Welcome to Week 1 of “Common Stocks and Uncommon Profits” by Philip A. Fisher!I think we're all in for a fantastic ride.First thoughts:- There are no stupid/dumb questions or ideas.- Ignorance is acceptable and correctible- The point of this whole thing is to learn through question, dialog, discussion- Try to stay on topic – when things go off topic, the moderator (yours truly for week 1) will suggest that a separate thread be startedThat said, here are some quotes that I found interesting. Feel free to discuss them, ignore them, or start some discussions about thoughts of your own. I'm just here to provide an anchor for the week. |-%^}----------------------------“My father's goals and mine have never been quite the same. But this book works for his or mine. He was a growth stock investor. …He wanted stock in a firm that could grow and grow and grow, and the stock could be bought at a reasonable price and virtually never be sold.”. (From the Introduction by Kenneth L. Fisher, Page xii)Any resonance? How does this tie into the RM/RB philosophy of LTBH? Does the phrase “bought at a reasonable price” tie in? Or is it disharmonious in any way?----------------------------“Possibly you think of earlier years when Henry Ford was starting the Ford Motor Company or Andrew Mellon was building up the Aluminum Company of America, and you wonder if you could not discover some young enterprise which might today lay the groundwork for a great fortune for you, too.” (From Chapter 1, “Clues from the Past”, Page 6.)Is this at odds with what we've learned in the RM Seminar? Or is it harmonious? In what ways? Was Fisher a precursor to the Gardners, Foolishly?----------------------------Okay – those are my starting points. What are you finding that makes you stop and think, question, challenge, or jump up and yell “YEAH”?...Steven...thread-starter, moderator for Week 1
I lost my italic html tags...First the post wouldn't submit..took it into MSWord..pasted into new post...anyway.. my apologiesHere is post reiterated with citations italicized... I am reassured by the statement.."no stupid/dumb questions or ideas"I went over the scheduled reading several times. I found it difficult to remember the time of the writing as the 50's. To address the points from Steven...I have been working with RM principles..new graduate that I am ... but had a vague idea of RB being a company that is "new" or "doing things a new way" or "doing new things" something like that. Whereas the RM is the "best at doing what they have always done"When I think of Henry Ford..I think it must have been a RB situationRuleBreaker Principle #4 (I quote only the first since I don't understand all the others)Any Rule-Breaking company needs to fulfill ...these criteria: ** The top dog and first-mover in an important, emerging industry... Surely H.Ford fits this..Then I found this RuleBreaker Principle #3Valuation is overrated. Valuation is, at best, a secondary or tertiary concern. To many long-term investors, valuation should not be any concern at all. What I found in the discussion of this principle was that in our economic system the market price IS the reasonable price.So does P.Fisher mean "reasonable" the way RB Fools mean "reasonable" i.e. market price?I recognized Cash-to-Debt Ratio when Fisher wrote about a company being able to withstand "slow times" by having enough cash on hand..or "... borrowing ability to withstand a year of two of hard times,... as an investment that is "safer" than the "financially weak or marginal company...that is [susceptible] to the meanace of the business cycle (pg 12) Then finally Chapter 2..short "Scuttlebutt" I didn't like this chapter at all. I couldn't picture myself with a yellow legal pad, all filled with quetions..and Fisher writes that ...it is the professional advisor who can help the individual investor. (pg 17) And then I found(D.Gardner's writings)RuleBreaker Principle #5 I am not an institutional investor. I do not have a Quotron. I do not use a Bloomberg box. I have not met the management of most of the companies I invest in, and unlike Wall Street analysts, I don't get to regularly sit down behind closed doors with management and have them share privileged information about their upcoming earnings prospects. The information you get from me and from us here in Rule Breaker Portfolio Land is mostly just our own opinions -- although it is informed by what we learn from our community. (We listen very carefully.) I reason that these discussion boards are my yellow legal pad, filled with questions, sometimes answers. You are my community. (On preview reply I was going to take the last lines out...but no ideas stupid right?? besides 2 A.M. I can sound Foolish)Now it's closer to 2:30 A.M. and I'm still leavin' the sappy lines in!! Infinitely...
Hi RM Grads and Book Club members:Liked all of your first thoughts Steven! Your first thread from the introduction did resonate with me. Philip A. answered this in the preface on pg. 4 : two matters were significant influences in causing this book to be written. One, which I mention several times elsewhere, is the need for patience if big profits are to be made from investment. The other is the inherently deceptive nature of the stock market. That paragraph indicates the need for the LTBH philosophy."bought at a reasonable price" doesn't really tie in and I think that it is disharmonious.There are many paragraphs that indicate to me that the stock price wasn't of any great importance, but here is the one that stood out the most: Even in those earlier times, finding the really outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people than did the more colorful practice of trying to buy them cheap and sell them dear. Chapter 1,pg. 7As a new RM graduate and as a RB graduate I agree with wing9 that H.Ford is more of a RB . I also applaud wing9's recognition of the Cash- to -Debt Ratio.Finally, the chapter that I was so eager to read, the "Scuttlebutt" chapter, was difficult for me to grasp. I realized what Fisher was saying ,was that you had to be conversational in the companies that you were thinking about investing in. Knowing what questions to ask,etc. It occurred to me.....Replace the word Scuttlebutt with search the FOOL MESSAGE BOARDS.Linda (who has used a green highlighter on quite a few of the Fisher gems already)
Good morning fellow Rule Maker Grads and BooK Club members! I'm excited that we are finally getting started and I see the itkin, a.k.a. Steven, didn't waste anytime in launching our voyage through "Common Stocks and Uncommon Profits"...Mail4Isd says "bought at a reasonable price" doesn't really tie in and I think it is disharmoniousI would tend to agree that that statement is disharmonious.....but I'm thinking those are not really Philip Fisher's words but a maybe slightly off base interpretation by his son who actually wrote those words in the book's introduction. From what I've read so far, the stock price didn't seem to be a concern for Philip Fisher, only that the company have great potential for growth and a Research and Development budget. I could say more but then we are to stay in the bounds of the first 18 pages for the first thread.I did get a feeling of deja vous tough in reading the first two chapters. I felt as if I were reading posts on the Fool.com site. I think we are going to see alot of Fool in Philip Fisher, and then again maybe there is alot of Philip Fisher in the Motley Fool.As far as the section on "Scuttlebutt" goes, I'm not sure that that can apply to today's investor. It just doesn't seem possible for the average investor to get access to the people that Mr. Fisher is suggesting be interviewed, much less have the time that I think something like that would take. None the less, the ideas and principles that are revealed in this chapter represent sound thinking and just re-emphasizes the "do your homework" theme that you hear throughout the Motley Fool community.Ok...those are my initial humble thoughts and opinions.Fool-on.....Johnboy (hoping to uncommonly profit from my continuing investment education on the Fool.com)
wing9 offered the following insight:"I reason that these discussion boards are my yellow legal pad, filled with questions, sometimes answers. You are my community. (On preview reply I was going to take the last lines out...but no ideas stupid right?? besides 2 A.M. I can sound Foolish)Now it's closer to 2:30 A.M. and I'm still leavin' the sappy lines in!! "Right! Everything you have to say is valuable, and serves as inspiration or challenge to someone else. I thought this was an excellent insight, applying some thought and consideration to the situation.Bravo! No stupid ideas indeed!...Steven...thread starter, moderator for week 1...impressed with everything I've read so far - this is what a book club/study group is for!
Linda wrote:Finally, the chapter that I was so eager to read, the "Scuttlebutt" chapter, was difficult for me to grasp. I realized what Fisher was saying ,was that you had to be conversational in the companies that you were thinking about investing in. Knowing what questions to ask,etc. It occurred to me.....Replace the word Scuttlebutt with search the FOOL MESSAGE BOARDS.I was thinking the exact thing! The whole internet for that matter. His aproach is great and I wonder what he would have thought about our boards and the rest of the internet for performing scuttlebutt?
A few thoughts of my own and some favorite lines from the book:"For one reason or another, through one method or another, you buy common stocks in order to make money." p6Yep.... that's me!!!Even in those earlier times, finding the really outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people that did the more colorful practice of trying to buy the cheap and sell them dear." p7As a Fool once said, "You can't time the market." Fisher is very Foolish in his methods. This is gonna be good reading."What was required was the ability to distinguish these relatively few companies with outstanding investment possibilities from the much greater number whose future would vary all the way from the moderately successful to the complete failure." p7Enter the RB and RM seminars... I peaked ahead at his 15 points and next week will be a great discussion on this board!!!"... to the stockholder in the growth company with sufficien financial strength or borrowing ability to withstand a year or two of hard times, a business decline under today's economic conditions represents far more a temporary shrinking of the market balue of his holdings than the basic threat to the very existence of the investment itself that had to be reckoned with prior to 1932." p12I've enjoyed learning some of the history of the SEC and it's rules and regulations. It's always evolving and protecting the consumer by leveling the playing field. Even this year we saw a new law that stops early disclosure to analysts. This point again shows how Fisher stresses the LTBH philosophies.===========================HELP!! (my quote)I need to reread it a few times but I got lost after my first two trys figuring out pages 13-14. It's the section on bonds and inflation. Any insight would be appreciated.Thanks!!!
Johnboy said:As far as the section on "Scuttlebutt" goes, I'm not sure that that can apply to today's investor. It just doesn't seem possible for the average investor to get access to the people that Mr. Fisher is suggesting be interviewed, much less have the time that I think something like that would take. I thought the same thing. Fisher says that most investors are not in a position to do this for themselves, but that they need to "understand just what is needed and why. Only in this way are they in a position to select the type of professional advisor who can best help them."This was a little disheartening to me. It made me wonder--have times changed enough that we, as individual investors, are now able to do this for ourselves, at least well enough to successfully apply Fisher's 15 points? That's a question I'll carry with me as we work through the points.Lynne(enjoying all your thoughts and observations!)
