Saturday, January 22, 2011
Saturday, January 15, 2011
Cramer's Twenty-five Rules for Investing
http://www.thestreet.com/_rmnav/tsc/cramerbook
Rule 1: Bulls, Bears Make Money, Pigs Get SlaughteredIt's essential for all traders to know when to take some off the table.
Rule 2: It's OK to Pay the TaxesStop fearing the tax man and start fearing the loss man because gains can be fleeting. More
Rule 3: Don't Buy All at OnceTo maximize your profits, stage your buys, work your orders and try to get the best price over time.
Rule 4: Buy Damaged Stocks, Not Damaged CompaniesThere are no refunds on Wall Street, so do your research and focus your trades on damaged stocks rather than companies.
Rule 5: Diversify to Control RiskIf you control the downside and diversify your holdings, the upside will take care of itself.
Rule 6: Do Your Stock HomeworkBefore you buy any stock, it's important to research all aspects of the company.
Rule 7: No One Made a Dime by PanickingThere will always be a better time to leave the table, so it is best to avoid the fleeing masses.
Rule 8: Buy Best-of-Breed CompaniesInvesting in the more expensive stock is invariably worth it because you get piece of mind. More
Rule 9: Defend Some Stocks, Not AllWhen trading gets tough, pick your favorite stocks and defend only those. More
Rule 10: Bad Buys Won't Become TakeoversBad companies never get bids, so it's the good fundamentals you need to focus on. More
Rule 11: Don't Own Too Many NamesIt can be constraining, but it's better to have a few positions you know well and like. More
Rule 12: Cash Is for WinnersIf you don't like the market or have anything compelling to buy, it's never wrong to go with cash.
Rule 13: No Woulda, Shoulda, CouldasThis damaging emotion is destructive to the positive mindset needed to make investment decisions.
Rule 14: Expect, Don't Fear CorrectionsIt is not always clear when a correction will strike, so expect and be prepared for one at all times.
Rule 15: Don't Forget BondsIt's important to watch more than stocks, and bonds are stocks' direct competition.
Rule 16: Never Subsidize Losers With WinnersAny trader stuck in this position would do well to sell sinking stocks and wait a day.
Rule 17: Check Hope at the DoorHope is emotion, pure and simple, and trading is not a game of emotion.
Rule 18: Be FlexibleRecognize and be open to the unexpected shifts in the market because business, by nature, is dynamic, not static.
Rule 19: When the Chiefs Retreat, So Should YouHigh-level executives don't quit a company for personal reasons, so that is a sign something is wrong.
Rule 20: Giving Up on Value Is a SinIf you don't have patience, think about letting someone who does run your money.
Rule 21: Be a TV CriticAccept that what you hear on television is probably right, but no more than that.
Rule 22: Wait 30 Days After PreannouncementsPreannouncements signal ongoing weakness, wait 30 days to see if anything has gotten better before you pull the trigger to buy.
Rule 23: Beware of Wall Street HypeNever underestimate the promotion machine because analysts get behind stocks and can keep them propelled in an up direction well beyond reason.
Rule 24: Explain Your PicksBuying stocks is a solitary event, too solitary in fact, so always make sure you can articulate your reasoning to someone else.
Rule 25: There's Always a Bull MarketIt's OK if you have to work hard to find it, just don't default to what's in bear mode because you are time-constrained or intellectually lazy.
Rule 1: Bulls, Bears Make Money, Pigs Get SlaughteredIt's essential for all traders to know when to take some off the table.
Rule 2: It's OK to Pay the TaxesStop fearing the tax man and start fearing the loss man because gains can be fleeting. More
Rule 3: Don't Buy All at OnceTo maximize your profits, stage your buys, work your orders and try to get the best price over time.
Rule 4: Buy Damaged Stocks, Not Damaged CompaniesThere are no refunds on Wall Street, so do your research and focus your trades on damaged stocks rather than companies.
Rule 5: Diversify to Control RiskIf you control the downside and diversify your holdings, the upside will take care of itself.
Rule 6: Do Your Stock HomeworkBefore you buy any stock, it's important to research all aspects of the company.
Rule 7: No One Made a Dime by PanickingThere will always be a better time to leave the table, so it is best to avoid the fleeing masses.
