his professional life, Graham sought explainable, specific teachniques that he could teach to others to enable them to select safe and profitable investments. He wanted a method that was entirely quantitative, that did not depend on things one couldnt be sure about, such as social trends, a companys future success in bringing out new products, or quality of management. In other words, the antithesis of T. Rowe Prices futurology approach. He also wanted a method that could be used by anybody, and that therefore depended entirely on readily available published material, particularly the companys own reports.
In 1976, Graham and his collaborators finished calculating the application of his simplified criteria of a bargain stock over the fifty years since 1925. Graham described his bargain stock selections as:
My first, more limited, technique confines itself to the purchase of common stocks at less than their working-capital value, or net-current-asset value, giving no weight to the plant and other fixed assets, and deducting all liabilities in full from the current assets. We used this approach extensively in managing investment funds, and over a thirty-odd-year period, we must have earned an average of some 20% per year from this source. For a while, however, after the mid-1950s, this brand of buying opportunity became very scarce because of the pervasive bull market. But it has returned in quantity since the 1973-1974 decline. In January 1976 we counted over 100 such issues in the Standard & Poors Stock Guide--about 10% of the total. I consider it a foolproof method of systematic investment--once again, not on the basis of individual results but in terms of the expectable group outcome.
This approach consists of buying groups of stocks at less than their current or intrinsic value as indicated by one or more simple criteria. The criterion I prefer is seven times the reported earnings for the past twelve months. You can use others-- such as a current dividend return above 7%, or book value more than 120% of price, etc. We are just finishing a performance study of these approaches over the past half-century-- 1925-75. They consistently show results of 15% or better per annum, or twice the record of the DJIA for this long period. I have every confidence in the threefold merit of this general method based on (a) sound logic, (b) simplicity of application, and (c) an excellent supporting record. At bottom it is a technique by which true investors can exploit the recurrent excessive optimism and excessive apprehension of the speculative public.
In 1976, Graham and his collaborators finished calculating the application of his simplified criteria of a bargain stock over the fifty years since 1925. They established that besides his traditional criterion:
Criterion #1
A stock should be bought for less than two-thirds of its net current assets giving no weight to fixed assets and deducting all liabilities in full, and sold at 100% of net current assets.
Criterion #2
The company should owe less than its worth. That is, the debt-to-tangible-equity ratio should be less than 1, counting preferred stock as debt; and
The earnings yield (that is, the reciprocal of the price-earnings ratio) should be twice the prevailing AAA bond yield. Thus, if a stock sells for ten times earnings it has a 10% earnings yield, if it sells for five times earnings it has a 20% earnings yield, and so on. So if AAA bonds yield 5% you can afford to buy a stock at a 10% earnings yield (or ten times earnings). If AAA bond yields 10%, a stock must have an earnings yield of twice that, 20%, or no more than five times earnings.
Criterion #3
The company should owe less than it is worth; and
The dividend yield should be no less than two-thirds of AAA bond yields. Thus, if AAA bonds yield 6%, then a stock should yield at least 4%. If AAA bonds yield 9%, then the stock should yield at least 6%.
Rules for selling were simplified to the following:
Sell after your stock has gone up 50%;
If criterion #1 has not yet been met, sell after two years.
Sell if the dividend is omitted.
Sell when earnings decline so far that the current market price is 50% over the new target buying price. (In other words, selling rule #1 applied to a hypothetical new purchase.)
Credits: Much of this article is extracted from Money Masters Of Our Time (John Train, 2000).
Benjamin Graham was the greatest investment theorist of his day. He loved mathematics and his approach to investment is mathematical, or quantitative in nature. In fact, he may well have been concerned with security analysis primarily as a branch of mathematics. Certainly no earlier investment thinker approached the subject solely through figures, without concern for the quality of the business or the character of management.
Grams magnum opus is his Security Analysis. More useful for almost all readers, however, is The Intelligent Investor. Almost every investor should read its three hundred pages. Graham can give a feeling for investment reality. Most of what you hear in Wall Street is blather; Graham helps you see it all in perspective and sense where to look for objective truth.
Benjamin Graham (originally Grossbaum) came to New York from England with his parents in 1895 when he was a year old. He grew up in Manhattan and Brooklyn, the youngest of three boys. After the death of his father, when Ben was nine, the family was quite poor--which likely accounts for Bens subsequent preoccupation with achieving financial security. Ben attended Columbia University in the class of 1914 and was offered a teaching fellowship in English and Mathematics, but chose to work as a messenger in Wall Street for Newburger, Henderson & Loeb. He soon progressed to doing write-ups and analyses, and during this period he married the first of three wives. By 1917 he was earning respect as an analyst and was published in several financial magazines. He became a partner of the firm in 1920.
By Wall Street standards, Graham had unusually wide interests: the Greek and Latin classics, philosophy, languages, and Marcus Aurelius. Graham was wiped out by the 1929 Great Crash, but persisted and later distinguished himself as an investor and investment manager. From 1928 to 1956, he taught a popular evening course at Columbia Business School. In 1934, with Professor David L. Dodd, he published the monumental Security Analysis, a basic text for serious students of investing. In 1944, Graham published Storage and Stability, offering a plan to stabilize food surpluses, world commodities, and world currencies. The Interpretation of Financial Statements, an excellent book, appeared in 1947, and in 1949 The Intelligent Investor, his most useful book for the nonspecialist.
Just Show Me the Balance Sheet
All his professional life, Graham sought explainable, specific teachniques that he could teach to others to enable them to select safe and profitable investments. He wanted a method that was entirely quantitative, that did not depend on things one couldnt be sure about, such as social trends, a companys future success in bringing out new products, or quality of management. In other words, the antithesis of T. Rowe Prices futurology approach. He also wanted a method that could be used by anybody, and that therefore depended entirely on readily available published material, particularly the companys own reports.
In 1976, Graham and his collaborators finished calculating the application of his simplified criteria of a bargain stock over the fifty years since 1925. Graham described his bargain stock selections as:
My first, more limited, technique confines itself to the purchase of common stocks at less than their working-capital value, or net-current-asset value, giving no weight to the plant and other fixed assets, and deducting all liabilities in full from the current assets. We used this approach extensively in managing investment funds, and over a thirty-odd-year period, we must have earned an average of some 20% per year from this source. For a while, however, after the mid-1950s, this brand of buying opportunity became very scarce because of the pervasive bull market. But it has returned in quantity since the 1973-1974 decline. In January 1976 we counted over 100 such issues in the Standard & Poors Stock Guide--about 10% of the total. I consider it a foolproof method of systematic investment--once again, not on the basis of individual results but in terms of the expectable group outcome.
This approach consists of buying groups of stocks at less than their current or intrinsic value as indicated by one or more simple criteria. The criterion I prefer is seven times the reported earnings for the past twelve months. You can use others-- such as a current dividend return above 7%, or book value more than 120% of price, etc. We are just finishing a performance study of these approaches over the past half-century-- 1925-75. They consistently show results of 15% or better per annum, or twice the record of the DJIA for this long period. I have every confidence in the threefold merit of this general method based on (a) sound logic, (b) simplicity of application, and (c) an excellent supporting record. At bottom it is a technique by which true investors can exploit the recurrent excessive optimism and excessive apprehension of the speculative public.
In 1976, Graham and his collaborators finished calculating the application of his simplified criteria of a bargain stock over the fifty years since 1925. They established that besides his traditional criterion:
Criterion #1
A stock should be bought for less than two-thirds of its net current assets giving no weight to fixed assets and deducting all liabilities in full, and sold at 100% of net current assets.
Criterion #2
The company should owe less than its worth. That is, the debt-to-tangible-equity ratio should be less than 1, counting preferred stock as debt; and
The earnings yield (that is, the reciprocal of the price-earnings ratio) should be twice the prevailing AAA bond yield. Thus, if a stock sells for ten times earnings it has a 10% earnings yield, if it sells for five times earnings it has a 20% earnings yield, and so on. So if AAA bonds yield 5% you can afford to buy a stock at a 10% earnings yield (or ten times earnings). If AAA bond yields 10%, a stock must have an earnings yield of twice that, 20%, or no more than five times earnings.
Criterion #3
The company should owe less than it is worth; and
The dividend yield should be no less than two-thirds of AAA bond yields. Thus, if AAA bonds yield 6%, then a stock should yield at least 4%. If AAA bonds yield 9%, then the stock should yield at least 6%.
Rules for selling were simplified to the following:
Sell after your stock has gone up 50%;
If criterion #1 has not yet been met, sell after two years.
Sell if the dividend is omitted.
Sell when earnings decline so far that the current market price is 50% over the new target buying price. (In other words, selling rule #1 applied to a hypothetical new purchase.)
Credits: Much of this article is extracted from Money Masters Of Our Time (John Train, 2000).
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 7
MONEY MASTERS: RICHARD RAINWATER
Richard Rainwaters investing style resembles few other superinvestors. First, he peers into the future to discern a promising area and tries to visualize an enterprise that would succeed in it. Then, he makes a few concentrated investments in the sector. Then he does not necessarily sit back and wait patiently, but is willing to climb aboard the companies he has invested in, forcefully molding them, hiring and firing, refinancing, merging, until the resulting enterprise approaches his original vision.
So, while most investors look for outstanding management and then ride with it, taking a passive attitude, Rainwater begins with an investment conception and then acts as an investor/consultant/merchant banker. In his career investing on his own, Richard Rainwater enjoyed a net compound annual rate of return of 26% even after a disastrous 1998 (only his second bad year in a 16-year run that started with his first five years of annual returns over 70%).
