Message Font: Serif | Sans-Serif
 
No. of Recommendations: 2
This is going to get long.

I gotta be honest. I've never read a single book dealing with a sector I'm thinking of investing in.

I'll second Paul's idea of Value Line. Call your local library to see if they have it in their reference section. It is a wonderful resource.

For me, I don't want to bog myself down with too much information. I don't need to know which grains and hops Sam Adams Beer is brewed with or any of the beers in InBev's, for that matter. I can taste a few and 'know' if I like it or not. And if I like it, chances are other will as well. Annual (and quarterly) reports will tell me how expansion is going, how much inventory is moving, and accounts receivables are being handled...

I know that FedEx and UPS has a business plan that works, I can review the reports to get an idea of how things are going.

My father was in the oil/gas exploration field years ago. He can read message boards and know how a start-up company is doing, or how a wildcat rig is doing for a larger company. To me, they're only numbers and words and mean nothing to me. So, I don't own any.

Years ago (and if I thought about how long ago it was I might start whimpering) I bought a couple of railroad companies. Kansas City Southern and Canadian Pacific.
I bought KSU for two reasons. 1. Because Union Pacific had just merged with Southern Pacific and couldn't move cargo. At all. They were delivering spoiled food and empty tanker cars whose cargo had evaporated. It was a horrible mess for UP. Companies could use KSU to get their cargo to other tracks. A little foolish of me, but I had hopes. Also, 2. NAFTA. Many railroads travel east/west across the United States. KSU travels north/south, into both Canada and Mexico. The rails are there. They were ready for built for NAFTA. I did well with this purchase.

When I bought Canadian Pacific, I did it for entirely different reasons. I heard they were thinking of splitting the company up into 5 different companies. I could get in before it happened and then wind up with 5 companies for 1. What a bargain. (CP split into 1. Overseas transportation-CP Ships, 2. Hotels-Fairmont hotels, 3. Coal-Fording 4. Oil/Gas-Encana and 5.Trains-Canadian Pacific) Over the years, the various companies have been bought up by other companies, or I outright sold them. I really can't remember what happened to CP Ships, Encana went through a couple of buyouts and mergers. I was out of it before long. I held Fairmont until it was bought up and taken private. I only recently sold CP. I sold Fording, the coal division, because, well, I don't understand coal. Fording (old ticker: FDG) languished for sometime in the low teens and I was pretty dejected about it. Then it started climbing and sometime in the 40s I sold--essentially doubling my money. I was a happy camper. But I still have no idea about coal.

Enron was another company I owned. I bought it because everyone told me "they just make money. It just keeps going up." So I bought some. Then I started reading message boards and after several months I noticed that there was a discussion of a power plant in India that was being built by Enron and the sub-contractors weren't getting paid. It felt rather 'hinky' and didn't sit well with me. I sold it. I lost money on it. But, lo, how I could have lost so much more. And I still couldn't tell you what they do.

I have, from time to time, invested in bio-tech companies that have little or nothing to offer. They have an idea that might help with [insert disorder here]. I don't have a Phd, and I don't plan on getting one anytime soon. I look at the board, and the CEO and think "do they have what it takes? More importantly, what have they done in the past?"

***** The Takeaway:
I'm the kind of investor that thinks of himself as the CEO of the company that I'm investing in. And I delegate EVERYTHING. I don't want to be bothered with the idea of "Would production be better off with a Samratron 2000 or the Harwink IX?" The company is going to know that better than I, and more power to them. Let them sum up things and let me sit in on the conference calls and send me an annual report.

And look for that Value Line report.

Mike
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.