Restoring Traders/Investors Faith into Investing
- Thread starter Einstein
- Start date
- Tags portfolio tracker value investing warren buffett
This one is tough to answer, again an example from Enron in 2000, 1 year before the bankruptcy, 'analysts' from big investment banks like lehman, GS, Merill were saying BUY for long, and they were all wrong. probability of winning or losing was equal to an average joe investor.
so lets just trust the mighty auditors of this god forsaken corrupt country and buy what you can understand..
so lets just trust the mighty auditors of this god forsaken corrupt country and buy what you can understand..
We all make mistakes, no one is perfect like traders, investors also distribute risk among different bets. Example I am not going to put my entire wealth in a stock. People talk about satyam and enron. Denounce our craft but fail to remember that a professional investor might not even have a big share in it. Practice prudent diversification.
Benajamin Graham devised a simpler technique for novice investors, take a list off high quality stocks, eg. Nifty50 or sensex. And buy the ones that are low P/E. You won't make spectacular gains but you have a fair chance of beating the market if you do this.
Benajamin Graham devised a simpler technique for novice investors, take a list off high quality stocks, eg. Nifty50 or sensex. And buy the ones that are low P/E. You won't make spectacular gains but you have a fair chance of beating the market if you do this.
Socialism in Finance.
It’s incredible what kind of idiocy passes for politics in the country. In 2008-09, the UPA government threw a huge sop to farmers, telling them their unpaid loans would be forgiven. The government paid a massive 52,000 cr. reimbursing banks.
But the problem was of moral hazard.
The debt waiver waived off all outstanding principal and interest for farmers with less than 5 acres. For more, 25% of all outstanding was waived.
In the process of this debt waiver, farmers began to realize one thing: it’s not useful to pay back loans. The waiver applied only to outstanding debt which remained unpaid. So, if you paid back your loan religiously, you were the idiot, because your neighbour who did not repay got to not pay back anything at all.
Immediately after the waiver was announced, every farmer stopped paying back loans. Many of the farmers who had paid back parts of their loans were furious, and though the loan waiver helped them partially, they had realized that it’s silly to actually pay your loan back. Especially when there was the smell of a loan waiver.
Now, the Andhra Pradesh and Telangana governments decided to waive off agri-loans just after they were elected to power. They probably came to power on that promise.
And while the RBI doesn’t like any of it, the chairman of the State Bank of India, our largest lender, has already complained that people have stopped paying loans. After all, 2008 wasn’t so long ago, and it would be downright stupid for people to pay if the government waived off loans only for those who don’t.
Who pays for this mess?
The man in your mirror. And mine. We’ll pay either through higher taxes or through a central government backstop of the state governments.
Effectively these governments will borrow this money. The debt burden is large relative to the size of these economies. The state of Andhra Pradesh, for example, before it split, had Rs. 150,000 cr. outstanding as debt.
Telangana’s loan waiver package along will cost another 16,000 cr. - which the government will have to bear.
The rest of Andhra Pradesh, which is a state too, has a much larger loan bill, of upto Rs. 100,000 cr.
As you can imagine, this will nearly double the debt taken by these states, which have just been formed. Obviously to pay the higher interest cost, the states will have to raise taxes or borrow even more, and that’s a losing proposition in the longer term.
The Rest of India is Watching
And now, with the monsoon more than 40% in deficit, we might be staring at a huge drought. If the Telangana or AP loan waivers go through, the rest of India will see farmers suddenly decide to stop their payments as well, whether they can or not.
Because when you introduce moral hazard, this is exactly the kind of behaviour you incentivize. We lost our ethics so long back it’s pointless to tell people that this is just wrong. But hopefully, if they realize they’re going to pay for it…
It’s incredible what kind of idiocy passes for politics in the country. In 2008-09, the UPA government threw a huge sop to farmers, telling them their unpaid loans would be forgiven. The government paid a massive 52,000 cr. reimbursing banks.
But the problem was of moral hazard.
The debt waiver waived off all outstanding principal and interest for farmers with less than 5 acres. For more, 25% of all outstanding was waived.
In the process of this debt waiver, farmers began to realize one thing: it’s not useful to pay back loans. The waiver applied only to outstanding debt which remained unpaid. So, if you paid back your loan religiously, you were the idiot, because your neighbour who did not repay got to not pay back anything at all.