Rule 8: Buy Best-of-Breed CompaniesInvesting in the more expensive stock is invariably worth it because you get piece of mind. More
Rule 9: Defend Some Stocks, Not AllWhen trading gets tough, pick your favorite stocks and defend only those. More
Rule 10: Bad Buys Won't Become TakeoversBad companies never get bids, so it's the good fundamentals you need to focus on. More
Rule 11: Don't Own Too Many NamesIt can be constraining, but it's better to have a few positions you know well and like. More
Rule 12: Cash Is for WinnersIf you don't like the market or have anything compelling to buy, it's never wrong to go with cash.
Rule 13: No Woulda, Shoulda, CouldasThis damaging emotion is destructive to the positive mindset needed to make investment decisions.
Rule 14: Expect, Don't Fear CorrectionsIt is not always clear when a correction will strike, so expect and be prepared for one at all times.
Rule 15: Don't Forget BondsIt's important to watch more than stocks, and bonds are stocks' direct competition.
Rule 16: Never Subsidize Losers With WinnersAny trader stuck in this position would do well to sell sinking stocks and wait a day.
Rule 17: Check Hope at the DoorHope is emotion, pure and simple, and trading is not a game of emotion.
Rule 18: Be FlexibleRecognize and be open to the unexpected shifts in the market because business, by nature, is dynamic, not static.
Rule 19: When the Chiefs Retreat, So Should YouHigh-level executives don't quit a company for personal reasons, so that is a sign something is wrong.
Rule 20: Giving Up on Value Is a SinIf you don't have patience, think about letting someone who does run your money.
Rule 21: Be a TV CriticAccept that what you hear on television is probably right, but no more than that.
Rule 22: Wait 30 Days After PreannouncementsPreannouncements signal ongoing weakness, wait 30 days to see if anything has gotten better before you pull the trigger to buy.
Rule 23: Beware of Wall Street HypeNever underestimate the promotion machine because analysts get behind stocks and can keep them propelled in an up direction well beyond reason.
Rule 24: Explain Your PicksBuying stocks is a solitary event, too solitary in fact, so always make sure you can articulate your reasoning to someone else.
Rule 25: There's Always a Bull MarketIt's OK if you have to work hard to find it, just don't default to what's in bear mode because you are time-constrained or intellectually lazy.
Friday, January 14, 2011
Ken Heebner - America's hottest investor
Never mind the rocky market. After a string of supersmart calls, mutual fund manager Ken Heebner is putting up the best numbers of his sterling career.
http://money.cnn.com/2008/05/23/magazines/fortune/birger_americas_hottest_investor.fortune/
http://money.cnn.com/2008/05/23/magazines/fortune/birger_americas_hottest_investor.fortune/
Fed Economist To Greenspan In 2005: Discovery Channel's 'Flip That House' Should Cause 'Existential Crisis'
One economist raised a point at that Dec. 13 during a meeting of the Federal Open Makret Committee that could have brought home the case that the Fed had let the housing market spin out of control.
"I offer one more piece of evidence that I think almost surely suggests that the end is near in this sector. While channel-surfing the other night, to the annoyance of my otherwise very patient wife, I came across a new television series on the Discovery Channel entitled 'Flip That House,'" economist David Stockton said, prompting a roomful of laughter according to the transcript. "As far as I could tell, the gist of the show was that with some spackling, a few strategically placed azaleas and access to a bank, you too could tap into the great real-estate wealth machine. It was enough to put even the most ardent believer in market efficiency into existential crisis. [Laughter]"
http://www.huffingtonpost.com/2011/01/14/fed-economist-greenspan-flip-that-house_n_809138.html
"I offer one more piece of evidence that I think almost surely suggests that the end is near in this sector. While channel-surfing the other night, to the annoyance of my otherwise very patient wife, I came across a new television series on the Discovery Channel entitled 'Flip That House,'" economist David Stockton said, prompting a roomful of laughter according to the transcript. "As far as I could tell, the gist of the show was that with some spackling, a few strategically placed azaleas and access to a bank, you too could tap into the great real-estate wealth machine. It was enough to put even the most ardent believer in market efficiency into existential crisis. [Laughter]"
http://www.huffingtonpost.com/2011/01/14/fed-economist-greenspan-flip-that-house_n_809138.html
Bruce Berkowitz interview
http://bcove.me/agph2w5v
Fairholme now has $20B in assets under managment as of early Dec. 2010.
Can't time the market - buy stressed securities
Compare what we are paying for the cash they expect to get inthe future
Come up with a thesis. Hire experts to destroy their thesis. Don't want to talk to yes people. Want people to tell them why their thesis is wrong. Want their ideas to be disproven.