Before Rainwater went out on his own, his great early success was managing the fortune of the famous Bass family of Fort Worth, Texas; during those years their assets grew a hundredfold, from $50m to several billion. Since leaving the Basses and becoming independent, Rainwater has focused mostly on three industries: oil and gas, real estate, and health care. In doing so, he has accumulated a net worth as of early 1999 of somewhere around US$1 billion.
Rainwater was an outstanding mathematics and physics student at the University of Texas and gained a scholarship to Stanford Business School. By his graduation in 1968 he had resolved to make a fortune. He materialized one day without an appointment at Goldman Sachs in New York, announcing, Ive done well in school. Gotten essentially all As. For me, working for Goldman Sachs could be the next step in living the American Dream. Rainwater was eventually hired to sell securities in Dallas. In their first year, he and a partner generated $1.2 million in commissions, of which their share was 16%.
Before long the Stanford connection paid off. He had taken several classes with young Sid Bass, the eldest son of Perry Bass, whose uncle had amassed a vast fortune drilling wildcat oil wells. Sid needed someone to help invest the family money, and Rainwater was available. They sank some $20 million into various propositions and briskly dropped $3 million of it. All the early deals lost money. Rainwater realized that he needed to develop a clear strategy and a systematic methodology. So at age 26, he went on a walkabout, calling on Charles Allen, Warren Buffett, and Philip Fisher. He was looking for a style that was consistently rewarding, rather than being inconsistent and hard to operate, and one that was appropriate to his skill set.
One of his most important conclusions was that to succeed you must specialize. You should identify, and then be around, areas where practically everybody is successful, over and over again. He encountered not a few where investors seemed successful, but where nobody in the field was really prospering massively. At the end of his quest, Rainwater concluded that there were a number of attractive sectors that he should propose to the Basses, including real estate, arbitrage, and hedge funds, but above all, they should narrow their focus, stick close to their knitting. Having accepted these ideas and establishing a winning technique, they made a magnificent fortune out of a relatively modest initial capital.
Developing a Strategy
During his years with the Basses, Rainwater developed the strategy he followed for the rest of his investment career. It has six key parts:
Target a major industry in disrepute thats due for a change. His aim is to find opportunity and value. Rainwater feels no particular need to be an expert himself on an industry before buying into it. He thinks on a grand scale: Im interested in large industries and in companies that offer products the whole world needs, he says.
Find a particularly attractive company or a sector within the industry. Rainwater calls this the opportunity within the opportunity. With oil prices depressed, Rainwater looked for drilling companies; in the health care industry, he focused on hospitals whose occupancy rate could be increased and whose doctors would have a share in ownership; his real estate holdings center almost entirely on a few areas of the Southwest.
He also uses a different strategy-- what in Wall Street lingo might be called a filter-- that became extremely successful: Find a company with a long-term, sustainable competitive advantage, or what some call an impregnable business franchise. Disney fell into this category because it has unique assets-- its theme parks and cartoon characters.
Find a world-class player to run the show. Rather than try to become an expert in each industry, Rainwater consults experts to find the right manager (or managers) to revive the company. He will then call a good man and say, You take it. Sometimes, however, he will do it himself, to try to put meat on the bones of his idea.
Never enter an investment alone. For every private investment Rainwater sets up a partnership, usually including trusted colleagues he has worked with in the past, and probably experts in the chosen industry. Generally, one of the group runs the operation. This is an unusual attitude. Most venture capitalists want to be able to impose hard decisions when necessary, without much consultation.
Improve the risk-reward ratio through financial engineering. Rainwater bought the forty-story office tower where he works in Texas from Ray Hunt, of the Hunt family. Hunt had spent between $140 and $160 million on it; Rainwater scooped it up for just $64 million, using a $55 million floating-rate loan that cost him less than 6%.
Healthcare Opportunity
Rainwater often forced rapid expansion of his acquisitions by a familiar technique: Create a high-priced stock, then use it as a currency to buy properties. This was demonstrated perfectly with Rainwaters Columbia Hospital Corp formed in 1987. American hospitals ordinarily ran at about 45% of capacity, yet everybody stayed in the business. He knew that increasing cost-consciousness was putting pressure on hospitals. Why shouldnt they try to achieve the same efficiency standards as other businesses? Rainwater identified Richard Scott as a world-class player to partner with. Each contributed $125,000 and they borrowed $61 million and purchased two El Paso, Texas hospitals to launch Columbia.
After Columbias IPO, Rainwater used Columbia stock that was selling at 8-times cash flow to buy additional hospitals selling for 5-times cash flow. They bought at a furious speed, seeking market consolidation by acquiring several hospitals in a given region, notably the Southeast, then closing down some locations and referring patients to the others. They also slashed costs. Within 4 months of buying a 4-hospital chain in San Jose, California, in 1996 they cut or reduced the hours of 890 of 4,500 jobs. Based on their centralized purchasing power, they sought and received huge discounts on equipment and supplies. By 1997, Columbia was a 347-hospital chain. Rainwaters investment had ballooned to $300 million.
Real Estate Opportunity
By the late 1980s, everyone was selling off real estate in the Texas sunbelt as fast as possible. By then, Rainwater was in a position to snap up many hotel, property, and land development assets at 30 to 35 cents on the dollar. His reasoning was that although many Texas developers had gone belly up, along with the savings and loans that had lent to them, the buildings had in fact been built, the depositors repaid, and the thrifts sold and reopened. With no corporate or personal income taxes, Texas was a prime location.
His first bargain was the 40-story dark-green glass Continental Plaza he bought from the Hunts in 1990. Within two years he raised occupancy from 77% to 90%-- partly by occupying the building with tenants from his own ventures, such as Columbia. In 1994, Rainwater moved into high gear, forming a REIT called Crescent Real Estate Equities. He raised $350 million in an IPO and went public at $25 a share. His reputation was such that he could take Crescent public mainly on his promise to build the company. Crescent was essentially a blind pool.
Rainwater invested $35 million of his own sweat equity in what became 14 million shares of Crescent, which started with 5 office properties, a retail project, and stakes in 3 residential developments. Within 3 years, it bought almost $4 billion in properties, most of them at large discounts: 89 office buildings and 7 retail properties, plus stakes in 97 cold storage warehouses, 90 psychiatric hospitals, 7 hotels, 2 spas, and 5 residential developments. Over the same time its funds from operations rose 370% and its share price 215%. Most of Crescents cash flow comes from office and retail properties, two-thirds of which are in the Dallas/Fort Worth area. Rainwater succeeded in Crescent by buying high-quality office buildings located in the energy belt at low prices. He foresaw that local conditions would improve, despite falling oil prices, and that he could raise rents. By September 1997, his holding in Crescent was worth $426 million.
Credits: Much of this article was extracted from the book, Money Masters of Our Time (John Train, 2000).
Richard Rainwaters investing style resembles few other superinvestors. First, he peers into the future to discern a promising area and tries to visualize an enterprise that would succeed in it. Then, he makes a few concentrated investments in the sector. Then he does not necessarily sit back and wait patiently, but is willing to climb aboard the companies he has invested in, forcefully molding them, hiring and firing, refinancing, merging, until the resulting enterprise approaches his original vision.
So, while most investors look for outstanding management and then ride with it, taking a passive attitude, Rainwater begins with an investment conception and then acts as an investor/consultant/merchant banker. In his career investing on his own, Richard Rainwater enjoyed a net compound annual rate of return of 26% even after a disastrous 1998 (only his second bad year in a 16-year run that started with his first five years of annual returns over 70%).
Before Rainwater went out on his own, his great early success was managing the fortune of the famous Bass family of Fort Worth, Texas; during those years their assets grew a hundredfold, from $50m to several billion. Since leaving the Basses and becoming independent, Rainwater has focused mostly on three industries: oil and gas, real estate, and health care. In doing so, he has accumulated a net worth as of early 1999 of somewhere around US$1 billion.
Rainwater was an outstanding mathematics and physics student at the University of Texas and gained a scholarship to Stanford Business School. By his graduation in 1968 he had resolved to make a fortune. He materialized one day without an appointment at Goldman Sachs in New York, announcing, Ive done well in school. Gotten essentially all As. For me, working for Goldman Sachs could be the next step in living the American Dream. Rainwater was eventually hired to sell securities in Dallas. In their first year, he and a partner generated $1.2 million in commissions, of which their share was 16%.
Before long the Stanford connection paid off. He had taken several classes with young Sid Bass, the eldest son of Perry Bass, whose uncle had amassed a vast fortune drilling wildcat oil wells. Sid needed someone to help invest the family money, and Rainwater was available. They sank some $20 million into various propositions and briskly dropped $3 million of it. All the early deals lost money. Rainwater realized that he needed to develop a clear strategy and a systematic methodology. So at age 26, he went on a walkabout, calling on Charles Allen, Warren Buffett, and Philip Fisher. He was looking for a style that was consistently rewarding, rather than being inconsistent and hard to operate, and one that was appropriate to his skill set.
One of his most important conclusions was that to succeed you must specialize. You should identify, and then be around, areas where practically everybody is successful, over and over again. He encountered not a few where investors seemed successful, but where nobody in the field was really prospering massively. At the end of his quest, Rainwater concluded that there were a number of attractive sectors that he should propose to the Basses, including real estate, arbitrage, and hedge funds, but above all, they should narrow their focus, stick close to their knitting. Having accepted these ideas and establishing a winning technique, they made a magnificent fortune out of a relatively modest initial capital.
Developing a Strategy
During his years with the Basses, Rainwater developed the strategy he followed for the rest of his investment career. It has six key parts:
Target a major industry in disrepute thats due for a change. His aim is to find opportunity and value. Rainwater feels no particular need to be an expert himself on an industry before buying into it. He thinks on a grand scale: Im interested in large industries and in companies that offer products the whole world needs, he says.