Scuttlebutt can still be done. You may not have access to the CEO but access to employees is available. Home Depot has lots of locations. You can check the parking lots. Inside you can see the employees and the customers. Watch, study, talk. I think there are plenty of ways to do it, you may just have to be creative. Can't interview the CEO. Try google.com, I bet they have some links to help. Go to construction sites. Where do they get their materials.Creativity. Sorry, jumping ahead just a hair.halon
Luminary, in post #839, pleaded:HELP!! (my quote) I need to reread it a few times but I got lost after my first two tries figuring out pages 13-14. It's the section on bonds and inflation. Any insight would be appreciated.Luminary, you are not alone. The yellow highlighting in my book comes to a skidding halt on pages 13-14. Reading those pages brought back for me the dim memory of why I hated the required college economics courses that I slid through - ironically, at a time just a few years before Fisher published his book in 1958.I look forward with you to any insight.Alan
Hi Alan, Luminary, et al., About pp. 13-14 and bonds:HELP!! (my quote) I need to reread it a few times but I got lost after my first two tries figuring out pages 13-14. It's the section on bonds and inflation. Any insight would be appreciated.Here's a three-part answer. First, what's a bond? Second, what affects a bond's attractiveness as an investment? Third, why I think Fisher is bringing up all that stuff about government policy and bonds in Chapter 1. :)1. What's a bond?A bond, is an I.O.U that a company or the governemnt issues to raise money. Let's say we buy a bond for $1000 from Caterpillar in 2000 at 10% for a term of 10 years. Caterpillar uses our money for the term (ten years) and pays us 10% interest ($100) per year as payment to us for borrowing our money. In 2010 Caterpillar returns our $1000 (principal) to us. The above assumes that we buy and hold the bond for the entire ten year term. Of course, that doesn't always happen, and thus we have the bond market where bonds are bought and sold for various amounts. 2. What affects a bond's attractiveness as an investment?There are two important things that affect the return of a bond investment: the rate of inflation and the interest rate. When interest rates rise the the price of bonds fall.When interest rates fall the the price of bonds rise.If a bond is issued in 1998 with an interest rate of 5% but then in 1999 bonds are paying 6% the 1998 bond is less valuable than the 1999 bond. If I know I can get 6% return with a current $1000 bond, I'm not going to pay you $1000 for your 1998 5% bond, even though that's what you paid for it. Conversely, if bonds are paying 4% in 1999 the 5% 1998 bond can be sold for more than the 1999 bond because it's paying more interest. Inflation causes bonds to decrease in value over time. Let's say you are receiving 10% interest each year from your bond and the rate of inflation increases at 2% per year. Your 10% return is fixed each year, but the rate of inflation is cumulative. So as far as I can figure it, by the end of the ten year term you have effectively received -10% interest. My math could be wrong, but I think we can say that inflation greatly erodes the return of your bond. 3. Why I think Fisher is bringing up all that stuff about government policy and bonds in Chapter 1. :) Common Stocks, Uncommon Profits was published in 1958. Philip Fisher became what we know refer to as a securities analyst in 1928. In that historical context, Fisher had witnessed and been deeply affected by both the Depression of the early 30's and WWII. Both the war and the Depression fundamentally changed both the U.S. banking system and the way the U.S. government managed the economy. It seems to me that in 1958 Fisher was quite a genius to have such grasp of the changes in the U.S. ecomony and and such a prescient understanding of the effects that they would cause in investing and business.To keep this short and probably somewhat inaccurate, the crux of it is that after the Depression, the government began to take an active role in influencing or managing the economy in order to neutralize the extreme highs and lows of the business cycle. After the devastation of the Depression, especially the debilitating employment which literally and figuratively destroyed people's lives, the consensus was that it was worthwhile for the government to run a deficit and thus increase inflation to keep the economy on a fairly even keel. So, in the years that have followed the Depression, the price of stability and low unemployment has become inflation. Deficits cause inflation because deficits are basically overspending with too many dollars chasing too few goods, thus resulting in price increases. I think that Fisher is stressing the government's fairly new (in 1958) monetary policies (which included taxes, setting the interest rate, running a deficit, and controlling the money supply) because they had already changed the business/investing landscape in fundamental ways that were just being understood at the time. The historical attractiveness of investing in bonds, which had been high when inflation was low or non-existent, has really been undermined by inflation. I believe that Fisher's saying that bond investment is bad for the long-term investor was quite a radical departure from the thinking of the time. That's why I think he's making such a point of discussing bonds.One last comment ---What was really interesting to me is that Fisher writes on page 7, "Even in those earlier times, finding the outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people than did the more colorful practice of trying to buy them cheap and sell them dear." That is, even in the earlier times when people were able to bet on and profit from the wildly fluctuating business cycle, Fisher is saying that the best rewards were still to be found in finding great companies and sticking with them. So, in our economic times, which are much more stable, I think the long-term buying and holding of great companies is even more compelling. --I hope this has helped, and I apologize for any inaccuracies or omissions! :)Further resources:The Fool's Investing Basics: Bondshttp://www.fool.com/school/basics/investingbasics005.htmand The Fool FAQ: Bondshttp://www.fool.com/FoolFAQ/FoolFAQ0010.htmI'm enjoying this discussion and looking forward to reading more of the book! Best, Lydia
Oops! That should read:debilitating unemployment rather than "debilitating employment" in the previous post......unless someone really hates their job I don't think employment is usually debilitating! :)Lydia
Even though I didn't go to our RM Grads-July 2000 board until 2 weeks after the workshop ended, I'm pleased to find this book club was formulated. I need to learn a lot more about stocks that I do now. (I was a rookie!) I'm grateful for the size of the assignments, the slower pace, and the doability of this along with Life. First, I'll get my (not dumb) questions out of the way. What's the easiest and fastest way to get onto this board? Can non-graduates lurk on this board? How does one start and get onto a new thread? Now for the book, which I was lucky to find at the 3rd store, plus it was the last copy. I agree with itkin's thoughts about the Introduction regarding Fisher's thoughts, "But this book works for his or mine." It's nice to be reading a book that has principles that generate to either growth stocks or value stocks, or RB/RMs. It reminds me of the structure of the RM Workshop where we narrowed down choices to 3, then studied them in depth. When we were done, we gained knowledge and skills to do it with other stocks. From this I'll jump to the "scuttlebutt." I guess I was really expecting something more from this small chapter, especially when Fisher said it was one of the "jewels" in the book and "The craft is in the scuttlebutt, which, like all craft, takes time to learn." (xii) Like some of you, I wondered how I could possibly do all the investigation he suggested. I really like the idea of using the discussion boards to gain the information. Good thinking on your parts. As for the economic lesson, it was a little heavy for me, but necessary. I liked lacow's further explanation because I need to force myself to learn more about the subject. It's not my favorite subject, so if I can learn more about it, then maybe I can understand the stock market better. Kathy
Steven,Great start. ------"My father's goals and mine have never been quite the same. But this book works for his or mine. He was a growth stock investor. …He wanted stock in a firm that could grow and grow and grow, and the stock could be bought at a reasonable price and virtually never be sold.". (From the Introduction by Kenneth L. Fisher, Page xii)When I read this in the introduction, I couldn't help but think that good sound investment strategies will work for most people even if each individual puts their own little twist on them. Reasonable price! What is a reasonable price? He didn't say bargain price, nor did he say inflated price, he said reasonable price. In my opinion, if you have found the type of company this book is about, the stock will be at a reasonable price.Also, Fisher himself when referring to long term investment opportunities in chapter #1 on page 7 states: " These opportunities did not require purchasing on a particular day a the bottom of a great panic. The shares of these companies were available year after year at prices that were to make this kind of profit possible. This means that to make a great investment we are not price shopping, but company shopping.This is not unlike the things we have learned in both the RM Seminar and the RB Seminar. In fact, in the RB Seminar, one of the things we look for is a company that Wall Street Analysts consider to be overvalued.---------"Possibly you think of earlier years when Henry Ford was starting the Ford Motor Company or Andrew Mellon was building up the Aluminum Company of America, and you wonder if you could not discover some young enterprise which might today lay the groundwork for a great fortune for you, too." (From Chapter 1, "Clues from the Past", Page 6.)Now, isn't what I read in almost every introductory post on the Rule Maker Seminar Boards. Need I say more? In both the RM and RB philosophy we are looking for those companies that will outperform their competitors today and tomorrow. We want to be in on the ground floor, so to speak. To be able in 2010 to look back to our investments from 2000 and be content with our choices and success. The exciting thing is that there is not just one company out there that will answer our needs. As Fisher says, there are scores of them. As the Fool teaches us, there are scores of them. It is up to us to learn to sift through the many to find the few.eeegad!...really enjoying all the posts
Two other things that had an impact upon me as I read:I liked the way Kenneth Fisher portrayed himself in the Introduction. He humbled himself that it took him quite a bit of time to learn the things that he learned. He said, "It took me about fifteen years to understand 'Common Stocks and Uncommon Profits'." (Introduction, xi) That inspired me!Next: "I spent...spare time...reviewing both the successful and, more particularly, the unsuccessful investment actions that I had taken and that I had seen others take during the preceding ten years. I began seeing certain investment principles emerge from this review which were different from some of those commonly accepted as gospel in the financial community. (Preface, p. 4) "I thought of the difficulties of the army of small investors who have unintentionally picked up all sorts of ideas and investment notions that can prove expensive over a period of years, possiby because they had never been exposed to the challenge of more fundamental concepts...I concluded there was need for a book of this sort." (Preface, p.5)These excerpts reminded me of foolish articles I've read of brave people willing to share their mistakes in order to help others.I'm looking forward to reading more of this Fisher book.
