Joined: 17/Jan/2008
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Posted: 15/Feb/2009 at 7:34pm
In a classic “The Art of Speculation”, the author, Philip L. Carret, writes on his twelve commandments of investing.
“As
in any business there are standards of management which cannot be
disregarded by the business man, so in speculative investment it is
possible to formulate certain rules which must be followed
intelligently if success is to be attained. The speculator will never
be a success if he attempts to follow any set of rules blindly. There
will always be exceptions, he must apply his intelligence keenly in
any given situation. Nevertheless, so far as the technical details may
be summarized in a few paragraphs, it may be useful to do so.
Twelve precepts for the speculative investor may be stated as follows:
1)Never hold fewer than ten different securities covering five different fields of business.
2)At least once in six months reappraise every security held.
3)Keep at least half the total fund in income-producing securities.
4)Consider yield the least important factor in analyzing any stock.
5)Be quick to take losses, reluctant to take profits.
6)Never put more than 25% of a given fund into securities about which detailed information is not readily and regularly available.
7)Avoid "inside information" as you would the plague.
8)Seek facts diligently, advice never.
9)Ignore mechanical formulas for valuing securities.
10)When stocks are high, money rates rising, business prosperous, at least half a given fund should be placed in short-term bonds.
11)Borrow money sparingly and only when stocks are low, money rates low or falling, and business depressed.
12)Set
aside a moderate proportion of available funds for the purchase of
long-term options on stocks of promising companies whenever available.”
Joined: 02/Sep/2006
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Posted: 18/Feb/2009 at 4:25pm
Intersting extract from an article by Tom Dyson
......Money is a commodity. Like any other commodity, its price is a function of both supply and demand. When demand is higher than supply, its price goes up... and the price of the stuff it buys falls. When demand is lower than supply, its price is low... and the price of the stuff it buys goes up.
People forget this. They usually think about supply only. They think increases in the money supply automatically lead to price inflation. They're forgetting about demand for money. If demand for money rises at the same speed as supply, then the price of money stays the same. Demand for money could even rise faster than supply. Then prices for other goods would fall.
This is what's happening right now. The feds are increasing money supply by the trillion. But there's huge demand for money, too. It's so strong, it's neutralizing the Fed's supply increases. The spark won't ignite the gas, and we're still caught in deflation.
Money supply is guaranteed. The Fed controls it. But money demand is all about people's confidence and sentiment. It could change rapidly at any moment. That's why it's the spark in this situation. If you're trying to anticipate the fireball, it's the thing to watch.
Money demand is a little different than demand for a regular commodity. That's because money doesn't waste as you consume it. Think about a $20 bill. It could go round and around in the economy hundreds of times... but it'll still be a $20 bill. So the way you measure demand for that $20 bill is by how long people hold on to it before they spend it.
In Zimbabwe, for example, people spend their money as soon as they receive it. Every hour they hold their cash, it loses half its value. So they turn it into food or gas or whatever other essential commodity they need, immediately. Demand for money in Zimbabwe is extremely low. Think how fast banknotes circulate in Zimbabwe. Every day, each banknote gets used in thousands of transactions as people rush to get rid of it.....
Edited by catcall - 18/Feb/2009 at 5:06pm
There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing!
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Posted: 23/Jun/2009 at 2:03pm
Best Advice I Ever Got In a world of uncertainty, we could all use a little advice. So we asked a host of influential leaders to share with us the wise words that changed their lives forever. 1 Jim Rogers: Read everything Age: 66 Investor and commodities guru
The best advice I ever got was on an airplane. It was in my early days on Wall Street. I was flying to Chicago, and I sat next to an older guy. Anyway, I remember him as being an old guy, which means he may have been 40. He told me to read everything. If you get interested in a company and you read the annual report, he said, you will have done more than 98% of the people on Wall Street. And if you read the footnotes in the annual report you will have done more than 100% of the people on Wall Street. I realized right away that if I just literally read a company's annual report and the notes -- or better yet, two or three years of reports -- that I would know much more than others. Professional investors used to sort of be dazzled. Everyone seemed to think I was smart. I later realized that I had to do more than just that. I learned that I had to read the annual reports of those I am investing in and their competitors' annual reports, the trade journals, and everything that I could get my hands on. But I realized that most people don't bother even doing the basic homework. And if I did even more, I'd be so far ahead that I'd probably be able to find successful investments.