Find a particularly attractive company or a sector within the industry. Rainwater calls this the opportunity within the opportunity. With oil prices depressed, Rainwater looked for drilling companies; in the health care industry, he focused on hospitals whose occupancy rate could be increased and whose doctors would have a share in ownership; his real estate holdings center almost entirely on a few areas of the Southwest.
He also uses a different strategy-- what in Wall Street lingo might be called a filter-- that became extremely successful: Find a company with a long-term, sustainable competitive advantage, or what some call an impregnable business franchise. Disney fell into this category because it has unique assets-- its theme parks and cartoon characters.
Find a world-class player to run the show. Rather than try to become an expert in each industry, Rainwater consults experts to find the right manager (or managers) to revive the company. He will then call a good man and say, You take it. Sometimes, however, he will do it himself, to try to put meat on the bones of his idea.
Never enter an investment alone. For every private investment Rainwater sets up a partnership, usually including trusted colleagues he has worked with in the past, and probably experts in the chosen industry. Generally, one of the group runs the operation. This is an unusual attitude. Most venture capitalists want to be able to impose hard decisions when necessary, without much consultation.
Improve the risk-reward ratio through financial engineering. Rainwater bought the forty-story office tower where he works in Texas from Ray Hunt, of the Hunt family. Hunt had spent between $140 and $160 million on it; Rainwater scooped it up for just $64 million, using a $55 million floating-rate loan that cost him less than 6%.
Healthcare Opportunity
Rainwater often forced rapid expansion of his acquisitions by a familiar technique: Create a high-priced stock, then use it as a currency to buy properties. This was demonstrated perfectly with Rainwaters Columbia Hospital Corp formed in 1987. American hospitals ordinarily ran at about 45% of capacity, yet everybody stayed in the business. He knew that increasing cost-consciousness was putting pressure on hospitals. Why shouldnt they try to achieve the same efficiency standards as other businesses? Rainwater identified Richard Scott as a world-class player to partner with. Each contributed $125,000 and they borrowed $61 million and purchased two El Paso, Texas hospitals to launch Columbia.
After Columbias IPO, Rainwater used Columbia stock that was selling at 8-times cash flow to buy additional hospitals selling for 5-times cash flow. They bought at a furious speed, seeking market consolidation by acquiring several hospitals in a given region, notably the Southeast, then closing down some locations and referring patients to the others. They also slashed costs. Within 4 months of buying a 4-hospital chain in San Jose, California, in 1996 they cut or reduced the hours of 890 of 4,500 jobs. Based on their centralized purchasing power, they sought and received huge discounts on equipment and supplies. By 1997, Columbia was a 347-hospital chain. Rainwaters investment had ballooned to $300 million.
Real Estate Opportunity
By the late 1980s, everyone was selling off real estate in the Texas sunbelt as fast as possible. By then, Rainwater was in a position to snap up many hotel, property, and land development assets at 30 to 35 cents on the dollar. His reasoning was that although many Texas developers had gone belly up, along with the savings and loans that had lent to them, the buildings had in fact been built, the depositors repaid, and the thrifts sold and reopened. With no corporate or personal income taxes, Texas was a prime location.
His first bargain was the 40-story dark-green glass Continental Plaza he bought from the Hunts in 1990. Within two years he raised occupancy from 77% to 90%-- partly by occupying the building with tenants from his own ventures, such as Columbia. In 1994, Rainwater moved into high gear, forming a REIT called Crescent Real Estate Equities. He raised $350 million in an IPO and went public at $25 a share. His reputation was such that he could take Crescent public mainly on his promise to build the company. Crescent was essentially a blind pool.
Rainwater invested $35 million of his own sweat equity in what became 14 million shares of Crescent, which started with 5 office properties, a retail project, and stakes in 3 residential developments. Within 3 years, it bought almost $4 billion in properties, most of them at large discounts: 89 office buildings and 7 retail properties, plus stakes in 97 cold storage warehouses, 90 psychiatric hospitals, 7 hotels, 2 spas, and 5 residential developments. Over the same time its funds from operations rose 370% and its share price 215%. Most of Crescents cash flow comes from office and retail properties, two-thirds of which are in the Dallas/Fort Worth area. Rainwater succeeded in Crescent by buying high-quality office buildings located in the energy belt at low prices. He foresaw that local conditions would improve, despite falling oil prices, and that he could raise rents. By September 1997, his holding in Crescent was worth $426 million.
Credits: Much of this article was extracted from the book, Money Masters of Our Time (John Train, 2000).
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 8
MONEY MASTERS: PHILIP FISHER
Philip Fisher began his investing career with a San Francisco bank, but in 1931 ventured out on his own confident that all investors would be looking for a new advisor with the 1929 Great Depression crash still fresh in their minds. Fisher built his early portfolio around just four stocks: FMC, Dow Chemical, Texas Instruments, and Motorola. He didnt want a lot of investments, just a few outstanding ones.
Fishers general feeling about investments that are of interest to him is that the company in question should combine outstanding business management with a strong technological lead in most of what it does. Fishers key idea is that you can make a lot of money by investing in an outstanding enterprise and holding it for years and years as it becomes bigger and better. At the end your share in the enterprise is worth a great deal more than at the beginning. Almost certainly the market price of your share will rise to reflect its higher intrinsic worth. And certainly you should concentrate on growth in intrinsic worth: without that theres no reason for the stock to go up at all.
He ridicules short-term thinking. Pursuing short-term goals Fisher regards as almost the worst possible mistake for a company. He therefore insists that management must first and foremost be working to build the company over the long-term. Growth happens because management is profoundly dedicated to bringing it about and directs all its activities to that objective, and as long as it does this successfully, the investor can stay on board.
One of Fishers most notable utterances is on this subject: If the job has been correctly done when a common stock is purchased, the time to sell it is-- almost never. He gives two exceptions: first, if it turns out that you made a mistake in your original appraisal; second, if the company ceases to qualify under the same appraisal method. The old management may lose its drive or newer management may not be as able. Alternatively, a company may get so big in its own market that it cannot do much better than its industry, or indeed than the economy as a whole.
A third exception, which Fisher considers rarely valid, is that you discover a particularly attractive new opportunity-- such as a company with great promise of a sustained 20% annual earnings gain-- and, to buy it, you decide to cut back on a holding with lesser growth prospects. However, you probably know less about the new company than the old one, about which you have been learning more and more for years, so there is a risk of making a mistake. You cannot, after all, know almost everything that could be important about more than a few companies. Those years of progressively greater familiarity, Fisher urges, should not be thrown away.
He also argues that you should not sell because you think that a stock is too high-priced-- has gotten ahead of itself-- or because the whole market is due for a slide. Selling for either reason implies that you are clever enough to buy the stock back more cheaply later. And in addition you have the capital gains tax to pay. After all, if you have chosen the company properly in the first place, with a reasonable prospect that in ten years, say, the stock will have tripled or quadrupled, is it so important that its 35% overpriced today? And theres always the possibility that the stock price reflects good news you dont know about yet.
Silliest of all, says Fisher, is selling out just because a stock has gone up a lot. The truly great company-- the only kind he is interested in buying-- will grow indefinitely, and its stock likewise. That it has advanced substantially since purchase only means that everything is going just as it should.
Fisher redefines the word conservative around this concept. To him, a conservative investor is one who makes his capital grow in a practical, realizable way, not in a way that cant succeed. People often describe large, well-known companies as conservative investments. But for Fisher, old and famous companies that have passed their prime and are losing ground in the jungle of international business are by no means conservative holdings. Rather, the conservative investor is one who owns winners: dynamic, well-managed enterprises that because they are well situated and do almost everything right continue to prosper, grow, and build value year after year. The owners of such companies dont have to worry about market fluctuations, since the underlying assets are building: Things are going the right way. Market recognition will follow.
Fishers first substantive chapter in his classic text, Common Stocks and Uncommon Profits dwells on the importance of scuttlebut-- which he also calls the business grapevine-- in investing. The theme recurs throughout his writing. In fact, Fisher suggests no other source of information for a number of the points he says a prudent investor must consider, such as management integrity, long-range planning, cost controls, and the effectiveness of a companys research program, all of which are hard to determine from the public figures.
Outstanding Companies
In his first book, Fisher describes fifteen characterists of an outstanding company, and in his second he touches on several more. I think one can discern about 20 in all, depending on what is considered a separate category. Though not presented consistently in Fishers two books, his criteria can be grouped under two main categories: qualities of management and characteristics of the business itself.
Characteristics of an attractive business include growth from existing products and from new ones; a high profit margin and return on capital, together with favorable trends for both; effective research; a superior sales organization; a leading industry position giving advantages of scale; and a valid franchise-- proprietary products or services.
Management characteristics include integrity, implying conservative accounting; accessibility; an orientation toward long-range results, if necessary at the expense of this quarters bottom line, without equity dilution; a recognition of the pervasiveness of change; excellent financial controls; multidisciplinary skills where appropriate; the special skills associated with particular industries; and good personnel policies, including continuing management training.
In discussing profit margins, Fisher makes a point that investors sometimes forget: Exceptionally high profit margins can be a honeypot to attract hungry competitors. The safest position may be to have only a small edge on the competition in profit margins, plus a higher turnover, because that leaves little incentive for new competition to move in on you. Fisher ridicules the notion, sometimes put forward by brokerage reports, that a statistically cheaper number two company may be a more attractive investment because it has greater possibilities. A fully installed dominant company-- a GE or Merck-- is exceedingly hard to displace, as long as management remains alert.