The entire "Scuttlebutt" chapter seems to be difficult for the individual investor to accomplish, but look at the resources we have available. There are the individual stock boards, the use of sites such as Company Sleuth, the company's web site, the use of the company's Investor Relations people, Free Edgar, the Motley Fool reports. Seems there is almost too much information available, and the trick is "the yellow pad" to know what we are looking for.Incidentally, all of Chapter 2 seems to match the profession of "Competitive Intelligence". If one reads some of the competitive intelligence books, there is much help in how to get info on companies and industries. One starting source is http://www.scip.org which is the home page of the competitive intelligence organization.One problem I have is that the pace of today's new technology is so rapid that it is hard to know what new industry is going to be a true growth industry. And then, even when we project correctly, how would we have picked Ford over all of the other auto companies that have come and gone?Back to scuttlebutt. Even though we like to do our own due diligence and run our own portfolios, many of us do subscribe to newsletter, Barron's, magazines, TV financial shows, etc. Knowing what questions should be asked sure helps in evaluating what sources are fluff and which are beneficial.Thanks for this book club. I'm a John McEnroe rookie, and this adds to the education.
Having read the first two chapters, I have to think there is a lot of Fisher in the Motely Fools. Of course, you can view it either way, but it sounds like Fisher has been the force behind many an investment philosophy. Kenneth L. Fisher notes in the introduction on page xiii, “The scuttlebutt chapter is only three pages long. But they are among the book's most important pages." I'm thinking the chapter on “scuttlebutt” is a chapter we may want to review again as we read more. It may take a few times to digest it all.As I read the material we are covering this week I was drawn to the comments Fisher makes concerning the average individual ability to research a company prior to purchasing stock. On page 16 Fisher states, “This is to find someone who is sufficiently skilled in the various facets of management to examine each subdivision of a company's organization and by detailed investigation of its executive personnel, its production, its sales organization, its research, and each of its other major functions, form a worthwhile conclusion as to whether the particular company has outstanding potentialities for growth and development.” And he goes on to say, “Unfortunately there are several reasons why it usually will not serve the average investor very well. In the first place, there are only a few individuals who have the necessary degree of top management skill to do a job of this kind.”This issue has been a source of concern for me when studying how TMF suggests we research a company. They tell us to research a company and to know everything you can about them. I think I understand the direction TMF is giving us and this excerpt just reaffirmed to me that this task is not a small one. I do believe that the boards and the Internet as a whole is an excellent source for “scuttlebutt”. I do wonder what Philip Fisher would think about the Internet as a source for “scuttlebutt”. I do think that his suggestion that the average investor needs an investment advisor was perhaps wise before the Internet came along. Can you imagine researching a stock without it the Internet? I am sure he would have concerns about checking the source of our information. These are a few thoughts I had from the first couple of chapters. It does appear to be a very important book to read in expanding our knowledge of how we chose which companies to invest in.Mayacourt -Mary
A question: what is the difference between a growth investor and a value investor? Kenneth Fisher mentions that this method works for both himself (value investor) and his father (growth investor) I am not clear on how the two differ.Also I really liked this quote from page 4: "...the need for patience if big profits are to be made from investment. Put another way, it is often easier to tell what will happen to the price of a stock than how much time will elapse before it happens. The other is the inherently deceptive nature of the stock market. Doing what everybody else is doing at the moment, and therefore what you have an almost irresistable urge to do, is often the wrong thing to do at all." Thinking for yourself. Trying to understand a company. Not just jumping offboard because a stock price doesn't go up fast enough or even goes down-- but learning to look if there has been a fundamental change in the company. And sticking with it if company fundamentals remain excellent. All very Foolish.Another comment regarding Mr Fisher's advise on having a professional do your investing for you. I believe there was no other way to invest in 1957. So he wasn't really saying you shouldn't do it yourself-- but back then you really couldn't. And in that case you needed a good way to evaluate the professional investor you did pick.I'm going to enjoy this. Its been fun reading all the posts so far.Susan
Fellow teammates & book club members,I have the feeling that we are moving so fast on this book that by the time I type this, it will be out of date (I type very slowly – which should keep my posts short).Favorite quote #1: Doing what everybody else is doing at the moment, and therefore what you have an almost irresistible urge to do, is often the wrong thing to do at all.This, combined with the already quoted ideas that great companies don't need to be jumped on immediately is something I need to tell myself repeatedly as I learn about the next new, new thing. I often use a corollary to this quote (once I'm sure about a company): Be fearful when others are greedy, and greedy when others are fearful.Along these lines, my most recent purchases have been NOK & LHSP.I like the comments about management at the end of Chapter 1. To me, Fisher seems to be combining the qualitative analysis we do in RB investing with the quantitative analysis we do in RM investing. I like the statements that ..companies need not be young & small.” and “growth is often associated with knowing how to organize research in the various fields…to market economically worthwhile and usually interrelated product lines.I hope this doesn't sound insulting to those of you who have already shared your thoughts on “scuttlebutt”, but you should know that you are in plentiful company: the average investor will have one predominant reaction.. regardless of how beneficial the 'scuttlebut' method may be to someone else, it is not going to be helpful to him, because he just won't have much chance to apply it.I agree that much scuttlebutting can be done on the web, and here at TMF. Recall, however, that one of the best sources of scuttlebutt is competitors. Therefore, I think that scuttlebutting should include active participation in discussion boards of competing companies, not just the board of the company you are interested in. I also think useful & less biased information can be obtained from industry boards & Speaker's Corner boards related to the company you are investigating.Scuttlebutting also puts us in a bit of a dilemma: while it is a powerful way to screen out (or in) companies worthy of further investigation, you need to have done a good amount of DD before you can effectively scuttlebutt (IMO). I think one of the intimidating aspects of Fisher investing is the innumerable dead ends one ends up coming up against, usually after a lot of DD! I've heard estimates of as few as 10 Fisher companies (out of ~8000) may exist, and that one should feel fortunate to be able to find one in a year of searching. TMFGrape has posted that within his portfolio are only 3 true Fisher companies.During the RM seminar, I posted a question about “scuttlebutting in the 21st century”. While I received several helpful responses, many of which we've already covered, the most useful were from TMFGrape:I find conference calls an important part of my analysis of management. While they can certainly read from a script for part of the call, they are often required to think on their feet. Plus, you can get a sense for their capabilities and depth by listening to the different people speak on the calls. I also like to look at publications dedicated more to industries than the masses, as these should normally provide a more unbiased perspective. For example, I've found a number of interviews with John Chambers in PC Week (recently renamed e-Week). Calls to a company's investor relations department are also invaluable in this regard. I also like to read through the business description and management discussion and analysis in the financial reports to learn the company's approach to its business so that I can evaluate whether I agree or disagree with the approach, the goals and the like. I really believe that one can scuttlebutt quite well, but only after a lot of DD has already been done. And then only if all that DD hasn't blinded us to the fact that the odds are stacked heavily against us that this is the one we've been searching for (again, and again, and again). In other words, I believe that Fisher investing is like RB/RM investing but more so. We are searching the world over for a company we shall have and hold till death do us part. No small task.Thanks for reading & sharing,Mark
Preliminary book club chat stuff:Wow so far I sure am glad I helped this get going. So far the pace is the proverbial "just right" for me in that it is the only thing I was able to finish and feel that I had accomplished something in quite a while. Now I get all week to learn more about my "homework" assignment from all of you and I have already on the first day begun learning stuff.I don't know how many of you were as ignorant about this book and its author as I was. I admit to not even having read the posts that had done Fisher Analysis...if anything just scanned them...and of course cut and pasted the urls for the proverbial later look that rarely gets done.So imagine my suprise when I find the book was written in the '50's. Really folks..I didn't know that. My first reaction to the Introduction was negative. I didn't particularly like the son giving me his resume and status ....and more than once. I wasn't really sure how he felt about his Dad (sorry...that's what you get from having a retired shrink in your club). But after I was done with the whole assignment and reflected on it...I not only got even more enthused about reading it...I decided that the Intro was okay.What astounded me is how contemporary the book appears to be. The Mechanical Investing Board folks often talk about a time machine in regard to things like their backtesting. I felt like I was in a time machine with this week's assignment. Its wierd how much this guy appeared to accurately understand and predict the future. Their is Gorilla Game and RM/RB and othe TMF stuff stamped all over this stuff and is a half a century and another world ago!Being the "dunce of omaha" I was astonished and delighted to learn that this Fisher guy was whom the "wizard of omaha" says taught him his stuff. Now I see why TMFMycroft likes this guy and his stuff (from what I have been able to decipher he is big on and has been long on BRK for quite a while).I was disappointed in the scuttlebutt chapter also after the build up in the Intro. But after reading just whats been posted so far in this weeks thread I have changed my mind. You are all teaching me tons about what the chapter really meant...obviously it means something different almost 50 years later and you all are updating for me and by doing that make the chapter seem as valuable as The Son seemed to indicate.I suspect that the idea...given how difficult researching must have been before the internet and tons of other changes in the Information Age...must have been revolutionary and radical. Thats my thoughts for now but I reserve the right to jump back in as I read what you all contribute. I may need a whole Zip Disk just for the copying and pasting I am going to do during this book club!Benjamin aka omahafool
In addition to the many points already mentioned in previous posts, my highlighter seemed to be running over the word “management” quite frequently in the first chapter. Today's top corporate management is usually engaged in continuous self-analysis and, in a never-ending search for improvement,…”“…what really counts is a management having both a determination to attain further important growth and an ability to bring its plans to completion.”Fisher seems to be saying (to me) that you may have a fine set of Arabians pulling your chariot, but it really helps to have Ben-Hur holding the reins. I don't recall him using the term “reinvent”, but he does link “corporate management” with “corporate research and engineering” and goes on to say “this research could be made a tool to open up a golden harvest of ever-growing profits to the stockholder.” However, he also states that expenditures for research must be carefully managed and that the best outcome may include “financial drain before it eventually adds to the stockholder's profit.”As I was reading the “Scuttlebutt” chapter, I found myself shouting out “Ya sure, that's easy for you to say. Not only is that what you do for a living, full time, but you've also been doing it for 30 years!” I don't believe I will ever be as thorough as Philip Fisher when I research my stocks, but I'll do enough to make me feel comfortable with my choices. I also believe each one of us will require a different amount of self-reassurance that we are doing enough invest-igation before we invest our money. As Fisher himself said in a 1996 interview http://www.forbes.com/forbes/092396/5807222a.htm“There are relatively few people who in my opinion have the competency I would want if they were handling my money. But they can find people with a long-term outlook.”If there's one thing I do have, it's patience.tP.S. Did anyone else find the phrase "depreciation in the purchasing power of money" sounding more menacing than the word "inflation"?