Immediately after the waiver was announced, every farmer stopped paying back loans. Many of the farmers who had paid back parts of their loans were furious, and though the loan waiver helped them partially, they had realized that it’s silly to actually pay your loan back. Especially when there was the smell of a loan waiver.
Now, the Andhra Pradesh and Telangana governments decided to waive off agri-loans just after they were elected to power. They probably came to power on that promise.
And while the RBI doesn’t like any of it, the chairman of the State Bank of India, our largest lender, has already complained that people have stopped paying loans. After all, 2008 wasn’t so long ago, and it would be downright stupid for people to pay if the government waived off loans only for those who don’t.
Who pays for this mess?
The man in your mirror. And mine. We’ll pay either through higher taxes or through a central government backstop of the state governments.
Effectively these governments will borrow this money. The debt burden is large relative to the size of these economies. The state of Andhra Pradesh, for example, before it split, had Rs. 150,000 cr. outstanding as debt.
Telangana’s loan waiver package along will cost another 16,000 cr. - which the government will have to bear.
The rest of Andhra Pradesh, which is a state too, has a much larger loan bill, of upto Rs. 100,000 cr.
As you can imagine, this will nearly double the debt taken by these states, which have just been formed. Obviously to pay the higher interest cost, the states will have to raise taxes or borrow even more, and that’s a losing proposition in the longer term.
The Rest of India is Watching
And now, with the monsoon more than 40% in deficit, we might be staring at a huge drought. If the Telangana or AP loan waivers go through, the rest of India will see farmers suddenly decide to stop their payments as well, whether they can or not.
Because when you introduce moral hazard, this is exactly the kind of behaviour you incentivize. We lost our ethics so long back it’s pointless to tell people that this is just wrong. But hopefully, if they realize they’re going to pay for it…
Comparing famous investors in one chart
This chart plotting the greatest investors of all time based on their returns compared to the S&P 500 over time is getting passed around all over finance. Investors listed range from people still in the game, like David Einhorn of Greenlight Capital, to legends who are no longer with us, like Walter Schloss and Benjamin Graham. UK publisher Harriman House made the chart.
What instantly jumps out is that there are a lot of people who have beat the market big time over the course of a few years. But there aren't many people with a track record of beating the market over the course of decades. Both Soros and Buffett stand out as guys who crushed the market over many years.
-business insider.
This chart plotting the greatest investors of all time based on their returns compared to the S&P 500 over time is getting passed around all over finance. Investors listed range from people still in the game, like David Einhorn of Greenlight Capital, to legends who are no longer with us, like Walter Schloss and Benjamin Graham. UK publisher Harriman House made the chart.
What instantly jumps out is that there are a lot of people who have beat the market big time over the course of a few years. But there aren't many people with a track record of beating the market over the course of decades. Both Soros and Buffett stand out as guys who crushed the market over many years.
-business insider.
I was reading about Philip Carret and wow what an investor.
Today, Phil Carret’s investing approach is still the centerpiece of our investment philosophy - focus on companies with strong business fundamentals, manageable debt, solid cash flow, consistent earnings growth, and dedicated management teams.
Carret Asset Management was founded in 1963 by Philip L. Carret, a Wall Street icon and investment legend who pioneered the concept of value investing, introducing it four years before the publication of Security Analysis by Benjamin Graham and David Dodd.
After graduating from Harvard College in 1917, Carret attended Harvard Business School. He first introduced value investing in a series of Barron’s articles in 1927. He further described the concept in his 1930 book, The Art of Speculation.
Carret put his ideas into action in 1928, when he created one of the world’s first mutual funds, the Pioneer Fund, which he managed with great success for more than half a century. In 1963, seeking to provide personalized investment services, he founded Carret Asset Management.
Carret’s disciplined and effective approach to investing was applauded by noted value investor Warren Buffett, who said Carret had established “the best long-term investment record of anyone in America.”
Carret, who was an active investor until his death in 1998 at age 101, personally experienced 31 bull markets, 30 bear markets, and 20 recessions, as well as the Great Depression—and throughout the ups and downs, was widely known for focusing on a long-term investment horizon.
In "A Money Mind at 90"— a book he wrote at 90 years old — he said when he was 16 he saw that "If I were ever to gain wealth, it would have to be by my own efforts." - Which I believe since I was a child and still following it.
The Pioneer Fund, itself with $6 billion in assets, recently reached a rich milestone. It's had a cumulative return of 1,000,000% from its founding through Dec. 31. A dollar invested in 1928 would be worth more than $1 million today.