Holding cash - worst situation is if you are backed into a corner - e.g. too early to an investment and don't have ability to buy more. The great investors never run out of cash. Always want to have a lot of cash - cash can be very valuable when nobody else has it.
Fairholme now has $20B in assets under managment as of early Dec. 2010.
Can't time the market - buy stressed securities
Compare what we are paying for the cash they expect to get inthe future
Come up with a thesis. Hire experts to destroy their thesis. Don't want to talk to yes people. Want people to tell them why their thesis is wrong. Want their ideas to be disproven.
Holding cash - worst situation is if you are backed into a corner - e.g. too early to an investment and don't have ability to buy more. The great investors never run out of cash. Always want to have a lot of cash - cash can be very valuable when nobody else has it.
Bill Priest - Apple versus Microsoft
http://bcove.me/wtg81yy5
Shareholder yield strategy. Microsoft - 7% yield (cash plus share buy back) + double digit growth rate. Microsoft entering a remarkable period. The financial fundamentals - very attractive.
Oracle has entered a mature phase. So big, needs to big give money back to shareholders. Good at integrating acquisitions. The will be giving a dividend. Needs to maintain low cost of capital so can continue acquiring firms. 6% shareholder total yield.
Shareholder yield strategy. Microsoft - 7% yield (cash plus share buy back) + double digit growth rate. Microsoft entering a remarkable period. The financial fundamentals - very attractive.
Oracle has entered a mature phase. So big, needs to big give money back to shareholders. Good at integrating acquisitions. The will be giving a dividend. Needs to maintain low cost of capital so can continue acquiring firms. 6% shareholder total yield.
A story goes with it
Charles Schwab’s Jeffrey Ryan examines the opportunities and risks inherent in “story” stocks, including this significant, if not surprising, caveat: “Our research indicates that the stocks that analysts rate best, presumably those with the best or most powerful stories, tend to underperform the market in general.”
http://www.schwab.com/public/schwab/research_strategies/market_insight/investing_strategies/stocks/a_story_goes_with_it.html
http://www.schwab.com/public/schwab/research_strategies/market_insight/investing_strategies/stocks/a_story_goes_with_it.html
Sunday, January 9, 2011
Interesting article about Successful Former Truck Driver Investor
Jack Weyland specializes in biotech investing.
http://blogs.forbes.com/schifrin/2010/11/12/a-warren-buffett-next-doors-top-5-biotech-buys/
http://marketocracy.com/mds/investors/jackweyland
He attributes much of his success to the book "The Psychology of Judgment and Decision Making" by Scott Plous, Ph.D.
http://blogs.forbes.com/schifrin/2010/11/12/a-warren-buffett-next-doors-top-5-biotech-buys/
http://marketocracy.com/mds/investors/jackweyland
He attributes much of his success to the book "The Psychology of Judgment and Decision Making" by Scott Plous, Ph.D.
Seth Klarman's Margin of Safety
One of the best books ever written on investing.
"Risk-Averse Value Investing Strategies for the Thoughtful Investor"
http://www.my10000dollars.com/MS.pdf
"Risk-Averse Value Investing Strategies for the Thoughtful Investor"
http://www.my10000dollars.com/MS.pdf
Berkshire Focus Fund - BFOCX
A tiny mutual fund that a has high variability in returns. Berkshire did very well in 2010.
"The Focus Fund normally concentrates its investments in a core group of 20-30 common stocks selected for their long-term growth potential. In selecting investments for the Fund, management focuses on industry leaders with dominant franchises and strong growth prospects. The Fund may concentrate at least 25%, and as much as 100%, of its assets in the securities of companies in the technology industry."
http://www.berkshirefunds.com/top.jsp
"The Focus Fund normally concentrates its investments in a core group of 20-30 common stocks selected for their long-term growth potential. In selecting investments for the Fund, management focuses on industry leaders with dominant franchises and strong growth prospects. The Fund may concentrate at least 25%, and as much as 100%, of its assets in the securities of companies in the technology industry."