Hi Book Club RM Grads,It's good to be here with all of you and learn some more from those who have so much to teach! This is my first book club, and the 3rd book I've read on investing. Here's what jumped out at me so far from Fisher's “Common Stocks and Uncommon Profits":(Long post)Chap. 1 “Clues from the past”:The seven major insights from the investment clues that can be gleaned from the past:First, The greatest investment rewards comes to those who by good luck or good sense find the occasional company that over the years can grow in sales and profits far more than industry as a whole. Second, when we believe we have found such a company we had better stick with it for a long period of time. Third, such companies need not necessarily be young and small. Fourth,what really counts is a management having both a determination to attain further important growth and an ability to bring it plans to completion. Fifth, growth is often associated with knowing how to organize research in the various fields of the natural sciences so as to bring to market economically worthwhile and usually interrelated product lines. Sixth, a general characteristic of such companies is a management that does not let its preoccupation with long-range planning prevent it from exerting constant vigilance in performing the day-to-day tasks of ordinary, business outstandingly well. Seventh, in spite of the very many spectacular investment opportunities that existed twenty-five or fifty years ago, there are probably even more such opportunities available today.Having attended both the March RB Seminar and the August RM Seminar I can honestly say that both seminars used these same seven major clues and that when needing to find exceptional companies the criteria hasn't changed: The 7 Clues match up with Fool criteria:1. “Do your homework...look for growth."(TMF: Criteria for both for RBs and RMs) 2. As long as it's solid…"Hold your investment position for a long period of time."(TMF: Criteria for both RBs and RMs)3. ”Look at emerging companies." (TMF: RBs "Well established companies." and RMs "Billion-$-profits-a-year" companies.) 4. “Look at Management.”(TMF: RBs “Who's at the helm?” and RMs “Are the CEOs staying or jumping ship for greener pastures?") 5. “Look for Growth…backed by on going research.”(TMF: Criteria for both RBs and RMs)6. “What's company Performance...day-to-day?”(TMF: RBs "Investigate to make sure management has the credentials and background to make this happen" and RMs “How well can management pinch a penny and hold on to its pennies?”(Foolish Flow Ratio) 7. “Opportunities…amass today!”(TMF: RBs "Look for companies that are the top first movers with unique products in an emerging industry" and RM's "Look at the truly well managed mega sales companies in the leading industries.")Chap 2 “What 'Scuttlebutt' can do”:So far (since we've only read up to page 18) the message Fisher is giving is very close to what Peter Lynch wrote later in his book published in '89 "One up on Wallstreet", and what the Motley Fool's, David and Tom are advocating in both their book "Rule Breaker, Rule Makers and their seminars: “Do your homework!”: Fisher comments: “I am aware that most investors are not in a position to do for themselves much of what is needed to get the most from their investment funds...nevertheless they should understand just what is needed and why…this way they are in a position to select the type of professional advisor... and can adequately evaluate the work of that advisor.”Ha! Fisher in the 50s couldn't possibly have conceived of the communications network available to the average investor via the Internet today! We may not be able to travel to visit the companies and talk face to face with management, but we have almost instant access to a company's SEC filings and the all breaking news we can read about a company and it's industry and what's effecting it's stock price.Insight into the market is available via email…and myriads of opinions from knowledgeable, well informed commentators can be received daily...all one has to do is sign up! Much valuable “scuttlebutt” can be found via urls to sites that cover company news, profiles, competitors, upcoming splits, buybacks, quarterly earnings, and so much more!For instance, just to name a few, sites are available that:-Evaluate the company in relationship to its industry and tells how it ranks in that relationship.-Give the % for the estimated growth of an industry in the next year.-Tell how a company rates in comparison to its peers and gives each company a “report card” as to how it is doing.-Give the performance of a stock in relationship to all other stocks in 3-6-12mos intervals (Relative Strength)-Give detailed information and commentary about company CEOs.-Give detailed information and commentary on what the company and it's stock have been doing since the company's inception.-Will allow you to compare 3 stocks and identify which one is performing the best. The Net allows one access to any company that has a web page, their latest press releases, and information about their products. So much information literally at one's fingertips!One gets to investigate, learn and become one's own advisor in the 2000s!...something unavailable and totally unimaginable to Fisher in the 50s!I'm looking forward to reading more of Fisher's book and learning what other things are holding true for me as an investor in the 2000s. I find it reassuring that the basis for sound investing hasn't changed over the past 50 years as far as needing to do one's own research and that using the same 7 criteria still work in identifying the best investment opportunities.I'm glad I'm learning about investing today, with the use of the Internet and that I have access to the resources that will help me develop the skills to become "the trustworthy, knowledgeable advisor" who is responsible for investing my money wisely! Ha!invescape
Whew! What a thread! To begin with, everyone must go back and read the 1996 interview with Fisher (link given by thenderson in post #859). He doesn't talk about how the net can or might be used for scuttlebutt, but it is enlightening nonetheless.Second, I'm so glad to see that the thread has lured mlc11 back to this board! Hi Mark!As for me, I gobbled up the first 2/3 of this book several weeks ago, and then stopped in my tracks when talk of this book club began. I've reskimmed the first two chapters ... so... here goes.Someone asked what the difference is between a growth investor and a value investor. In the preface, Ken the value guy states "I wanted a stock that was dirt cheap because it was better than its bad image." Growth investors on the other hand care less about the current price. It is worth mentioning, though, even at the risk of jumping ahead in the book, that Fisher does care about price and timing to some degree, and that there is such a thing as a Fisher buying point. That's why Chapter 5 is entitled "When to Buy", even if most of that chapter does say not to worry about it too much. Sorry for being the first to break the rules... but it seemed like people might be in for a rude surprise later if a belief was forming that value matters nothing to our guru Fisher. As he says in that '96 interview, "My business is to find unusual companies and judge whether the price is too high." That gives it away, and you could've read that by now, so... :)My favorite quote so far that hasn't been mentioned is also from that interview: "I own six stocks. I would be willing to go as high as nine if I could find them." This to me indicates a discipline and pickiness level I think I will never have, although it's something to aspire to. (Actually, I too own six stocks... but then, I've only been in the market since January 2000. Time to stop buying a new one every month.)I think one of the intimidating aspects of Fisher investing is the innumerable dead ends one ends up coming up against, usually after a lot of DD! I've heard estimates of as few as 10 Fisher companies (out of ~8000) may exist, and that one should feel fortunate to be able to find one in a year of searching.I would like to respond to this: ow ow ow. Ow. Well... perhaps this can be tempered with the thought that filters like the RM criteria, and maybe even some of the MI screens, can help weed out the non-promising ones early. Even so, yes, this is not an easy method and not for the faint of heart or short on time. I will be searching in the coming weeks for ways to fit Fisher analysis into a working person's schedule. Lastly (for now), as for scuttlebutt, I have an idea I got while reading that nobody has proposed yet. Why not fill a yellow legal pad with the questions you would ask if you could, and then use those questions to remind you what to look for as you read the google articles, the website, the competitors' discussion boards and all the rest? This would seem to me like a reasonable melding of the old and the new: it forces you to think out the questions for yourself, and thus avoid getting sidetracked as you search.I don't mean to skip over the historical stuff, but many people have offered insights already--and I'm an engineer type who likes to focus on the practical side of things.Fool on,lemming
Greetings fellow book club members!I finished up our first assignment and thought I'd post my thoughts before reading through everyone else's has comments.Clues From the PastI think it's fun to be able to see in this book one of the sources of inspiration for many of The Motley Fool principles. Long term buy and hold, for instance. Fisher says, "Even in those earlier times, finding the really outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people than did the more colorful practice of trying to buy them cheap and sell them dear." (p. 7)And how many times have you read in Fooldom how one or two big winners over the course of an investor's lifetime can lead to financial independence? (This theme is especially prevalent in RB investing.) According to Fisher, "Listed on the various stock exchanges of the nation today are not just a few, but scores of companies in which it would have been possible to invest, say, $10,000 somewhere between twenty-five and fifty years ago and today have this purchase represent anywhere from $250,000 to several times this amount." (p. 7)What's especially encouraging to me is this sentence: "The shares of these companies were available year after year at prices that were to make this kind of profit possible." (p. 7)Finally, ". . .the greatest investment reward comes to those who by good luck or good sense find the occasional company that over the years can grow in sales and profits far more than the industry as a whole." (p. 15)Sounds Foolish to me. ;)ScuttlebuttThis chapter demonstrates ways of digging deeper and learning more about a company once you've researched all you can about the financials and the business plan. Fisher didn't put it exactly that way; in fact by placing this chapter before he reveals his fifteen points he may be indicating he normally performs "scuttlebutt" first, and then applies the fifteen points to companies he feels deserve further investigation. However, it seems to me that individual investors like us may be better served to save scuttlebutt for last. Just my initial thoughts. This chapter woke me up somewhat because I worked in a television newsroom for years, and I've learned a lot about developing sources and maintaining a flow of information, so this is something I should be halfway good at. ;)Fisher says good sources of information include competitors, vendors, customers, research scientists, executives of trade associations, and even former employees. (I would extend this to include current employees, also.) Finally, he says to contact company officers to fill in any remaining gaps in the picture.Very interesting, and I'm looking forward to next week! Now, who brought the cookies?Cheers,orangeblood