Fisher insists on integrity in management. Insiders have any number of opportunities to benefit themselves at their shareholders expense, both in material terms and by deceiving them about the prospects for the company. A greedy managements most common abuse is issuing itself overly generous stock options when the companys stock happens to be at a low point-- selling below book value, say. Time passes, the stock returns to a normal level, and through no merit of its own, management has extracted millions of dollars of value from the shareholders.
Fishers investing technique will be very difficult for most investors to emulate. He proposes three successive phases in analyzing a company properly: absorbing the available printed material, triangulating through business sources, and finally visits to management. Once convinced of the quality of the business and its management, Fisher further advises three buying points to accumulate shares: first, buy when the start-up period of a substantial new plant--which sometimes lasts for months and includes a special sales effort for the new product involved-- has depressed earnings and discouraged investors. Second, is on bad corporate news: a strike, a marketing error, or some other temporary misfortune.
The third opportunity to buy on favorable terms arises in a capital intensive industry, such as chemicals, where an unusually large investment in plant is required. Sometimes after a product has been in production for a while engineers figure out how to increase their output substantially by spending a relatively modest amount of additional capital. This may produce a significant improvement in the companys profits. Until the stock advances to reflect this prospect there should be a buying opportunity. Fisher also mentions that one should not hesitate to buy on a war scare. During this century, almost every time American forces have become engaged somewhere in the world, or there has been a serious danger that they would, the stock market has fallen, and every time it has recovered. Perhaps the same applies to a SARS scare.
Credits: Much of this article was extracted from the book, Money Masters of Our Time (John Train, 2000).
Philip Fisher began his investing career with a San Francisco bank, but in 1931 ventured out on his own confident that all investors would be looking for a new advisor with the 1929 Great Depression crash still fresh in their minds. Fisher built his early portfolio around just four stocks: FMC, Dow Chemical, Texas Instruments, and Motorola. He didnt want a lot of investments, just a few outstanding ones.
Fishers general feeling about investments that are of interest to him is that the company in question should combine outstanding business management with a strong technological lead in most of what it does. Fishers key idea is that you can make a lot of money by investing in an outstanding enterprise and holding it for years and years as it becomes bigger and better. At the end your share in the enterprise is worth a great deal more than at the beginning. Almost certainly the market price of your share will rise to reflect its higher intrinsic worth. And certainly you should concentrate on growth in intrinsic worth: without that theres no reason for the stock to go up at all.
He ridicules short-term thinking. Pursuing short-term goals Fisher regards as almost the worst possible mistake for a company. He therefore insists that management must first and foremost be working to build the company over the long-term. Growth happens because management is profoundly dedicated to bringing it about and directs all its activities to that objective, and as long as it does this successfully, the investor can stay on board.
One of Fishers most notable utterances is on this subject: If the job has been correctly done when a common stock is purchased, the time to sell it is-- almost never. He gives two exceptions: first, if it turns out that you made a mistake in your original appraisal; second, if the company ceases to qualify under the same appraisal method. The old management may lose its drive or newer management may not be as able. Alternatively, a company may get so big in its own market that it cannot do much better than its industry, or indeed than the economy as a whole.
A third exception, which Fisher considers rarely valid, is that you discover a particularly attractive new opportunity-- such as a company with great promise of a sustained 20% annual earnings gain-- and, to buy it, you decide to cut back on a holding with lesser growth prospects. However, you probably know less about the new company than the old one, about which you have been learning more and more for years, so there is a risk of making a mistake. You cannot, after all, know almost everything that could be important about more than a few companies. Those years of progressively greater familiarity, Fisher urges, should not be thrown away.
He also argues that you should not sell because you think that a stock is too high-priced-- has gotten ahead of itself-- or because the whole market is due for a slide. Selling for either reason implies that you are clever enough to buy the stock back more cheaply later. And in addition you have the capital gains tax to pay. After all, if you have chosen the company properly in the first place, with a reasonable prospect that in ten years, say, the stock will have tripled or quadrupled, is it so important that its 35% overpriced today? And theres always the possibility that the stock price reflects good news you dont know about yet.
Silliest of all, says Fisher, is selling out just because a stock has gone up a lot. The truly great company-- the only kind he is interested in buying-- will grow indefinitely, and its stock likewise. That it has advanced substantially since purchase only means that everything is going just as it should.
Fisher redefines the word conservative around this concept. To him, a conservative investor is one who makes his capital grow in a practical, realizable way, not in a way that cant succeed. People often describe large, well-known companies as conservative investments. But for Fisher, old and famous companies that have passed their prime and are losing ground in the jungle of international business are by no means conservative holdings. Rather, the conservative investor is one who owns winners: dynamic, well-managed enterprises that because they are well situated and do almost everything right continue to prosper, grow, and build value year after year. The owners of such companies dont have to worry about market fluctuations, since the underlying assets are building: Things are going the right way. Market recognition will follow.
Fishers first substantive chapter in his classic text, Common Stocks and Uncommon Profits dwells on the importance of scuttlebut-- which he also calls the business grapevine-- in investing. The theme recurs throughout his writing. In fact, Fisher suggests no other source of information for a number of the points he says a prudent investor must consider, such as management integrity, long-range planning, cost controls, and the effectiveness of a companys research program, all of which are hard to determine from the public figures.
Outstanding Companies
In his first book, Fisher describes fifteen characterists of an outstanding company, and in his second he touches on several more. I think one can discern about 20 in all, depending on what is considered a separate category. Though not presented consistently in Fishers two books, his criteria can be grouped under two main categories: qualities of management and characteristics of the business itself.
Characteristics of an attractive business include growth from existing products and from new ones; a high profit margin and return on capital, together with favorable trends for both; effective research; a superior sales organization; a leading industry position giving advantages of scale; and a valid franchise-- proprietary products or services.
Management characteristics include integrity, implying conservative accounting; accessibility; an orientation toward long-range results, if necessary at the expense of this quarters bottom line, without equity dilution; a recognition of the pervasiveness of change; excellent financial controls; multidisciplinary skills where appropriate; the special skills associated with particular industries; and good personnel policies, including continuing management training.
In discussing profit margins, Fisher makes a point that investors sometimes forget: Exceptionally high profit margins can be a honeypot to attract hungry competitors. The safest position may be to have only a small edge on the competition in profit margins, plus a higher turnover, because that leaves little incentive for new competition to move in on you. Fisher ridicules the notion, sometimes put forward by brokerage reports, that a statistically cheaper number two company may be a more attractive investment because it has greater possibilities. A fully installed dominant company-- a GE or Merck-- is exceedingly hard to displace, as long as management remains alert.
Fisher insists on integrity in management. Insiders have any number of opportunities to benefit themselves at their shareholders expense, both in material terms and by deceiving them about the prospects for the company. A greedy managements most common abuse is issuing itself overly generous stock options when the companys stock happens to be at a low point-- selling below book value, say. Time passes, the stock returns to a normal level, and through no merit of its own, management has extracted millions of dollars of value from the shareholders.
Fishers investing technique will be very difficult for most investors to emulate. He proposes three successive phases in analyzing a company properly: absorbing the available printed material, triangulating through business sources, and finally visits to management. Once convinced of the quality of the business and its management, Fisher further advises three buying points to accumulate shares: first, buy when the start-up period of a substantial new plant--which sometimes lasts for months and includes a special sales effort for the new product involved-- has depressed earnings and discouraged investors. Second, is on bad corporate news: a strike, a marketing error, or some other temporary misfortune.
The third opportunity to buy on favorable terms arises in a capital intensive industry, such as chemicals, where an unusually large investment in plant is required. Sometimes after a product has been in production for a while engineers figure out how to increase their output substantially by spending a relatively modest amount of additional capital. This may produce a significant improvement in the companys profits. Until the stock advances to reflect this prospect there should be a buying opportunity. Fisher also mentions that one should not hesitate to buy on a war scare. During this century, almost every time American forces have become engaged somewhere in the world, or there has been a serious danger that they would, the stock market has fallen, and every time it has recovered. Perhaps the same applies to a SARS scare.
Credits: Much of this article was extracted from the book, Money Masters of Our Time (John Train, 2000).
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 9
MONEY MASTERS: JOHN TEMPLETON
During the depression, while John Templeton was in his second year at Yale, his father told him that he couldnt give him any more money for his education. So Templeton worked his way through college with the aid of scholarships. After that he won a Rhodes scholarship and went to Oxford for two years, seeing Europe during his vacations. Then he came home to Tennessee, and thereafter migrated to New York, first as a trainee at Merrill Lynch, and after that in a seismic exploration company.
When World War II began, Templeton became convinced that the 10-year slump in stock prices was over and everything would boom-- especially the Cinderellas that nobody considered suitable investments. So one day he called his broker and told him to buy 100 shares of every single listed stock that was selling at less than $1. He got 104 corporate dogs for about $10,000. Four years later he sold the whole kennel for about $40,000-- around $1 million in todays money. His motto became: Never sell on war news.
That extraordinary transaction set the pattern for Templetons later ones. He insisted on buying only what was being thrown away. Also, he held the stocks he had bought for an average of four years, which usually gives a bargain enough time to be recognized, and a stock to move to a higher multiple of higher earnings-- the double play. He took his profits and bought a tiny investment counsel firm, which he built into a medium-sized one and sold to Piedmont Management. At age 56, John Templeton started all over again.
Templeton moved to the Carribbean island of Nassau, on the grounds of the Lyford Cay Club and built a white house in the Southern US style, with columns on all four sides. He focused his attention on managing his one tiny remaining Canadian fund, of which he and some of his old clients owned most of the shares. The record of this fund in the next years proved that John Templeton is one of the great investors. Over the 20 years ending 1978, a $1,000 investment in his Templeton Growth Fund grew to $20,000-- making it the top performer of all funds then in existance.