More importantly, take a look at Phil Carret’s “12 Commandments of Investing”:
1. Never hold fewer than 10 different securities covering five different fields of business;
2. At least once every six months, reappraise every security held;
3. Keep at least half the total fund in income producing securities;
4. Consider (dividend) yield the least important factor in analyzing any stock;
5. Be quick to take losses and 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 value in securities;
10. When stocks are high, money rates rising and 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 and falling and business depressed;
12. Set aside a moderate proportion of available funds for the purchase of long-term options on stocks in promising companies whenever available.
Today, Phil Carret’s investing approach is still the centerpiece of our investment philosophy - focus on companies with strong business fundamentals, manageable debt, solid cash flow, consistent earnings growth, and dedicated management teams.
Carret Asset Management was founded in 1963 by Philip L. Carret, a Wall Street icon and investment legend who pioneered the concept of value investing, introducing it four years before the publication of Security Analysis by Benjamin Graham and David Dodd.
After graduating from Harvard College in 1917, Carret attended Harvard Business School. He first introduced value investing in a series of Barron’s articles in 1927. He further described the concept in his 1930 book, The Art of Speculation.
Carret put his ideas into action in 1928, when he created one of the world’s first mutual funds, the Pioneer Fund, which he managed with great success for more than half a century. In 1963, seeking to provide personalized investment services, he founded Carret Asset Management.
Carret’s disciplined and effective approach to investing was applauded by noted value investor Warren Buffett, who said Carret had established “the best long-term investment record of anyone in America.”
Carret, who was an active investor until his death in 1998 at age 101, personally experienced 31 bull markets, 30 bear markets, and 20 recessions, as well as the Great Depression—and throughout the ups and downs, was widely known for focusing on a long-term investment horizon.
In "A Money Mind at 90"— a book he wrote at 90 years old — he said when he was 16 he saw that "If I were ever to gain wealth, it would have to be by my own efforts." - Which I believe since I was a child and still following it.
The Pioneer Fund, itself with $6 billion in assets, recently reached a rich milestone. It's had a cumulative return of 1,000,000% from its founding through Dec. 31. A dollar invested in 1928 would be worth more than $1 million today.
More importantly, take a look at Phil Carret’s “12 Commandments of Investing”:
1. Never hold fewer than 10 different securities covering five different fields of business;
2. At least once every six months, reappraise every security held;
3. Keep at least half the total fund in income producing securities;
4. Consider (dividend) yield the least important factor in analyzing any stock;
5. Be quick to take losses and reluctant to take profits;
6. Never put more than 25% of a given fund into securities about which detailed information is not readily and regularly available;
7. Avoid inside information as you would the plague;
8. Seek facts diligently, advice never;
9. Ignore mechanical formulas for value in securities;
10. When stocks are high, money rates rising and business prosperous, at least half a given fund should be placed in short-term bonds;
11. Borrow money sparingly and only when stocks are low, money rates low and falling and business depressed;
12. Set aside a moderate proportion of available funds for the purchase of long-term options on stocks in promising companies whenever available.
Few months back I was analyzing portfolio of warren buffett, I think most of the companies he hold are good and trading very cheap, like IBM which is a trading at a huge discount of 50-55% from Intrinsic worth. but one stock which buffet was buying at that time really irritate me, because I think that stock was expensive and trading at 20%(15-10%) above the premium. and I was think at that time that i am making mistake and something is wrong with my analysis. by the way that stock was Directtv. Now, with his recent filing, one can see he is reducing his stake in directtv. now I am much more confident then ever before.
taking it one step further, as anyone can see that he has increased his holdings in Wells fargo bank. now he owns 23 Billion$ worth of wells fargo. With current valuations it is trading at fair price but looking at historical performance, I think the core value of Wells fargo is increasing at greater pace then of peer like GS, and BOAml. (only checked with these 2).
This has changed my views on expensive stocks and I believe portfolio 2015 for this forum will be the best portfolio of all.
taking it one step further, as anyone can see that he has increased his holdings in Wells fargo bank. now he owns 23 Billion$ worth of wells fargo. With current valuations it is trading at fair price but looking at historical performance, I think the core value of Wells fargo is increasing at greater pace then of peer like GS, and BOAml. (only checked with these 2).
This has changed my views on expensive stocks and I believe portfolio 2015 for this forum will be the best portfolio of all.
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