ScuttlebuttSomething that I have am constantly in awe of is something that Peter Lynch writes about in his book. Lynch, even though he had many stocks at a given time and was buying and selling on a regular basis always had time to do his own SCUTTLEBUTT. Of course he did have some tools that we may never have but the end result can still be the same.How? Well, Lynch would often times call the company he was interested in and start asking questions. His last question was always the same. "Who are your biggest competitors?" he would ask. He would then go out and do the same with those companies. He writes that many times the competitor would be the one that he would invest in. While that is not our main goal here, it is important to remember when doing the research. Don't just look at the competitions 10Q's and K's. Do the research.He invested in Super Cuts at one point and writes that after learning about the company he went to them and got his ears lowered. While waiting in line he pulled out his research paper and discovered that the Stylist had to take an exam every 7 months to stay licensed. He then compares that to a MF manager that does not have to have a degree. One of his many pokes at fund managers. The story goes into more depth but I thought it was a great way to show a form of Scuttlebutt.I was at the mall this evening buying glasses at Lens Crafters (are they public?)and while I had to wait I went walking. Being a NOK owner, I always find myself at the Kiosks roaming and asking questions about services and phones. My own Scuttlebutt. I think there must be more phone stores that shoe stores. One could get tired of all the walking from one phone place to the next. I like to watch people and see what phones they are holding and looking at purchasing. Again, Scuttlebutt. There are so many ways to get feedback just by observation. Phones are usually carried in the open and it very easy to see what people are buying. Point of all this rambilng? Simple, don't limit yourself by thinking you can't get answers because you can't talk to the folks at corporate. Watch, listen, and you will learn.Another interesting story that happened recently was TMF's own Mycroft traveling the world. While he was in Greece he talked a fellow into selling his NOK w/ WAP phone. That guy was on vacation asking questions in other parts of the world. When he returned he went on a tour of the U.S. for a couple of weeks. Says he was on vacation but me thinks he was headed to TMF HQ for a job interview because shortly there after he had TMF in front of his name. Back to my story. He drove from Seattle and stopped in Denver to ask questions at Liberty Media. Don't know where else he went but the best part is that he kept those of us that were interested updated on a daily basis. How is that for Scuttlebutt?Scuttlebutt is what you make it. Plain and simple. If you can't ask questions you can still observe.I always ask people about their job when I meet them. Nothing serious but people will provide great insight just by asking them what they do. I found out from a fellow last night that a local company has a 47% turn over rate. Amazing, they are supposed to be one of the premier places to work. I would have to dig deeper but I lost some interest at that point. Another fellow that I met works for a company that he said "We are like Oracle. We offer a suite like they do but we are much smaller." Both those were great answers and pretty much told me everything that I needed to know. I might be short changing myself but those answers from those folks will either spark further interest or in this case, send me to look email@example.com
Wow, do I feel special! Thanks for the hero's welcome, but I think you all should know that lemming is the brains in this operation. Also, I caught my Mom sending him money with notes to be nice to me.As part of the mutual admiration society, I'd like to thank lemming for his excellent advice:Why not fill a yellow legal pad with the questions you would ask if you could, and then use those questions to remind you what to look for as you read the google articles, the website, the competitors' discussion boards and all the rest? What do all the studies of successful people tell us? They write it down! (goals, etc.)Also, thanks for sending me back to the Forbes interview. As I was buzzing through these posts the first time, I had gotten the impression that the interview was with little Kenny Fisher, not Phil (da Man) Fisher.http://www.forbes.com/forbes/092396/5807222a.htmAs you point out, Fisher's idea is to search the world over for those rare companies that meet his criteria, and buy only those. Like you, I aspire to this, but have not yet accomplished this lofty goal. (TMF Mycroft, OTOH, holds only four companies in his portfolio the last time I talked to him about it!).In a way, this makes a tremendous amount of sense to me. After all, how many jobs would you want to work? Our investing money is like an extention of ourselves. Also, I find following even the 6 companies I own somewhat of a pain in the @$$ given all the other stuff in life that I need or want to do.I also like the idea of considering some type of screening to narrow the field. Mycroft has said that he reads Forbes religiously, as he feels that that periodical does the best job of focussing on management.(Does anyone have other recommendations along these lines?)Along more quantitative lines, I recommend this post from the l'union board (a recently discovered treasure):http://boards.fool.com/Message.asp?mid=12798314 Returning to the Fisher interview, the following theme came up again and again:I have stressed management, but even so, I haven't stressed it enough. I have stressed management, but I haven't stressed it enough. It's not what industry you're in, it's what you're doing right that your rivals haven't yet figured out.Itkin (Steve),I leave it to you to decide whether or not we need a new thread at this point, but I wanted to share parts of an essay I just read entitled: What Made Pericles a Leader by Philip Stadter. It's from the Key Reporter, but is not yet posted on their website. Insetting out the life of Pericles, Plutarch saw two outstanding leadership qualities: honesty and self-control…Despite the position of power he held…he died no richer than his father..the Athenians knew he did not expect to gain financially from his policy.Self-control is a less common trait, worth considering more closely…First, he put up with criticism…and even ..responded with humor. Second, Pericles didn't try to destroy his enemies. Third, he didn't try to win at all costs, but won support in ways that would enhance his city, not simply pay off the voters. Fourth, self-control means resisting irrational popular pressure.I don't want to bore you all any longer (and I hate typing), so I just recommend reading this last paragraph with, say, NOK's Jorma vs. MSFT's you-know-who in mind, and substitute shareholders for voters.Thanks for reading; Please comment.MarkFD: I am badlemming ;)
I'd like to comment on my impressions of what "scuttlebutt" is and how that differs from what some others are saying:*It occurred to me.....Replace the word Scuttlebutt with search the FOOL MESSAGE BOARDS.*I was thinking the exact thing! The whole internet for that matter. His aproach is great and I wonder what he would have thought about our boards and the rest of the internet for performing scuttlebutt?I don't think you can get the kind of information that he's talking about off of message boards, unless you're getting it from someone who has performed the actual scuttlebutt. For instance, there's a poster on the board of one of the stocks I follow that has provided information on the company that was apparently given to him by an employee. This info turned out to be a confirmation that the company was working on a certain project. However, you'll remember Fisher emphasized the importance of protecting your sources and not spilling information that would compromise the person who gave it to you. So I think that while you can find some scuttlebutt on the Internet, you may not find out everything you'd want.We may not be able to travel to visit the companies and talk face to face with management, but we have almost instant access to a company's SEC filings and the all breaking news we can read about a company and it's industry and what's effecting it's stock price.Insight into the market is available via email…and myriads of opinions from knowledgeable, well informed commentators can be received daily...all one has to do is sign up!The information I'm thinking about likely won't come from these sources. Let's say you're interested in a company that develops different kinds of products. You'd like to know several things: The likelihood the company can maintain or increase its market share for existing products; what new products the company has decided to try to develop; how well the R&D department is operating; etc. Now while you're likely to get opinions on matters such as these, wouldn't it be better if you actually knew the answers?Don't get me wrong, I'm not saying this is easy, or even possible in most cases. But I think this is probably what Fisher is trying to achieve.Cheers,orangeblood