His investment selections range over many markets. He is quite as much at home in the Japanese and Canadian exchange as the NYSE. Perhaps most important of all, he did not need to stick with large, familiar names-- what trust companies call quality. An established small specialty company with fat profit margins selling for a low price-earnings ratio is often a safer investment-- if you are sure you have the facts right-- than a huge, mediocre, heavily unionized and regulated standard industrial that sells at a high price because everybody knows about it. Templeton would buy into dozens of little companies his clients had never heard of, and was prepared to take almost all the stock available. Managers of large portfolios avoid smaller companies. They fear-- rightly, on the whole-- that they cant efficiently learn enough about them. If they are dealing in big numbers, taking the time to master small situations doesnt pay.
Incidentally, the willingness to invest in many countries ties in with a willingness to buy junior stocks. Quite often the smaller, cheaper, faster-growing company is outside the United States. For instance, while US grocery market giant Safeway was selling at about 8-times earnings, with some hope of 15% growth in the future, Ito Yokado, the best-managed and second-largest supermarket chain in Japan, was at 10-times earnings, growing at 30%. Still, the advantage of internationalism, small size, and diversification into secondary names only set the stage for superior performance. They dont bring it about. So, what is Templetons technique? How does he do it?
Flexibility
Templetons basic philosophy can be stated in one sentence: Search among many markets for companies selling for the smallest fraction of their true worth. He is not content to buy a bargain. It must be the best bargain. Of course, many seeming bargains are nothing of the sort. So when he finds one, he studies it and restudies it, and only buys the stock when he is convinced the values are authentic. Even then, he ruefully admits, he makes constant mistakes. They are inevitable. But because he is heavily diversified, the damage is limited.
The best bargains will be in stocks that are completely neglected, that other investors are not even studying. That, of course, explains the proliferation of unfamiliar names in his portfolio. At some time almost anything is likely to become a bargain, if youre in a position to evaluate the neglected factor that will change things for the better. To perceive this factor you have to wear different glasses from those worn by others who dont like what they see. Templeton thinks that more than any other skill, the investor needs this ability to recognize unfamiliar values. He calls it flexibility. A flexible viewpoint is the professional investors greatest need, and will be increasingly so in the future.
Perspective
Templeton emphasizes the importance of trying to see the values that the public is overlooking. But how does the investor escape from the unending static of news and opinion, the surge and ebb of the passions of the crowd? One answer is experience. After 30 years of getting a bloody nose every time he jumps on a bandwagon, even the most enthusiastic investor attains some measure of detachment from the crowds enthusiasms and desperations.
Templeton has gone a step further, though, to make it as easy as possible for him to kep his perspective. The distance from his large, cool porticoed white house on its little hill overlooking the grounds of the Layford Cay to the roar and shouting on the floor of the stock exchange is measured in psychological light-years. The house itself and everything in it are in silent reproach to excitement and hyperactivity.
Good countries
How does Templeton decide which are the countries to invest in and which are not? Obviously, the ones to avoid are those that have conditions that make investment difficult or impossible: socialism and inflation. The two go together. Either stifles growth. In 1962, when Templeton first got interested in Japan, one could buy the leading companies at two or three times real earnings, with the benefit of extensive hidden assets that didnt appear on the balance sheet. American and European investors just couldnt believe their eyes, so the bargains persisted year after year: pharmaceutical companies growing 30% per year and selling for a third of the multiples of the comparable US companies.
Besides Japan, the United States, and Canada, Templeton considers only a few areas suitable for investment: Germany, Switzerland, the northern European countries, Spain, Australia, and New Zealand, Hong Kong, Singapore, and South Korea. He finds Brazil of great potential interest.
Technique
Templeton has a few outstanding sources of information for non-Japanese foreign securities, but since the true facts are not publicly available he depends on industry scuttlebut, insiders tips, and bankers indiscretions. Early in his carreer, Templeton made hundreds of personal visits to companies, going through the plants and sizing everything up. In recent years, however, he has rarely found this necessary. He has a standard list of questions he likes to ask management. One of the first is, Do you have a long-range plan? Then, What will be your average annual growth rate? If the target growth rate is higher than the historical one, he asks, Why should the future be different from the past? What are your problems? And then, a key point, Who is your ablest competitor? and the essential Why?
Finally, a question Templeton finds particularly enlightening: If you couldnt own stock in your company, which of your competitors would you want to invest in... and why? As you find out fast enough in security analysis, contact with a single company can mislead nearly as much as it informs. Management is obviously going to blow its own trumpet. If you visit most of the companies in an industry over a period of many years, you eventually develop an informed concept of the entire group. You learn which sources are reliable, which managements achieve their objectives, which company officers tend to make exaggerated claims. Particularly, even a few minutes with a companys chief conpetitor or a major supplier may be vastly instructive. Your informant can tell what he knows about a competitor, while he is not permitted to divulge inside information about his own company.
During the depression, while John Templeton was in his second year at Yale, his father told him that he couldnt give him any more money for his education. So Templeton worked his way through college with the aid of scholarships. After that he won a Rhodes scholarship and went to Oxford for two years, seeing Europe during his vacations. Then he came home to Tennessee, and thereafter migrated to New York, first as a trainee at Merrill Lynch, and after that in a seismic exploration company.
When World War II began, Templeton became convinced that the 10-year slump in stock prices was over and everything would boom-- especially the Cinderellas that nobody considered suitable investments. So one day he called his broker and told him to buy 100 shares of every single listed stock that was selling at less than $1. He got 104 corporate dogs for about $10,000. Four years later he sold the whole kennel for about $40,000-- around $1 million in todays money. His motto became: Never sell on war news.
That extraordinary transaction set the pattern for Templetons later ones. He insisted on buying only what was being thrown away. Also, he held the stocks he had bought for an average of four years, which usually gives a bargain enough time to be recognized, and a stock to move to a higher multiple of higher earnings-- the double play. He took his profits and bought a tiny investment counsel firm, which he built into a medium-sized one and sold to Piedmont Management. At age 56, John Templeton started all over again.
Templeton moved to the Carribbean island of Nassau, on the grounds of the Lyford Cay Club and built a white house in the Southern US style, with columns on all four sides. He focused his attention on managing his one tiny remaining Canadian fund, of which he and some of his old clients owned most of the shares. The record of this fund in the next years proved that John Templeton is one of the great investors. Over the 20 years ending 1978, a $1,000 investment in his Templeton Growth Fund grew to $20,000-- making it the top performer of all funds then in existance.
His investment selections range over many markets. He is quite as much at home in the Japanese and Canadian exchange as the NYSE. Perhaps most important of all, he did not need to stick with large, familiar names-- what trust companies call quality. An established small specialty company with fat profit margins selling for a low price-earnings ratio is often a safer investment-- if you are sure you have the facts right-- than a huge, mediocre, heavily unionized and regulated standard industrial that sells at a high price because everybody knows about it. Templeton would buy into dozens of little companies his clients had never heard of, and was prepared to take almost all the stock available. Managers of large portfolios avoid smaller companies. They fear-- rightly, on the whole-- that they cant efficiently learn enough about them. If they are dealing in big numbers, taking the time to master small situations doesnt pay.
Incidentally, the willingness to invest in many countries ties in with a willingness to buy junior stocks. Quite often the smaller, cheaper, faster-growing company is outside the United States. For instance, while US grocery market giant Safeway was selling at about 8-times earnings, with some hope of 15% growth in the future, Ito Yokado, the best-managed and second-largest supermarket chain in Japan, was at 10-times earnings, growing at 30%. Still, the advantage of internationalism, small size, and diversification into secondary names only set the stage for superior performance. They dont bring it about. So, what is Templetons technique? How does he do it?
Flexibility
Templetons basic philosophy can be stated in one sentence: Search among many markets for companies selling for the smallest fraction of their true worth. He is not content to buy a bargain. It must be the best bargain. Of course, many seeming bargains are nothing of the sort. So when he finds one, he studies it and restudies it, and only buys the stock when he is convinced the values are authentic. Even then, he ruefully admits, he makes constant mistakes. They are inevitable. But because he is heavily diversified, the damage is limited.
The best bargains will be in stocks that are completely neglected, that other investors are not even studying. That, of course, explains the proliferation of unfamiliar names in his portfolio. At some time almost anything is likely to become a bargain, if youre in a position to evaluate the neglected factor that will change things for the better. To perceive this factor you have to wear different glasses from those worn by others who dont like what they see. Templeton thinks that more than any other skill, the investor needs this ability to recognize unfamiliar values. He calls it flexibility. A flexible viewpoint is the professional investors greatest need, and will be increasingly so in the future.
Perspective
Templeton emphasizes the importance of trying to see the values that the public is overlooking. But how does the investor escape from the unending static of news and opinion, the surge and ebb of the passions of the crowd? One answer is experience. After 30 years of getting a bloody nose every time he jumps on a bandwagon, even the most enthusiastic investor attains some measure of detachment from the crowds enthusiasms and desperations.
Templeton has gone a step further, though, to make it as easy as possible for him to kep his perspective. The distance from his large, cool porticoed white house on its little hill overlooking the grounds of the Layford Cay to the roar and shouting on the floor of the stock exchange is measured in psychological light-years. The house itself and everything in it are in silent reproach to excitement and hyperactivity.
Good countries
How does Templeton decide which are the countries to invest in and which are not? Obviously, the ones to avoid are those that have conditions that make investment difficult or impossible: socialism and inflation. The two go together. Either stifles growth. In 1962, when Templeton first got interested in Japan, one could buy the leading companies at two or three times real earnings, with the benefit of extensive hidden assets that didnt appear on the balance sheet. American and European investors just couldnt believe their eyes, so the bargains persisted year after year: pharmaceutical companies growing 30% per year and selling for a third of the multiples of the comparable US companies.