http://www.berkshirefunds.com/top.jsp
CGM holdings
Focus Fund (CGMFX)
http://moneycentral.msn.com/investor/partsub/funds/holdings.asp?Funds=1&Symbol=CGMFX
http://www.cgmfunds.com/pdf/2010-06-30-mutual-quarterly.pdf
Realty Fund (CGMRX)
http://moneycentral.msn.com/detail/stock_quote?Symbol=CGMRX%2C
Mutual (LOMMX)
http://moneycentral.msn.com/detail/stock_quote?symbol=LOMMX&ww=1
http://moneycentral.msn.com/investor/partsub/funds/holdings.asp?Funds=1&Symbol=CGMFX
http://www.cgmfunds.com/pdf/2010-06-30-mutual-quarterly.pdf
Realty Fund (CGMRX)
http://moneycentral.msn.com/detail/stock_quote?Symbol=CGMRX%2C
Mutual (LOMMX)
http://moneycentral.msn.com/detail/stock_quote?symbol=LOMMX&ww=1
Charley Munger on Wikipedia
http://en.wikipedia.org/wiki/Charlie_Munger
Go to External Links:
Latest Holdings in Berkshire Hathaway Portfolio, Dynamic
Charlie Munger - Treasure Trove
Charlie Munger - A Compilation
Speech at USC, May 2007
Three Speeches by Charlie Munger
Audio: Standard Causes of Human Misjudgment
Charlie Munger Link Collection
Munger Speeches & Writings
Munger's Speech on Mental Models
"In the Money" (2001 Harvard Law Bulletin article)
Munger's Worldly Wisdom (1994 USC Business School)
The Psychology of Human Misjudgment by Munger (1996 at Harvard Law School)
Charlie Munger's Lollapalooza Effect and This Credit Fiasco (2008)
Munger Says 'Thank God' U.S. Opted for Bailouts Over Handouts (Bloomberg article) (2010)
Go to External Links:
Be Your Own Fund Manager
The author of this article recently came around to the view that I have come around to the view of fellow columnist Ken Fisher that portfolios of individually purchased stocks are better for a lot of investors.
Read this article at:
http://blogs.forbes.com/baldwin/2010/11/30/be-your-own-fund-manager/
Read this article at:
http://blogs.forbes.com/baldwin/2010/11/30/be-your-own-fund-manager/
Forbes 2010 Mutual Fund Guide
After a dismal performance in 2008, fund managers regained some of their swagger in 2009. The average domestic stock fund returned 32.7% to shareholders last year, easily outpacing the S&P 500, up 26.8%.
Unless you are a wizard at shorting investments, it is easier to make money in a rising market than in a falling market. Our mutual funds report will not only help you identify funds likely to increase the value of your portfolio during the good times, but will also show you how to preserve capital at times when investors are panicking.
Continued at:
http://www.forbes.com/2010/01/19/mutual-funds-investors-grades-mutual-funds-2010-personal-finance-intro.html
Unless you are a wizard at shorting investments, it is easier to make money in a rising market than in a falling market. Our mutual funds report will not only help you identify funds likely to increase the value of your portfolio during the good times, but will also show you how to preserve capital at times when investors are panicking.
Continued at:
http://www.forbes.com/2010/01/19/mutual-funds-investors-grades-mutual-funds-2010-personal-finance-intro.html
Morningstar Picks Top Mutual-Fund Managers of Year for 2010
Jan. 5 (Bloomberg) -- Bob Goldfarb and David Poppe of Sequoia Fund, Brent Lynn of Janus Overseas and Michael Hasenstab of Templeton Global Bond were named mutual-fund managers of the year for 2010 by Morningstar Inc.
Continued at:
http://www.businessweek.com/news/2011-01-06/morningstar-picks-top-mutual-fund-managers-of-year-for-2010.html
“These managers posted exceptional gains -- enough to overcome the difficult market environment of the past few years,” Karen Dolan, director of mutual-fund analysis for Chicago-based Morningstar, said today in a statement.
Continued at:
http://www.businessweek.com/news/2011-01-06/morningstar-picks-top-mutual-fund-managers-of-year-for-2010.html
Meet the Managers Behind the Top Funds .
Mutual-fund managers have seen better days. More than a quarter of actively managed stock funds trailed the indexes they're measured against by five percentage points or more in the first nine months of 2010 -- their worst performance since 1998, according to J.P. Morgan.
But there are still managers who shine year in and year out. Each year, SmartMoney whittles the 6,800 mutual funds available in the U.S. down to a few standouts that consistently outperformed their peers -- without charging sky-high fees. Here, the top finishers in four major categories.
Continued at...
http://online.wsj.com/article/SB10001424052748704030704576070404141362100.html
But there are still managers who shine year in and year out. Each year, SmartMoney whittles the 6,800 mutual funds available in the U.S. down to a few standouts that consistently outperformed their peers -- without charging sky-high fees. Here, the top finishers in four major categories.
Continued at...
http://online.wsj.com/article/SB10001424052748704030704576070404141362100.html
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