Steven, and all. This is an interesting and informative thread.I had a question about bonds on page 13/14. Answered by lascow. Muchos Gracious, lydia.Very interesting exchange on "scuttlebutt", how difficult but necessary it may be for the individual investor to perform. And ways to improve on its performance.I liked the passage on page xiii Whenever you ask, you get answers. The art is to get more questions - and the right questions - flowing from the answers you receive. How is that done? Hmmm, lets see.We asked Tom G. and the writers to help us better understand how to select Rule Makers in our recent seminar. They provided us with some in-depth knowledge and practice on 6 quantitative financial criteria and some less in depth on 5 qualitative business criteria. Good answers, BUT, what questions flow from these 11 answers that were given?????By now, we have all read the Clues from the Past at the end of chapter 1. I won't repeat them here as they were previously documented. Again, Good Answers, BUT, what questions flow from these answers?Do any MLKers remember the phrase Critical Thinking?The other gem I found was on page xv, Don't overstress diversification. Warren Buffett would likely tell you, if you wanted to diversify your investments, to buy the no-load/low fee S&P500 index fund. This is a No-Stress, No-Sweat, No-Scuttlebutt, No-DD way to MATCH the performance of the Market. This is Dumb money that ceases to be Dumb when admitted and invested this way.Now that we have performed our worst-case investment analysis, what can we learn to improve our ability to improve our annual returns and beat the Market????BTW, Value investors buy cheap and sell dear - or like Mr. Buffet - they buy great companies at discounts to their present value. How? Discounted Cash Flows of future performance.Are we ready for chapter 3 yet????Harold
Harold et al., Are we ready for chapter 3 yet????No, no, no! :) As moderator for Week 2 (that means Ch. 3) I am not ready yet! So please try to hang on until Saturday!If you've got nothing else to do until we delve into Ch. 3, you could always check out ALL the sites below which relate to our beloved scuttlebutt.I check them all every day. ;) Excerpted from VaLurch's (I understand it was really Pat ;)) outstanding compendium (aka FAQ) posted during last year's Rule Maker seminar:II. Other Sources of News, Analysis, Research, and EducationA. General ...America Invest - http://www.america-invest.comAsk Research - http://www.askresearch.comBloomberg - http://www.bloomberg.comBriefing.com - http://www.briefing.com/intro/i_stocks.htmBusiness 2.0 - http://www.business2.com/Business Week Online - http://www.businessweek.comCBS MarketWatch - http://cbs.marketwatch.comClearstation - http://www.clearstation.comCNBC - http://www.cnbc.com/CNNfn - http://cnnfn.com/Company Sleuth - http://www.company.sleuth.com/EquityInsights - http://www.equityinsights.com/Financial Web - http://www.financialweb.comFinPortfolio - http://www.finportfolio.com/Forbes - http://www.forbes.comFORTUNE.com - http://www.fortune.com/Fox Marketwire - http://www.foxmarketwire.comHoovers Online - http://www.hoovers.comiexchange.com - http://www.iexchange.com/Individual Investor - http://www.individualinvestor.com/Insider Trading - http://www.insidertrader.com/Internet Investor - http://www.internetinvestor.comInternetNews - http://www.internetnews.com/Investor Guide - http://www.investorguide.com/home.htmlInvestorPackages.com - http://www.investorpackages.com/Investor Web - http://www.investorweb.comInvestors Business Daily - http://www.investors.com/Morningstar - http://www.morningstar.comMSN Investor - http://moneycentral.msn.com/investor/home.aspNightly Business Report - http://www.nightlybusiness.orgPC Quote - http://www.pcquote.comQuote.com (Lycos) - http://www.quote.com/quotecom/Quicken.com - http://www.quicken.com/Raging Bull - http://www.ragingbull.comRedHerring - http://www.redherring.com/Reuters Moneynet - http://www.moneynet.comS&P Personal Wealth - http://www.personalwealth.com/cgi-bin/WebObjects/SNPSilicon Investor - http://www.siliconinvestor.com/index.gspSmartMoney - http://www.smartmoney.com/Stock Market Investing - http://www.stock-market-investing.com/Stock Master - http://www.stockmaster.com/The Lion - http://www.thelion.com/The OnLine Investor - http://www.theonlineinvestor.com/The Standard - http://www.thestandard.com/Thomson Investor - http://www.thomsoninvest.net/index.sht USA Today - http://www.usatoday.com/money/mfront.htmWall Street City - http://www.wallstreetcity.comWall Street Research Net - http://www.wsrn.comYahoo! Finance - http://finance.yahoo.comZakcs.com - http://my.zacks.com/?ALERT=www.zacks.comZDNet Interactive Investor - http://www.zdii.com/fp.aspIncludes industry info ...American City Business Journal - http://www.amcity.com/Corporate Information - http://www.corporateinformation.com/Dow Jones & Company - http://dowjones.com/Market Guide - http://www.marketguide.comPowerize - http://www.powerize.com/PRGGuide - http://www.prgguide.com/US Business Reporter - http://www.activemedia-guide.com/index.htmVerticalNet (B2B) - http://www.verticalnet.com/index.htmlB. . INDUSTRY SPECIFIC WEBSITESBiotech ...BioSpace - http://www.biospace.com/Biotechnology FAQ - http://boards.fool.com/message.asp?id=1020007000551000Genomics: A Global Resource - http://18.104.22.168/Broadband ...ATHM Other Broadband FAQ - http://boards.fool.com/message.asp?id=1060256001647000Cisco Board FAQ - http://boards.fool.com/Message.asp?id=1080142002733000Converge! Network Digest - http://www.convergedigest.com/DSL Reports - http://www.dslreports.com/JDSU Board FAQ - http://boards.fool.com/Message.asp?id=1150100000646000Next Generation Networks - http://www.nextgenerationnetworks.com/Rat's Broadband Bandwagon FAQ - http://boards.fool.com/Message.asp?id=1380066000713000Telecommunications-Online - http://www.telecoms-mag.com/Computer Security ...Computer and Internet Security - http://lcweb.loc.gov/global/internet/security.htmlNanotechnology …Foresight Institute - http://www.foresight.org/Network Storage ...Computer and Internet Security - http://www.store-age.com/Other Science & Technology ...Advanced Technology Program - http://www.atp.nist.govBluetooth Technology - http://www.bluetooth.net/tech_overview1.aspFuel Cells 2000 - http://22.214.171.124/index_e.htmlHigh Temperature Electronics Network (The) - http://www.hiten.com/Hydrogen and Fuel Cell Investor (The) - http://www.h2fc.com/defaultIE4.htmlInternational Engineering Consortium (Electronics Industry) - http://www.iec.org/Mercury Technologies - http://www.mercury.com/MIT's tech magazine - http://www.techreview.com/Nature Magazine - http://www.nature.com/nature/Next Step - http://www.newmedianews.com/san jose mercury news - http://www.mercurycenter.com/svtech/Scientific American Magazine - http://www.sciam.com/C. MISCELLANEOUS Acronymns (and more) ...Chatters Jargon - http://www.stevegrossman.com/jargpge.htm#JargonGuruNet - http://www.gurunet.com/TMFKGOMalley's List - http://boards.fool.com/Message.asp?id=1420001000006000Analyst Reports (many free) ...Multex Investor - http://www.multex.comAUSTRALIAN SITESThe Trading Room - http://www.tradingroom.com.auQuicken Aust - http://www.quicken.com.auAustralian Stock Exchange - http://www.asx.com.auAustralian Securities and Investment Commission - http://www.asic.gov.auAustralian Financial Review - http://www.afr.com.auAustralian Financial Services - http://www.afsd.com.auGlossaries ...Harvey's Finance Glossary - http://www.duke.edu/~charvey/Classes/wpg/glossary.htmInvestor Words - http://www.investorwords.com/Yahoo! Financial Glossary - http://biz.yahoo.com/f/g/g.htmlInternational ...JP Morgan ADR Site - http://www.adr.comMartindale's the Reference Desk - International Business Finance and Economics Centerhttp://www-sci.lib.uci.edu/HSG/RefFinance.html#NEWS-JOrganinizing Bookmarks ...Backflip - http://www.backflip.com/PR News ...http://www.prnewswire.com/Rating Service ...http://www.gomez.com/Search Engines ...AltaVista - http://www.altavista.com/AskJeeves.com - http://www.askjeeves.comGoogle.com - http://www.google.com/Yahoo! - http://www.yahoo.com/Stock Exchanges (Major US)..American Stock Exchange - http://www.amex.com/Nasdaq - http://www.nasdaq.comNew York Stock Exchange - http://www.nyse.comUK SITESMotley Fool UK - http://www.fool.co.ukUK-iNvest.com - http://www.uk-invest.comMrs Cohen - http://www.mrscohen.comThe Street co.uk - http://www.thestreet.co.ukSharepages - http://www.sharepages.comMoneyExtra - http://www.moneyextra.comUS GovernmentSecurities and Exchange Commission (SEC) - http://www.sec.govU.S. Department of Commerce - http://www.doc.govBureau of Labor Statistics - http://www.bls.govPatent and Trademark Office - http://www.uspto.gov/Venture Capitalists (re: "smart backing) ...Kleiner, Perkins, Caufield, & Byers - http://www.kpcb.com/-----------------The full post is here:http://boards.fool.com/Message.asp?id=1390027000189000&sort=id-----------------(& Harold re: I had a question about bonds on page 13/14. Answered by lascow. Muchos Gracious, lydia. De nada, nino! :))Best, Lydia-----Visit my Soapbox!http://www.soapbox.com/english_exec/v?op=d&d=162&a=MEM0000000116&c=220
For some reason or other, I can't get a direct link, but there's a short article on evaluating management at Redchip.com that has some pretty useful ideas on "scuttlebutt":http://www.redchip.com/Enjoy,Mark
Mark, Thanks for that article, "Sizing Up Management" on Redchip.com.In addition to the advice to check out the proxy statement and the financial statement, I really liked author Greg Walsh's advice to check out, "the Web site of the local paper of a company's hometown." What a great place to snoop for information that maybe didn't hit the national news but is still of interest to investors!I couldn't get a link to the article either, but it's worth reading. Best,Lydia
Hi Fellow Bookreviewers,Referring to the interview with Forbes cited earlier, post #859 by thenderson, (scroll down about 3/4 of the way:http://www.forbes.com/forbes/092396/5807222a.htmWhen Fisher is asked about the quality of "good management", his reply includes "I want to know: Who is working on the things that others are barely aware of?" He further admits that it is difficult to ascertain this information.What struck me about his comment is his consistency with modern day thinking. Reading current business magazines, I found two references citing the importance of "ideas" when analyzing a business for investment. I suppose looking at R&D and patents of companies might give one a point of reference.BTW, the article on "Sizing Up Management" (mlc11,#917) suggesting hometown newspapers as a place for information is something I have done in the past. Doing this saved me from a disasterous investment when corporate culture was discussed in a newspaper article about a business in that community.The contributions and discussion for SCUP has been awesome in my opinion, a valuable learning experience.Thanks to all of you.BC
Regarding assessing management effectiveness, I'm wondering if any of you have read Stephen Covey's "Seven Habits.." and/or have participated in his Seven Steps program? For a review of this book, go tohttp://www.epinions.com/book-review-41D6-5AB271F-3975F223-prod1John Pepper, Chairman of PG, is apparently a disciple of Stephen Covey's. As you may know, Pepper recently (June) came out of retirement to resume chairmanship of PG and get that company back on track.Any experience with or comments on Covey's stuff?allen
Re: Bonds discussionI'd like comment on the call feature of bonds whichhas made me disillusioned.Many bonds that I've held w/ favorable interest rates seem to get called well in advance of due date.So, Q is, what place should bonds play in one's planning if one can't count on getting the return promised for the return promised?Thanks,Maryp.s. my book has not come in yet, so my Q is based on some of what I've read in the discussion.