Besides Japan, the United States, and Canada, Templeton considers only a few areas suitable for investment: Germany, Switzerland, the northern European countries, Spain, Australia, and New Zealand, Hong Kong, Singapore, and South Korea. He finds Brazil of great potential interest.
Technique
Templeton has a few outstanding sources of information for non-Japanese foreign securities, but since the true facts are not publicly available he depends on industry scuttlebut, insiders tips, and bankers indiscretions. Early in his carreer, Templeton made hundreds of personal visits to companies, going through the plants and sizing everything up. In recent years, however, he has rarely found this necessary. He has a standard list of questions he likes to ask management. One of the first is, Do you have a long-range plan? Then, What will be your average annual growth rate? If the target growth rate is higher than the historical one, he asks, Why should the future be different from the past? What are your problems? And then, a key point, Who is your ablest competitor? and the essential Why?
Finally, a question Templeton finds particularly enlightening: If you couldnt own stock in your company, which of your competitors would you want to invest in... and why? As you find out fast enough in security analysis, contact with a single company can mislead nearly as much as it informs. Management is obviously going to blow its own trumpet. If you visit most of the companies in an industry over a period of many years, you eventually develop an informed concept of the entire group. You learn which sources are reliable, which managements achieve their objectives, which company officers tend to make exaggerated claims. Particularly, even a few minutes with a companys chief conpetitor or a major supplier may be vastly instructive. Your informant can tell what he knows about a competitor, while he is not permitted to divulge inside information about his own company.
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 10
MONEY MASTERS OF OUR TIME: WARREN BUFFETT
In recent decades, Warren Buffett, once little known even in his hometown, has become the sage of Omaha, one of the most successful investors and richest men in America. His ups and downs-- mostly ups-- and even casual utterances make news in the business press.
Buffett started out as a disciple of Benjamin Graham, the most eminent theoretician of the value (as distinct from growth) technique of investing. He has edited Grahams The Intelligent Investor, an outstanding exposition of that technique. But when a disciple becomes in turn a master himself, or when times change, he rises above the previous orthodoxy and breaks new ground. As we will see, Buffett is no exception.
If you had put $10,000 in Buffetts original partnership at its inception in 1956, you would have collected about $267,691 by the time he dissolved it a the end of 1969. He had never suffered a down year, even in the severe bear markets of 1957, 1962, 1966, and 1969. When the partnership was would up, you could have elected to stay with Buffett as a shareholder of Berkshire Hathaway, Inc., which was spun off from the partnership and became Buffetts investing vehicle. In that event, your $10,000 would have grown to about $50 million by 2000.
The essence of Buffetts investment thinking is that the business world is divided into a tiny number of wonderful businesses--well worth investing in-- and a huge number of bad or mediocre businesses that are not attractive as long-term holdings. Most businesses are usually not worth what they are selling for, but on rare occasions the wonderful businesses are almost given away, based on current gloomy economic and stock market forecasts. When that happens, buy boldly! Buffett likes to sit with half a dozen or so core holdings plus a dozen or so held for possible resale. He characterizes traditional diversification as the Noahs Ark approach: You buy two of everything in sight and end up with a zoo instead of a portfolio.
For Buffett, the key to a good business is its business franchise-- the extent to which it is surrounded by a moat, so that another company cant muscle in to squeeze its prices and profits. The competitiveness built into the American economic system inhibits the creation of great franchises. Buffett explains, The test of a franchise is what a smart guy with a lot of money could do to it if he tried. If you gave me a billion dollars, and first draft pick of fifty business managers throughout the US, I could absolutely cream both the business world and the journalistic world. If you said, Go take the Wall Street Journal apart, I would hand you back the billion dollars. Reluctantly, but I would hand it back to you. The real test of a business is how much damage a competitor can do, even if he is stupid about returns. The trick is to find the ones that havent been identified by someone else.
The businesses that Buffett thinks are worth owning-- those with powerful franchises-- sometimes fall into the category he calls gross profits royalty companies, perhaps better called gross revenues royalty companies. These have included TV stations, newspapers, international advertising agencies, and the largest insurance brokerage companies. Other valid franchises Buffett has liked include insurance and reinsurance, financial companies such as Wells Fargo Bank and Freddie Mac, some specialized situations such as Sperry & Hutchison Green Stamps, furniture and jewelry retailing and candy manufacturing, but there arent many that enjoy both a substantial and a well-secured niche. In recent decades he has branched out of Graham-style value situations in favor of huge multinational consumer companies, such as Coca-Cola and Gillette, both surrounded by very deep and wide moats indeed.
What about buying and holding the bargain stocks listed in financial publications from time to time? Buffett is not too excited about their prospects longer-term saying, If you buy and hold on, you will do only about as well as the companies themselves do. Since they have a low return on capital, that means not outstandingly. To grow fast you need a high return on capital. So, you must be sure to sell a Graham investment at the right time, whereas you can hold on to a higher-growth company for as long as it goes on developing rapidly.
He thinks of a stock only as a fractional interest in a business and always begins by asking himself, How much would I pay for all of this company? And on that basis, what will I pay for 1% or 10% of it? There are very few companies he considers interesting enough to buy at all, and even those he will look at only when they are very unpopular. Then, if one knows for certain what the values really are, one can have the confidence to buy in the teeth of general gloom.
Buffetts Six Qualities of a Good Investor
You must be animated by controlled greed, and fascinated by the investment process. You must not, however, let greed take possession of you so that you become in a hurry. If you are too interested in money, you will kill yourself; if not interested enough, you wont go to the office. And you must enjoy the game.
You must have patience. Buffett often repeats that you should never buy a stock unless you would be happy with it if the stock exchange closed down for the next ten years.
You must think independently. Jot down your reasons for buying: XYZ is undervalued by the market at $500 million because... When you have them all down, make your decision and leave it at that, without feeling the need to consult other people: no committees. Buffett reasons that if you dont know enough to make your own decisions, you should get out of decision-making. He likes to quote Ben Grahams dictum: The fact that other people agree or disagree with you makes you neither right nor wrong. You will be right if your facts and reasoning are correct.
You must have the security and self-confidence that comes from knowledge, without being rash or headstrong. If you lack confidence, fear will drive you out at the bottom. As an example of the folly of being too market-conscious, Buffett cites nervous investors who dont know the facts and thus make a habit of selling stocks when they go down. Crazy, he says. Its as though you bought a house for $1 million and immediately told the broker that you would sell it again if you got a bid for $800,000.
Accept it when you dont know something.
Be flexible as to the types of businesses you buy, but never pay more than the business is worth. Calculate what the business is worth now, and what it will be worth in due course. Then ask yourself, How sure am I? Nine times out of ten you cant be. Sometimes, though, the bell rings and you can almost hear the cash register. However, nobody is clever enough to buy stocks he doesnt really want and resell them to someone else at a profit. The bigger fool in the bigger fool theory-- accepting a bad buy to sell it to someone dumber than you are-- is usually the original buyer, not his intended victim.
Buffetts Eleven Characteristics of Wonderful Businesses
They have a good return on capital without accounting gimmicks or lots of leverage.
They are understandable. One should be able to grasp what motivates the people working in them, and why they appeal to their customers. Even IBM, which looks straightforward, has changed character several times, such as when it went from punch cards to magnetic tape, and again when it introduced the 360, betting the future of the whole company on the success of one system.
They see their profits in cash.
They have strong franchises and thus freedom to raise prices. The number of truly protected areas in the US economy is minute. Their very rarity is the greatness of capitalism. Start a Japanese restaurant and, if it works, the neighborhood soon has two, four, eight, then sixteen Japanese restaurants. Their profitability declines until the owners just have a job, not an exploitation.
They dont take a genius to run.
Their earnings are predictable.
They are not natural targets of regulation.
They have low inventories and high turnover. In other words, they require little continuing capital investment. There are many high-growth businesses that require large infusions of capital as they grow and have done little or noghing for their owners-- a lesson investors periodically relearn.
The management is owner-oriented. Buffett observes that one can sense quickly when management thinks of itself first and the shareholder second. In such a case the investor should stay away. He considers it an atrocity when controlling shareholders go public at high prices in a bubbling market, then fail to perform, and eventually force the public investors out at 50 cents on the dollar. He insists on managements who regard stockholders as partners, not adversaries. This attitude is of course the opposite of that of certain economists who consider shareholder distributions just another cost of doing business. As interesting theory, but no way to attract capital!
There is a high rate of return on the total of inventories plus plant. (Receivables usually offset payables.) This test, applicable only in certain industries, exposes many bad businesses that seem to have high earnings but in fact are wormy--some of the conglomerates, for example. Stock promoters during frothy markets crudely but successfully dress up ordinary companies to fit the current fashion of the investment world, but return on capital is hard to fake. This is an extremely important way in which Buffetts approach differs from standard brokerage house analysis.
The best business is a royalty on the growth of others, requiring little capital itself.
Credits: Much of this article was extracted from the book, Money Masters of Our Time (John Train, 2000).
In recent decades, Warren Buffett, once little known even in his hometown, has become the sage of Omaha, one of the most successful investors and richest men in America. His ups and downs-- mostly ups-- and even casual utterances make news in the business press.
Buffett started out as a disciple of Benjamin Graham, the most eminent theoretician of the value (as distinct from growth) technique of investing. He has edited Grahams The Intelligent Investor, an outstanding exposition of that technique. But when a disciple becomes in turn a master himself, or when times change, he rises above the previous orthodoxy and breaks new ground. As we will see, Buffett is no exception.