2 Colin Powell: Focus on performance, not power
Age: 72 Former secretary of state; retired four-star general
When I was a young infantry officer at Fort Benning, we had a lot of old captains who had served in World War II and Korea. They were not going to go higher in rank, but, boy, did they know about soldiering. So I didn't learn this piece of barracks wisdom from an Eisenhower or Pershing. I heard it from these wonderful reserve captains. This is the story: There was a brand-new second lieutenant who was very ambitious and wanted to be a general. So one night at the officer's club the young officer spotted this old general sitting at the bar. So he went up and said, "How do I become a general?" And the old general answered, "Son, you've got to work like a dog. You've got to have moral and physical courage. There may be days you're tired, but you must never show fatigue. You'll be afraid, but you can never show fear. You must always be the leader." The young officer was so excited by this advice. "Thank you, sir," he said, "so is this how I become a general?" "No," said the general, "that's how you become a first lieutenant, and then you keep doing it over and over and over." Throughout my career, I've always tried to do my best today, think about tomorrow, and maybe dream a bit about the future. But doing your best in the present has to be the rule. You won't become a general unless you become a good first lieutenant.
3.
Tiger Woods: Keep it simple Age: 33 No. 1-ranked golfer
When I was young, maybe 6 or 7 years old, I'd play on the Navy golf course with my pop. My dad would say, "Okay, where do you want to hit the ball?" I'd pick a spot and say I want to hit it there. He'd shrug and say, "Fine, then figure out how to do it." He didn't position my arm, adjust my feet, or change my thinking. He just said go ahead and hit the darn ball. My dad's advice to me was to simplify. He knew that at my age I couldn't digest all of golf's intricacies. He kept it simple: If you want to hit the ball to a particular spot, figure out a way to do it. Even today, when I'm struggling with my game, I can still hear him say, "Pick a spot and just hit it." When I'm making adjustments during a round, I know some of the television commentators theorize that I'm changing this or moving that, but really what I'm doing is listening to Pop. 4 Bill Gates Chairman , Microsoft Corp.
Well, I've gotten a lot of great advice from Warren Buffet. I'd say one of the most interesting is how he keeps things simple. You look at his calendar, it's pretty simple. You talk to him about a case where he thinks a business is attractive, and he knows a few basic numbers and facts about it. And [if] it gets less complicated, he feels like then it's something he'll choose to invest in. He picks the things that he's got a model of, a model that really is predictive and that's going to continue to work over a long-term period. And so his ability to boil things down, to just work on the things that really count, to think through the basics -- it's so amazing that he can do that. It's a special form of genius. I think Warren is so nice to everybody -- how does he say no in a nice way? Or how does he think about priorities and have that explicitly in mind? And he turns down an unbelievable number of things, and yet everybody feels great about it. His grace in talking to people.There was a case at the annual meeting where somebody asked a question about should you sell the stocks that have gone up and keep the ones that have not? And he sort of said, "No, you look at the value of the business." And then Charlie [Munger] added, "He's telling you your conceptual framework is all wrong." Which is in fact what the answer had been, but there wasn't one element of, "Hey, dummy ..."
< ="w10">< ="w20">Impact cost can be defined as by how much large a buy/sell order increases/
decreases price of scrip. This cost has more relevance to liquidity and has more ... www.humsurfer.com/what-is-impact-cost-effect-of-impact-cost-on-mutual-funds-index-funds -
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