An example of Scuttlebutting from da Man (lifted from the GFK board):I went to 3 Gap stores and 1 Banana Republic store yesterday. Dressed to the max and ready for some scuttlebutt. I talked to all the managers and was I hate to say it very disappointed. Now I have been using my system for some ten years and have had a 90% success rate. I have read all of Freud and Jung and have tried to use psychology in my system of scuttlebutt. I have found that when managers are doing well they love to talk about what they are doing and are very open. Last year I wrote the following ; http://boards.fool.com/message.asp?id=1380002000244000 As you can see I had great success with the Gap last year and spoke to two or more managers and got wonderful responses. This year something has changed. Everyone is very tight lipped and all the managers had a certain fear in their eyes. I tried to ask very simple questions such as how are the new combined stores doing (GAP and GAP Kids). I got the answer everytime, I am sorry but I can not discuss that with you. I got an angry look from one manager and that is unheard of when one is talking to a shareholder. I tried to ask some more questions and was rejected everytime. Everyone seems worried about something and I think they got a stern warning not to divulge any information at all. I tried to ask as to why the inventory was so large this year, Zero Answer, they were is shock that I knew that. The stores themselves are very jam packed and not the open relaxed atmosphere that I saw last year. They have just flooded the stores with merchandise and the colors were so bright that I had to put my sunglasses on. It seems that jean sales must be terrible for they had about half the selection that I saw last year. Something is not right inside the company and I am not the only one who sees it as why would the stock go down $1 point on friday with the stock market going up 247 points. Somethings wrong somewhere. I had the same problem with Starbucks, everyone is very hush hush. That always means to me that there are problems inside the company and the top management is breathing down the necks of the managers and they are not happy about it. Go into any wireless phone store and you can easily talk for 30 minutes with the managers. WHY !!! Because business is booming!!! From what I have been able to figure out from my scuttlebutt session with GPS yesterday that there is something wrong in the company and that the leadership is worried for the managers are very tight lipped and very stressed out. They did not even smile when I approached them. That's a first for The GAP. Thus with no scuttlebutt available I can not continue my Fisher Analysis for I have no inside track into the company. It is amazing to me how the environment has changed in some 15 months. Thus I have to now try and find another company to Analyze, The Gap is shelved until I see a change at the store level. Sorry Folks for the bad news, but thats life, not everything in life is always rosy. MYCROFT Now if that don't say it all!Cheers,Mark
Hello CSUP Book Club Members:I've been lurking this past week absorbing the whole conversation on the CSUP chapters 1 and 2. I went over to my local library and checked out the book 2 weeks ago and I am now about 75% done. Ain't libraries great! As the LBYM board people say, "Every penny counts".What is LBYM? Look here:http://boards.fool.com/message.asp?id=1040018001439000Ah, but I digress...the real point is to evaluate those first two chapters of the book.The more I read, the more I admire Fisher and his philosophy. I may not agree with everything he writes, but I can see the logic of it and the wisdom of decades of experience distilled into a precious few pages.The whole Fisher philosophy comes down to researching the heck out of a company before you buy it, picking the very best and sticking with them for the long term (as long as those fundamentals hold) watching your gains compound to big returns.That really jives with my personal philosophy. In page 7 he writes: "These opportunities did not require purchasing on a particular day at the bottom of a great panic. The shares of these companies were available year after year at prices that were to make this kind of profit possible."Now, that's my kind of investment philosophy. It certainly beats sitting in front of a computer screen day after day waiting for that brief plunge in share price from some kind of scare. You know, the kind of thing that happened to EMLX this week. I'm really glad they apprehended somebody for that crime, and to think the person allegedly made $250K out of it.<xerohype gives a horrifying look of disgust>Fisher believes in sustainable growth, and also in companies that invest heavily in R&D to sustain that growth. These are my kind of companies, ones that look toward the future and improve all our lives with their products.invescape does a marvelous job in this post encapsulating the Fisher philosophy present in the first chapter:http://boards.fool.com/Message.asp?mid=13199352It all seems very Foolish to me.I also want to point out the wonderful explanation that lacow put forth on bonds:http://boards.fool.com/Message.asp?mid=13195366In the long run inflation erodes the value of bonds, and over long periods of time stocks have always outperformed bonds.Mark (mlc11) wrote two great posts, one underlining the major points of the two chapters:http://boards.fool.com/Message.asp?mid=13196885and another one showing us a great example of scuttlebutt in action (Mycroft visits The Gap):http://boards.fool.com/Message.asp?mid=13221680I have another outstanding example of scuttlebutt. In this post BruceBrown the incomparable describes his visit to Redback Networks (one of his and my favorite companies):http://boards.fool.com/Message.asp?id=1360002000844000Now, I think we have a big advantage comnpared to investors in the 1950s in doing scuttlebutt. Information flows freely through the internet, we just have to be able to filter it down. The message boards are great sources of information, not only here at the Fool, but also at sites such as Silicon Investor, where the Gorillas&Kings thread has a high level of discourse:http://www.siliconinvestor.com/stocktalk/subject.gsp?subjectid=25851I usually reserve the largest amount of scuttlebutt for my riskiest companies. First, I e-mail or call their investor relations dept. to obtain an investor packet. I read over their latest 10-Q and 10-K, crunching some numbers. Their latest 10-Q will ususally state who is their competition, I then go and read the 10-Ks of the competition. When earnings time comes along I listen to the conference call, and I also make a point to listen to the competition's conference call. I will also read the most recommended posts in the stock's message baord, as well as that of their competitors.If you do all of this before you buy into a stock and follow Fisher's principles or your own discipline (RB, RM, GG or whatever) you will know more than most analysts covering that company (especially with smaller companies). Don't be afraid to call their investor relation dept. with relevant questions after you've done your research.Fisher's philosophy is to be extremely picky inselecting your investments. If you do that, then you can rest easy for years knowing that your money is in good hands. As long as the fundamentals are good, you hold and you take advantage of the magic effects of compounding. Great stuff, as relevant in 1960 as it is in 2000.If only my Dad had bought $10,000 of Texas Instruments and Motorola way back when <sigh>, of course my Dad was lucky to have 25 cents to take the bus to school and get some lunch back then, if not he had to walk or eat, but couldn't do both.Thanks to the CSUP book club members for the outstanding discussion so far. I'll be happy to help with the a Gorilla Game book club for the next book.-xerohype
Hi Mark: Is there something to this scuttlebutt or what? News this AM was that GAP store sales were down 14% this quarter.That is enough to even worry the check out person. No wonder MYCROFT wasn't welcomed with jovial open arms.Harold
Before we move on to Chapter 3 I would like to expand on some of my questions in post 909.We asked Tom G. and the writers to help us better understand how to select Rule Makers in our recent seminar. They provided us with some in-depth knowledge and practice on 6 quantitative financial criteria and some less in depth on 5 qualitative business criteria. Good answers, BUT, what questions flow from these 11 answers that were given?????We all know that Rule Making includes more than the 11 criteria we were taught in the recent RM Seminar. We also know that a seminar can't cover everything, it helps us become comfortable with some of the key elements. How, then, do we then review, try out and integrate the applicable RM criteria into our investment "tool kit"? Do we come back to a book review of Rule Making after we have broadened our perspectives with CSUP and GG? By now, we have all read the Clues from the Past at the end of chapter 1. I won't repeat them here as they were previously documented. Again, Good Answers, BUT, what questions flow from these answers?Rereading Fisher's clues from the past, what really counts are our understanding of and being able to differentiate managment is mentioned twice and our ability to organize our research is mentioned once. Will CSUP provide more clues on on how to accomplish these things that really count?Maybe chapter 3 will help answer part of this question.Harold.... without a little focus, I sometimes get lost
Wow Harold...you IMO have asked the 64K question (showing my age..I guess it should be the "Millionaire" or the "Survivor" question ;--)I am struggling with my own two derivatives or corollaries of the question. How do I sort, sift, integrate..whatever all these tools in a "tool kit" for doing DD? I know the DD if you are going to do any stock selection outside of MI or index funds is essential...but how do I prioritize...choose...from all these methods and steps?Secondly...assuming I get anywhere with that question...how do I figure out what I keep referring to in my mind as Portfolio Management. I love MI..why shouldn't I ...in two years it doubled my retirement nestegg and didn't lose it so far this year! But after RB and RM seminars I feel that I am at least 2 on a scale of 10 at being able to have some kind of LTBH portfolio that I can stick with disciplinewise as I do MI. But what percent should be LTBH vs MI? What percent of LTBH should be RM? RB? GG? Other?So many questions. Know wonder why I was on the side of more than one book...maybe somewhere somehow if I stuff my head with everything until it explodes I will have the answers I seek.Benjamin aka omahafool
Hi all,Followed Xero's link to siliconinvestor (and registered). Uncle Frank's Gorilla & King Index lists 10 companies, 5 of which are also listed in Mycroft's link to 100 Best Managed Companies:CSCO, EMC, INTC, QCOM, and SUNW.Looks like there will be plenty of fertile ground for future Fisher/GG comparisons.Cheers,Mark
I am struggling with my own two derivatives or corollaries of the question. How do I sort, sift, integrate..whatever all these tools in a "tool kit" for doing DD? I know the DD if you are going to do any stock selection outside of MI or index funds is essential...but how do I prioritize...choose...from all these methods and steps?Ahhh, Benjamin... this is the art of investing, is it not?But what percent should be LTBH vs MI? What percent of LTBH should be RM? RB? GG? Other?Wait, these are rhetorical questions, right? ;)orangeblood
pilgprog wrote:I'm wondering if any of you have read Stephen Covey's "Seven HabitsAt the company I work for, everyone must go through the 7 habits course within a few months after they are hired and everyone goes through a refresher once a year or so. All or OH/OH/HR people are trained covy-ites so traiing is done on site.Personally, I found the whole thing way to touchy-feely and without much practical application. Particlularly telling was the information one can glean from the web concerning Covy's company's treatment of non-mormon staffers and the disasterous financial effects from their merger with a company that makes the daytimes covy promotes. jlubenow aka Cruncher
