Quotes About Strategy

What else should you watch for? Most fund buyers look at past performance first, then at the manager's reputation, then at the riskiness of the fund, and finally (if ever) at the fund's expenses. The intelligent investor looks at those same things—but in the opposite order.

Hence, after this foreshortened discussion of the major considerations, we once again enunciate the same basic compromise policy for defensive investors—namely that at all times they have a significant part of their funds in bond-type holdings and a significant part also in equities.

Take the five stocks in the Dow Jones Industrial Average with the lowest stock prices and highest dividend yields. Discard the one with the lowest price. Put 40% of your money in the stock with the second-lowest price. Put 20% in each of the three remaining stocks. One year later, sort the Dow the same way and reset the portfolio according to steps 1 through 4. Repeat until wealthy.

Read backwards. When you research a company's financial reports, start reading on the last page and slowly work your way toward the front. Anything that the company doesn't want you to find is buried in the back—which is precisely why you should look there first.

Today's defensive investor can do even better—by buying a total stock-market index fund that holds essentially every stock worth having. A low-cost index fund is the best tool ever created for low-maintenance stock investing—and any effort to improve on it takes more work (and incurs more risk and higher costs) than a truly defensive investor can justify.

Of course, wonders can be accomplished with the right individual selections, bought at the right levels, and later sold after a huge rise and before the probable decline. But the average investor can no more expect to accomplish this than to find money growing on trees.

If your investment horizon is long—at least 25 or 30 years—there is only one sensible approach: Buy every month, automatically, and whenever else you can spare some money. The single best choice for this lifelong holding is a total stock-market index fund. Sell only when you need the cash

guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with a consequent inverse range of between 75% and 25% in bonds.

Conversely, sound procedure would call for reducing the common-stock component below 50% when in the judgment of the investor the market level has become dangerously high.

Once you lose 95% of your money, you have to gain 1,900% just to get back to where you started.

Once you lose 95% of your money, you have to gain 1,900% just to get back to where you started. 1

Value = Current (Normal) Earnings × (8.5 plus twice the expected annual growth rate) The growth figure should be that expected over the next seven to ten years.7

It's time for everyone to acknowledge that the term "long-term investor" is redundant. A long-term investor is the only kind of investor there is. Someone who can't hold on to stocks for more than a few months at a time is doomed to end up not as a victor but as a victim.

One technique that can be helpful: See which leading professional money managers own the same stocks you do. If one or two names keep turning up, go to the websites of those fund companies and download their most recent reports. By seeing which other stocks these investors own, you can learn more about what qualities they have in common; by reading the managers' commentary, you may get ideas on how to improve your own approach.

Jeremy Siegel's Stocks for the Long Run (1994)—culminating

No compre nunca una acción inmediatamente después de una subida sustancial, ni tampoco la venda inmediatamente después de una bajada sustancial».

In our view there is no superior advantage in any fixed pattern of diversification. It is not essential to spread the risk around, in pre-established proportions, so that each of the major categories of American enterprise is included. What is essential is that a reasonable diversity of industries be achieved, so that the investor can feel he has his stake in a fairly good cross section of the economy. p143

Nothing is more prejudicial to war than talk.

The poets, when they speak of war, talk of the shield wall, they talk of the spears and arrows flying, of the blade beating on the shield, of the heroes who fall and the spoils of the victors, but I was to discover that war was really about food. About feeding men and horses. About finding food. The army that eats wins.

You will not fight in the shield wall," my father said. "No, Father." "Only men can stand in the shield wall," he said, "but you will watch, you will learn, and you will discover that the most dangerous stroke is not the sword or ax that you can see, but the one you cannot see, the blade that comes beneath the shields to bite your ankles.

An army, I learned in time, needs a head. It needs one man to lead it, but give an army two leaders and you halve its strength.

You should always plan your battles form the enemy's point of view.

The art of war," I told him, "is to make the enemy do your bidding.

The Lord Uhtred sought to annoy you, bishop, the king said, and it is best not to give him the satisfaction of showing that he has succeeded.