If you had put $10,000 in Buffetts original partnership at its inception in 1956, you would have collected about $267,691 by the time he dissolved it a the end of 1969. He had never suffered a down year, even in the severe bear markets of 1957, 1962, 1966, and 1969. When the partnership was would up, you could have elected to stay with Buffett as a shareholder of Berkshire Hathaway, Inc., which was spun off from the partnership and became Buffetts investing vehicle. In that event, your $10,000 would have grown to about $50 million by 2000.
The essence of Buffetts investment thinking is that the business world is divided into a tiny number of wonderful businesses--well worth investing in-- and a huge number of bad or mediocre businesses that are not attractive as long-term holdings. Most businesses are usually not worth what they are selling for, but on rare occasions the wonderful businesses are almost given away, based on current gloomy economic and stock market forecasts. When that happens, buy boldly! Buffett likes to sit with half a dozen or so core holdings plus a dozen or so held for possible resale. He characterizes traditional diversification as the Noahs Ark approach: You buy two of everything in sight and end up with a zoo instead of a portfolio.
For Buffett, the key to a good business is its business franchise-- the extent to which it is surrounded by a moat, so that another company cant muscle in to squeeze its prices and profits. The competitiveness built into the American economic system inhibits the creation of great franchises. Buffett explains, The test of a franchise is what a smart guy with a lot of money could do to it if he tried. If you gave me a billion dollars, and first draft pick of fifty business managers throughout the US, I could absolutely cream both the business world and the journalistic world. If you said, Go take the Wall Street Journal apart, I would hand you back the billion dollars. Reluctantly, but I would hand it back to you. The real test of a business is how much damage a competitor can do, even if he is stupid about returns. The trick is to find the ones that havent been identified by someone else.
The businesses that Buffett thinks are worth owning-- those with powerful franchises-- sometimes fall into the category he calls gross profits royalty companies, perhaps better called gross revenues royalty companies. These have included TV stations, newspapers, international advertising agencies, and the largest insurance brokerage companies. Other valid franchises Buffett has liked include insurance and reinsurance, financial companies such as Wells Fargo Bank and Freddie Mac, some specialized situations such as Sperry & Hutchison Green Stamps, furniture and jewelry retailing and candy manufacturing, but there arent many that enjoy both a substantial and a well-secured niche. In recent decades he has branched out of Graham-style value situations in favor of huge multinational consumer companies, such as Coca-Cola and Gillette, both surrounded by very deep and wide moats indeed.
What about buying and holding the bargain stocks listed in financial publications from time to time? Buffett is not too excited about their prospects longer-term saying, If you buy and hold on, you will do only about as well as the companies themselves do. Since they have a low return on capital, that means not outstandingly. To grow fast you need a high return on capital. So, you must be sure to sell a Graham investment at the right time, whereas you can hold on to a higher-growth company for as long as it goes on developing rapidly.
He thinks of a stock only as a fractional interest in a business and always begins by asking himself, How much would I pay for all of this company? And on that basis, what will I pay for 1% or 10% of it? There are very few companies he considers interesting enough to buy at all, and even those he will look at only when they are very unpopular. Then, if one knows for certain what the values really are, one can have the confidence to buy in the teeth of general gloom.
Buffetts Six Qualities of a Good Investor
You must be animated by controlled greed, and fascinated by the investment process. You must not, however, let greed take possession of you so that you become in a hurry. If you are too interested in money, you will kill yourself; if not interested enough, you wont go to the office. And you must enjoy the game.
You must have patience. Buffett often repeats that you should never buy a stock unless you would be happy with it if the stock exchange closed down for the next ten years.
You must think independently. Jot down your reasons for buying: XYZ is undervalued by the market at $500 million because... When you have them all down, make your decision and leave it at that, without feeling the need to consult other people: no committees. Buffett reasons that if you dont know enough to make your own decisions, you should get out of decision-making. He likes to quote Ben Grahams dictum: The fact that other people agree or disagree with you makes you neither right nor wrong. You will be right if your facts and reasoning are correct.
You must have the security and self-confidence that comes from knowledge, without being rash or headstrong. If you lack confidence, fear will drive you out at the bottom. As an example of the folly of being too market-conscious, Buffett cites nervous investors who dont know the facts and thus make a habit of selling stocks when they go down. Crazy, he says. Its as though you bought a house for $1 million and immediately told the broker that you would sell it again if you got a bid for $800,000.
Accept it when you dont know something.
Be flexible as to the types of businesses you buy, but never pay more than the business is worth. Calculate what the business is worth now, and what it will be worth in due course. Then ask yourself, How sure am I? Nine times out of ten you cant be. Sometimes, though, the bell rings and you can almost hear the cash register. However, nobody is clever enough to buy stocks he doesnt really want and resell them to someone else at a profit. The bigger fool in the bigger fool theory-- accepting a bad buy to sell it to someone dumber than you are-- is usually the original buyer, not his intended victim.
Buffetts Eleven Characteristics of Wonderful Businesses
They have a good return on capital without accounting gimmicks or lots of leverage.
They are understandable. One should be able to grasp what motivates the people working in them, and why they appeal to their customers. Even IBM, which looks straightforward, has changed character several times, such as when it went from punch cards to magnetic tape, and again when it introduced the 360, betting the future of the whole company on the success of one system.
They see their profits in cash.
They have strong franchises and thus freedom to raise prices. The number of truly protected areas in the US economy is minute. Their very rarity is the greatness of capitalism. Start a Japanese restaurant and, if it works, the neighborhood soon has two, four, eight, then sixteen Japanese restaurants. Their profitability declines until the owners just have a job, not an exploitation.
They dont take a genius to run.
Their earnings are predictable.
They are not natural targets of regulation.
They have low inventories and high turnover. In other words, they require little continuing capital investment. There are many high-growth businesses that require large infusions of capital as they grow and have done little or noghing for their owners-- a lesson investors periodically relearn.
The management is owner-oriented. Buffett observes that one can sense quickly when management thinks of itself first and the shareholder second. In such a case the investor should stay away. He considers it an atrocity when controlling shareholders go public at high prices in a bubbling market, then fail to perform, and eventually force the public investors out at 50 cents on the dollar. He insists on managements who regard stockholders as partners, not adversaries. This attitude is of course the opposite of that of certain economists who consider shareholder distributions just another cost of doing business. As interesting theory, but no way to attract capital!
There is a high rate of return on the total of inventories plus plant. (Receivables usually offset payables.) This test, applicable only in certain industries, exposes many bad businesses that seem to have high earnings but in fact are wormy--some of the conglomerates, for example. Stock promoters during frothy markets crudely but successfully dress up ordinary companies to fit the current fashion of the investment world, but return on capital is hard to fake. This is an extremely important way in which Buffetts approach differs from standard brokerage house analysis.
The best business is a royalty on the growth of others, requiring little capital itself.
Credits: Much of this article was extracted from the book, Money Masters of Our Time (John Train, 2000).
-
ม้าเฉียว
- Verified User
- โพสต์: 350
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 11
MONEY MASTERS OF OUR TIME: T. ROWE PRICE
Like Benjamin Graham, T. Rowe Price, who died in 1983, gave his name to an entire theory of investment. The T. Rowe Price approach was once heard on Wall Street almost as often as a real Ben Graham situation, the prevailing orthodoxy before Price arrived. Prices growth-oriented thinking gradually pushed aside the value style systematized by Graham. Indeed, Price may have popularized the term growth stock. Price created a large pool of capital: Already substantial while he was still headed it, the company he founded, T. Rowe Price Associates, Inc., in Baltimore, eventually became one of the largest in the US but branched out from its founders ideas. What follows describes Prices own philosophy, developed during the years when he actually ran the firm.
His thesis, briefly, was that the investors best hope of doing well is by seeking the fertile fields for growth and then holding those stocks for long periods of time. He defined a growth company as one which shows long-term growth of earnings, reaching a new high level per share at the peak of each succeeding major business cycle and which gives indications of reaching new high earnings at the peak of future business cycles. (It may, however, have declining earnings within a business cycle.) Examples of such stocks would be Coca-Cola, Merck, Wal-Mart, and Texas Instruments.
Price held that since industries and corporations both have life cycles, the most profitable and least risky time to own a share is during the early stages of growth. After a company reaches maturity, the investors opportunity diminishes and the risk increases. Successfully working out and applying this approach made him one of the most famous investment practitioners of his day. In his eighties, Price still got up at 5am. He was exceedingly disciplined and organized. When he bought a stock at 20, he also established that he would sell some at say, 40 and did even if things had changed for the good. If he had determined to buy more stock at 13, he would even if the news from the company was discouraging.
T. Rowe Price Associates had a relatively small volume of assets under management until late in Prices life. In the early 1950s the firms portfolios totaled only a few hundred million dollars, and in 1966, when Price was in his late sixties, the firm ran approximately $1.5 billion. After Price retired, the firm had two extraordinary pieces of luck. First, smaller growth companies became extremely popular with investors, giving six years of glory to the Growth Stock Fund and even more the New Horizons Fund, and the exploding market for pension fund management brought the managers of pension funds to the firms with the best recent records.
Some of Prices individual stock selections worked out amazingly. For instance, by the end of 1972, Black & Decker, held for thirty-five years, had risen from 1.25 to 108; Honeywell, held for thirty-four years, had gone from 3.75 to 138; 3M, for thirty-three years, from 0.50 to 85.63; Square D, also for thirty-three years, from 0.75 to 36.88; Merck, held for thirty-two years, from 0.38 to 89.38.