Sorry to be late to the first meeting (or early to the 2nd meeting?) but it has been a busy week then it took me 2 hours to read all the messages from this past week.I found the first parts of the book to be entirely Fool-ish. My favorite line came on the first page of the preface: learn to be the opposite of the stockbrokers men who know the price of everything and the value of nothingA lot of the discussion seems to have been focused on "scuttlebut." The transformations in communication methods and media that have occurred since the late fifties are ones that Fisher could not have ever imagined. Emulux is a great example. A fake press release sends the companies stock falling like Wiley E Coyote off a cliff. In Fisher's time it could have taken weeks for most investors to even have heard of that press release, let alone acted upon it so soon. Another good example is the wireless thread that happened on this board durig the past week. What would an investor who wanted to learn about a new industry have done in Fisher's time? How many people would he have had to call before getting the kind of information posted to the boards. But the internet allows us to go far beyond just reading boards: it allows interactivity. I myself am very interested in wirless technology and its application within "typical business establishments." I often fdind myself wondering what technologies will be adopted and implemented. We all know that the best technology is not always adopted (beta vs VHS, Apple's OS vs windos). Yet I can actually play with and design test apps using both PDA technology and WAP (Nokia has released a free set of wap authoring tools for Macromedia's Dreamweaver). Now instead of just asking questions about technologies and companies, we have the ability to make our own informed decisions.Now for the gripes:I do have two serious problems with the first part of Fisher's book. The first might be semantical in nature. Fisher states that the purpose of buying common stocks is to make money. In order for an investor to actually make money, the stock has to be sold. Until it is sold you have actually only spent money. While a LTBH strategy can give the paper appearence of wealth (if the right stocks are purchased), no wealth exists until the stock is sold for more than was paid to purdhase the stock. Not having cheated and looked ahead, there must be some provison/conditions set for selling the stock and realizing the gains.The second problem I have is with his interpretation of the economic forces he was facing in the fifties. (BTW, my gradualte work was in history) The fifites were an unusual economic period because of the forces of WWII. During the war, some much of our industrial production was shited to war materials that there was little to nothing left for people to buy with the money (including inflationary wages due to labor shortages) earned by those left in the states. After the war, there was a lot of money waiting to be spent. Drawing from Classical MacroEconomic theory, the economy was operating inside the supply-deamnd cures. As production shifted back to consumer goods, the economy grew to take advantage of pent-up demand and newly created capacity. This was the time that the subdivisions and housing communities began (starting with levitown(sp?) in New York). You had lots of people with lots of money to spend. These conditions will not happen again until after the next world war. Even the exciting era of the dot coms will only be a silight blip in 20 years - not nearly the impact on the economy as felt after WWII. I think we need to temper Fisher's words with an understanding that the period he was living in and basing his models on does not exist anymore. While his phiosophies may still be sound, their practive needs to be tempered with a good understanding of current economic and poltical conditions.Sorry for ramblingJlubenow aka Cruncher
<<Wait, these are rhetorical questions, right? ;)>>Unfortunately they are but OTH specific answers that are "right" will be entertained. ;-)Benjamin
Benjamin: All good questions, and I believe the answers will be somewhat different for each of us. Then as we become more comfortable with "our" tool kits, we will then upgrade them based on new knowledge. A life-long Foolish learning and application experience.Congrats on doubling your nest egg. May the force, the Foolish one, be with you.All the Best, FriendHarold
Hi jlubenow: You saidPersonally, I found the whole thing way to touchy-feely and without much practical application. Particlularly telling was the information one can glean from the web concerning Covy's company's treatment of non-mormon staffers and the disasterous financial effects from their merger with a company that makes the daytimes covy promotes.I tend to agree it was a little too touchy-feely and I haven't kept up on the merger you mention, but I found at least two parts interesting when I read this years ago.1) The episode on the subway with the 2 or 3 children running amok and bothering all the other passenger and the writer wishes the dad would control the children. When the writer suggested same to the dad and dad sysing that his wife had just died at the hospital. Didn't you experience a shift in your attitude towards the dad?2) The whole concept of "starting with the end in mind". You satart out going to a funeral - yours - and you wonder what people will say about you.BestHarold
Week 1 - Common Stock Uncommon Profits, by Philip A. FisherHello all,In reading the first installment, I was reminded of the advice of literature professors. Learning the motivations of the characters, in an effort to understand the overall story, is only part of the reason to read and think about literature. Far more important is learning something about yourself within the interpretation of the behavior of the characters. Philip Fisher is trying to teach us more than a list of formulas, he's trying to teach us how to approach investing and the personal qualities that we should expect to bring to the table if we want to achieve the same success he has enjoyed. Patience. The ability to spot those companies that are likely to outstrip their competitors and the overall market. For me, the most important insight I'm taking from Chapter 1 are the following excerpts from pages 4 and 7..Put another way, it is often easier to tell what will happen to the price of a stock than how much time will elapse before it happens.“What was required [to identify companies whose returns could provide the groundwork for a substantial fortune] was the ability to distinguish these relatively few companies with outstanding investment possibilities from the much greater number whose future would vary all the way from the moderately successful to the complete failure.” As an investor, I need to work on putting these two insights together and accepting them. There have been more than a few times over the last several years when I have “spotted” a company that I was sure would be a “mover.” I frequently hesitated to buy however, because I wasn't sure I was getting in at the beginning of an upward run. Maybe the price would go lower. Maybe it wouldn't start moving for another six months. Maybe the stock had already doubled, I had already missed out on the first “bag”! Does any of this really matter? You do NOT have to be a PERFECT investor to be a SUCCESSFUL investor. I think Fisher is teaching us how to be successful investors, within the reality that it is impossible to spot every great company at its lowest price, and that it is simply unnecessary to do so in order to make substantial money from owning stocks. It is the ability to pick the best stocks, rather than the ability to time their purchase, that will lead to largest rewards. I consider this good news indeed, as I believe that I can spot winners, but I am very uncomfortable trying to time their bottom. My goal as an investor is to give up the expectation that I should be able to figure out how to get in at the beginning of an upward climb. This may sound like a small goal to some of you, but it's quite important to me. Could result in more buys. Of course, then there are no more excuses about the one that got away!What stood out for me in the reading ..From Ken Fisher's introduction to his father's book … “The craft is in the scuttlebutt, which like all craft, takes time to learn. The art is in seeing the signs that indicate the fifteen points. It's the difference between learning to play the piano (craft) and then composing (art). (p. xii)“He was a growth stock investor. … He wanted stock in a firm that could grow and grow, and the stock could be bought at a reasonable price and virtually never be sold.” (p. xii) “My point: scuttlebutt and the fifteen points work for growth and value stocks.” (p. xiii)“I think my father, who was fifty-one and a bit of an eclectic genius and already very successful when this book came out, failed to see how the understanding of the craft [scuttlebutt], which had come to him slowly and intuitively over the years, would take time for a neophyte to learn.” (p. xiii)Preface by Philip Fisher“.. two matters were significant influences in causing this book to be written. One, which I mention several times elsewhere, is the need for patience if big profits are to be made from investment. Put another way, it is often easier to tell what will happen to the price of a stock than how much time will elapse before it happens. The other is the inherently deceptive nature of the stock market. Doing what everybody else is doing at the moment, and therefore what you have an almost irresistible urge to do, is often the wrong thing to do at all.” (p. 4)Chapter 1“… you buy common stocks to make money.” (p. 6)“Even in those earlier times, finding the really outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people than did the more colorful practice of trying to buy them cheap and sell them dear.””What was required [to identify companies whose returns could provide the groundwork for a substantial fortune] was the ability to distinguish these relatively few companies with outstanding investment possibilities from the much greater number whose future would vary all the way from the moderately successful to the complete failure.” (p. 7)“Such a study indicates that the greatest investment reward comes to those who by good luck or good sense find the occasional company that over the years can grow in sales and profits far more than industry as a whole. It further shows that when we believe we have found such a company we had better stick with it for a long period of time. It gives us a strong hint that such companies need not necessarily be young and small. Instead, regardless, of size, what really counts is a management having both a determination to attain further important growth and an ability to bring its plans to completion. … Finally it furnishes considerable assurance that in spite of the very many spectacular investment opportunities that existed twenty-five or fifty years ago, there are probably even more such opportunities available today.” (p. 15)Chapter 2Scuttlebutt. In person interview. This will be a first for me!So far so good. On to Week 2!Rachel LeaheyTMF2Putt
Steven: Please don't flame me to badly, but since I will be gone for a while I read ahead a little and found this "gem" that I believe supports Point #1.Page 64: "let us review for a moment some of the basic charateristics of outstandingly desirable investments, ...... These companies are usually working in one way of another on the very frontiers of scientific technology. They are developing various new products or processes from the laboratory ...."This is a little broader than the GG definition and fits nicely with the RM applications, if not explicit criteria.Harold
I read ahead a little... Harold, everyone who reads ahead is a terrible, terrible person. But as long as we're on the topic, here's another gem I've been dying to share, from page 178 (raising shield to deflect dragon flame):...the balance changes if, instead of just a technology based on electronic hardware and software, producing the product calls for these skills to be combined with some quite different ones such as nucleonics or some highly specialized area of chemistry. The large electronic companies simply do not have the in-house skills to enter these interdisciplinary technologies. This affords the best-run innovators a far better opportunity to build themselves into [a] leadership position in their particular product line.... I believe that some of these multidisciplinary technological companies have recently proven some of the finest opportunities for truly farsighted investing. I am inclined to think that more such opportunities will occur in the future. Thus, for example, I suspect that sometime in the future new leading companies will arise through products or processes that utilize some of these other disciplines combined with biology, although so far I have not seen any company in this area that so qualifies.In other words, the man saw biotech coming. Wow. I am suitably humbled.lemming
"Steven: Please don't flame me too badly, but since I will be gone for a while I read ahead a little and found this "gem" that I believe supports Point #1."%^} No flames from me! Nice exerpt, and highly relevant.We'll miss you, Harold. How long will you be gone?...Steven
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