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Author: trader2012 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 27657  
Subject: It's 'Process' That Creates Winners Date: 9/28/2012 11:51 AM
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If you bought someone’s 7-1/4’s a couple months ago in the high 30’s (as I did) and then recently got called at par, what would your achieved Yield-to-Maturity be? How about 522.5%? That’s not too shabby, right? In fact, with that return, I achieved a personal best. I’ve made as much as 100% on bond positions before. Not commonly, but it’s not so rare as to be surprising. But a return of 522.5% really is remarkable, and it prompts me to ask this question:

Am I good, or am I good? BZZZRP! WRONG QUESTION!!!! The proper questions are these:

Do I have a good process by which I find those kinds of returns? And could any investor do the same?

“Yes” and “Yes”. To whom does Warren buffet owe his success? As he freely admits, he owes it all to Ben Graham, whose investment classes he took at Columbia. As I freely admit, I owe my investment success to Ben Graham as well and to his classic intro to value-investing, The Intelligent Investor. http://www.amazon.com/Intelligent-Investor-Definitive-Invest......

Sometime, when you get tired of the probably miserable returns you are achieving, you should make an effort to read his book. It doesn’t contain everything you will need to craft a money-making process for yourself.But his book offers the most important part, the conceptual framework within which you will operate. (The rest is just tiny, tactical details that the markets themselves (stock, or bond, or whatever) will teach if you really want to learn the investing game.)

Most won’t make the effort to read the book, and fewer will attempt to apply Ben Graham’s insights to markets. Instead, they’ll look for shortcuts where there aren’t any. 'Investing’ (which doesn’t differ from ‘gambling’, except in its spelling) is the business of making bets about unpredictable, future events. But there are better and worse ways to be making those bets. That’s what Graham’s book is really all about, how to make good bets in the securities casinos. Graham's betting schemes have paid off for Buffet. They have paid off for me as well (who happens to be beating Buffet’s returns over the past ten years).

They could pay off for you, too, though I’d bet against it, because most would-be investors refuse to think about investing probabilistically. They want sure returns when such things can never exist. So why not admit from the getgo that you're just gambling with your "investment" money, but then make sure you're the smartest gambler you can be and someone who, year after year, pulls more money out of the securities casinos than you bring to them, enough, in fact, that you can support yourself several times over?

Winner or loser? The choice is yours. http://www.youtube.com/watch?v=azZr1cSu9-4

Charlie
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