Quotes About Investment

But make sure you remember this: The people who now claim that the next "sure thing" will be health care, or energy, or real estate, or gold, are no more likely to be right in the end than the hypesters of high tech turned out to be.

Security analysis cannot presume to lay down general rules as to the proper value of any given common stock... The prices of common stocks are not carefully thought out computations, but the resultants of a welter of human reactions.

On December 7, 1999, Kevin Landis, portfolio manager of the Firsthand mutual funds, appeared on CNN's Moneyline telecast. Asked if wireless telecommunication stocks were overvalued—with many trading at infinite multiples of their earnings—Landis had a ready answer. "It's not a mania," he shot back. "Look at the outright growth, the absolute value of the growth. It's big.

If you want to put money in investment funds, buy a group of closed-end shares at a discount of, say, 10% to 15% from asset value, instead of paying a premium of about 9% above asset value for shares of an open-end company. Assuming that the future dividends and changes in asset values continue to be about the same for the two groups, you will thus obtain about one-fifth more for your money from the closed-end shares.

A reduction in common-stock holdings where needed to bring it down to a maximum of 50 per cent of the total portfolio. The capital-gains tax must be paid with as good grace as possible, and the proceeds invested in first-quality bonds or held as a savings deposit.

Instead of listening to Hoffman and his lapdog analysts, traders should have heeded the honest warning in Commerce One's annual report for 1999: "We have never been profitable. We expect to incur net losses for the foreseeable future and we may never be profitable.

The fault, dear investor, is not in our stars- and no in our stocks- but in ourselves...

The essence of proper bond selection consists, ... in obtaining specific and convincing factors of safety in compensation for the surrender of participation in profits.

Lucent's stock, at $51.062 on June 30, 2000, finished 2002 at $1.26—a loss of nearly $190 billion in market value in two-and-a-half years.

The real money in investment will have to be made- as most of it has been in the past- not out of buying and selling but of owning and holding securities, receiving interest and dividends and increases in value. pxvii

The rate of return sought should be dependent, rather, on the amount of intelligent effort the investor is willing and able to bring to bear on his task.

It's expensive to trade small lots of convertible bonds, and diversification is impractical unless you have well over $100,000 to invest in this sector alone. Fortunately, today's intelligent investor has the convenient recourse of buying a low-cost convertible bond fund. Fidelity and Vanguard offer mutual funds with annual expenses comfortably under 1%, while several closed-end funds are also available at a reasonable cost (and, occasionally, at discounts to net asset value).4

A comparison of eToys with Toys "R" Us, Inc.—its biggest rival—is shocking. In the preceding three months, Toys "R" Us had earned $27 million in net income and had sold over 70 times more goods than eToys had sold in an entire year. And yet as Figure 17-3 shows, the stock market valued eToys at nearly $2 billion more than Toys "R" Us.

We must recognize, however, that intrinsic value is an elusive concept.

In 1982, his biggest investment was Treasury bonds; right after that, he made Chrysler his top holding, even though most experts expected the automaker to go bankrupt; then, in 1986, Lynch put almost 20% of Fidelity Magellan in foreign stocks like Honda, Norsk Hydro, and Volvo. So, before you buy a U.S. stock fund, compare the holdings listed in its latest report against the roster of the S & P 500 index; if they look like Tweedledee and Tweedledum, shop for another fund.7

Never mingle your speculative and investment operations in the same account, nor in any part of your thinking.

just as in 1929 the companion theory for the "blue chips" was that no price was too high for them because their future possibilities were limitless.

It is our argument that a sufficiently low price can turn a security of mediocre quality into a sound investment opportunity—provided that the buyer is informed and experienced and that he practices adequate diversification. For, if the price is low enough to create a substantial margin of safety, the security thereby meets our criterion of investment

Thus, in sum, we say that to have a true investment there must be present a true margin of safety. And a true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.

Principle of Optimum Capitalization Structure.

the value of the pledged property is vitally dependent on the earning power of the enterprise.

You should always remember, in the words of psychologist Paul Slovic, that risk is brewed from an equal dose of two ingredients - probabilities and consequences. Before you invest, you must ensure that you have realistically assessed your probability of being right and how you will react to the consequences of being wrong.

risks therein must be assumed by someone. * There is intelligent speculation as there is intelligent investing. But there are many ways in which speculation may be unintelligent. Of these the foremost are: (1) speculating when you think you are investing; (2) speculating seriously instead of as a pastime, when you lack proper knowledge and skill for it; and (3) risking more money in speculation than you can afford to lose.

A strong-minded approach to investment, firmly based on the margin-of-safety principle, can yield handsome rewards. But a decision to try for these emoluments rather than for the assured fruits of defensive investment should not be made without much self-examination.