Price believed that even the amateur investor who lacks training and time to devote to managing his investments can be reasonably successful by selecting the best-managed companies in fertile fields for growth, buying their shares and retaining them until it becomes obvious that they no longer meet the definition of a growth stock. Price outlined his criteria for growth stocks as follows:
Superior research to develop products and markets
Lack of cutthroat competition
Comparative immunity from government regulation
Low total labor costs, but well-paid employees
At least a 10% return on invested capital, sustained high profit margins, and a superior growth of earnings per share
Price maintained that there are two aspects of capitalizing on the fertile fields for growth: identifying an industry that is still enjoying its growth phase, and settling on the most promising company or companies within that industry. The two best indicators of a growth industry are unit volume of sales (not dollar volume) and net earnings. How do you find the best companies within an attractive industry? They must have demonstrated their superior qualities, either by showing improving unit growth and profits right through the down phase of a business cycle (stable growth) or by showing higher earnings from peak to peak and bottom to bottom through several cycles (cyclical growth). Some qualities include superior management, outstanding research, patents, strong finances, and a favorable location.
Price did not believe in specific predictions of a companys future. No one can see ahead three years, he would say, let alone five or ten. Competition, new inventions, all kinds of things can change the situation in twelve months. As a result, the valuation models that are popular on Wall Street-- which project future earnings year by year, apply a discount factor, and give a theoretical price today which one compares with the market price-- are highly suspect. According to Price, one should just stick with the best companies in the highest-growth industries as long as their progress continues. Do not try for a pinpointed mathematical approach that creates an illusory certainty out of an unknowable future.
Adaptability
By 1965, Price had spent 30 years as a growth stock advocate, yet he had the courage to insist the time had come for a change, which he outlined in a pamphlet, The New Era for Investors. It created a great stir in the investment community. Price had just decided that there werent many bargains left in the kind of stock he wanted to buy. He cut back on his growth stock investments and put a substantial part of his family assets, including what he got from the sale of his firm, about equally into bonds and stocks, the stocks being mostly in his new era selections, particularly gold stocks. Ten years later these holdings were at a substantial profit, unlike the rest of the market, and particularly unlike the growth stocks.
Unfortunate for mutual fund investors, Prices old firm, T. Rowe. Price Associates had not followed Prices wise advice, or had been unwilling to shift from an investing style that was associated with their very name. By 1974, what Price feared had come about. Growth stocks became a disaster, with many falling 75 to 80% from their highs. A share of Prices former pride and joy, his New Horizons Fund, lost 42% of its asset value per share in 1973, and then 39% more in 1974. The whole fund fell in size from $511 million to $203 million over the two years, as redemptions followed the market decline.
When growth stocks fell from favor in 1974, the very name growth stock became virtually taboo on Wall Street. The same institutions that had rapturously bought Avon in 1973 as a one-decision holding at $130, or 55-times earnings, dumped it in 1974 at $25, or 13-times earnings, until by late 1974 the wringing-out process had gone so far that Price himself decided it was safe to begin buying growth stocks once more, though not necessarily the same ones. Price was not scared to adapt to reality and change track now and then as share prices and market conditions indicated it was necessary.
Credits: This article is partially extracted from the book, Money Masters of our Time (John Train, 2000).
Like Benjamin Graham, T. Rowe Price, who died in 1983, gave his name to an entire theory of investment. The T. Rowe Price approach was once heard on Wall Street almost as often as a real Ben Graham situation, the prevailing orthodoxy before Price arrived. Prices growth-oriented thinking gradually pushed aside the value style systematized by Graham. Indeed, Price may have popularized the term growth stock. Price created a large pool of capital: Already substantial while he was still headed it, the company he founded, T. Rowe Price Associates, Inc., in Baltimore, eventually became one of the largest in the US but branched out from its founders ideas. What follows describes Prices own philosophy, developed during the years when he actually ran the firm.
His thesis, briefly, was that the investors best hope of doing well is by seeking the fertile fields for growth and then holding those stocks for long periods of time. He defined a growth company as one which shows long-term growth of earnings, reaching a new high level per share at the peak of each succeeding major business cycle and which gives indications of reaching new high earnings at the peak of future business cycles. (It may, however, have declining earnings within a business cycle.) Examples of such stocks would be Coca-Cola, Merck, Wal-Mart, and Texas Instruments.
Price held that since industries and corporations both have life cycles, the most profitable and least risky time to own a share is during the early stages of growth. After a company reaches maturity, the investors opportunity diminishes and the risk increases. Successfully working out and applying this approach made him one of the most famous investment practitioners of his day. In his eighties, Price still got up at 5am. He was exceedingly disciplined and organized. When he bought a stock at 20, he also established that he would sell some at say, 40 and did even if things had changed for the good. If he had determined to buy more stock at 13, he would even if the news from the company was discouraging.
T. Rowe Price Associates had a relatively small volume of assets under management until late in Prices life. In the early 1950s the firms portfolios totaled only a few hundred million dollars, and in 1966, when Price was in his late sixties, the firm ran approximately $1.5 billion. After Price retired, the firm had two extraordinary pieces of luck. First, smaller growth companies became extremely popular with investors, giving six years of glory to the Growth Stock Fund and even more the New Horizons Fund, and the exploding market for pension fund management brought the managers of pension funds to the firms with the best recent records.
Some of Prices individual stock selections worked out amazingly. For instance, by the end of 1972, Black & Decker, held for thirty-five years, had risen from 1.25 to 108; Honeywell, held for thirty-four years, had gone from 3.75 to 138; 3M, for thirty-three years, from 0.50 to 85.63; Square D, also for thirty-three years, from 0.75 to 36.88; Merck, held for thirty-two years, from 0.38 to 89.38.
Price believed that even the amateur investor who lacks training and time to devote to managing his investments can be reasonably successful by selecting the best-managed companies in fertile fields for growth, buying their shares and retaining them until it becomes obvious that they no longer meet the definition of a growth stock. Price outlined his criteria for growth stocks as follows:
Superior research to develop products and markets
Lack of cutthroat competition
Comparative immunity from government regulation
Low total labor costs, but well-paid employees
At least a 10% return on invested capital, sustained high profit margins, and a superior growth of earnings per share
Price maintained that there are two aspects of capitalizing on the fertile fields for growth: identifying an industry that is still enjoying its growth phase, and settling on the most promising company or companies within that industry. The two best indicators of a growth industry are unit volume of sales (not dollar volume) and net earnings. How do you find the best companies within an attractive industry? They must have demonstrated their superior qualities, either by showing improving unit growth and profits right through the down phase of a business cycle (stable growth) or by showing higher earnings from peak to peak and bottom to bottom through several cycles (cyclical growth). Some qualities include superior management, outstanding research, patents, strong finances, and a favorable location.
Price did not believe in specific predictions of a companys future. No one can see ahead three years, he would say, let alone five or ten. Competition, new inventions, all kinds of things can change the situation in twelve months. As a result, the valuation models that are popular on Wall Street-- which project future earnings year by year, apply a discount factor, and give a theoretical price today which one compares with the market price-- are highly suspect. According to Price, one should just stick with the best companies in the highest-growth industries as long as their progress continues. Do not try for a pinpointed mathematical approach that creates an illusory certainty out of an unknowable future.
Adaptability
By 1965, Price had spent 30 years as a growth stock advocate, yet he had the courage to insist the time had come for a change, which he outlined in a pamphlet, The New Era for Investors. It created a great stir in the investment community. Price had just decided that there werent many bargains left in the kind of stock he wanted to buy. He cut back on his growth stock investments and put a substantial part of his family assets, including what he got from the sale of his firm, about equally into bonds and stocks, the stocks being mostly in his new era selections, particularly gold stocks. Ten years later these holdings were at a substantial profit, unlike the rest of the market, and particularly unlike the growth stocks.
Unfortunate for mutual fund investors, Prices old firm, T. Rowe. Price Associates had not followed Prices wise advice, or had been unwilling to shift from an investing style that was associated with their very name. By 1974, what Price feared had come about. Growth stocks became a disaster, with many falling 75 to 80% from their highs. A share of Prices former pride and joy, his New Horizons Fund, lost 42% of its asset value per share in 1973, and then 39% more in 1974. The whole fund fell in size from $511 million to $203 million over the two years, as redemptions followed the market decline.
When growth stocks fell from favor in 1974, the very name growth stock became virtually taboo on Wall Street. The same institutions that had rapturously bought Avon in 1973 as a one-decision holding at $130, or 55-times earnings, dumped it in 1974 at $25, or 13-times earnings, until by late 1974 the wringing-out process had gone so far that Price himself decided it was safe to begin buying growth stocks once more, though not necessarily the same ones. Price was not scared to adapt to reality and change track now and then as share prices and market conditions indicated it was necessary.
Credits: This article is partially extracted from the book, Money Masters of our Time (John Train, 2000).
-
ForrestGump
- Verified User
- โพสต์: 1435
- ผู้ติดตาม: 0
MONEY MASTER สำหรับคนที่ยังไม่รู้จักเค้าเหล่านี้
โพสต์ที่ 12
ขอบคุณครับ
แต่อ่านไม่ไหว ตาลายแล้ว เลยไม่ได้อ่านเลย
ช่วยแปลเป็นภาษาไทยหน่อยได้มั้ยครับ
ไม่อยากให้อุปสรรคทางภาษามากีดขวาง ความรู้เลย
ขอบคุณล่วงหน้าที่แปลให้ครับ 555
แต่อ่านไม่ไหว ตาลายแล้ว เลยไม่ได้อ่านเลย
ช่วยแปลเป็นภาษาไทยหน่อยได้มั้ยครับ
ไม่อยากให้อุปสรรคทางภาษามากีดขวาง ความรู้เลย
ขอบคุณล่วงหน้าที่แปลให้ครับ 555
กฎข้อที่1 อย่ายอมขาดทุน กฎข้อที่2 กลับไปดูกฎข้อที่ 1
บันทึกไม่สำเร็จ