- Your investor’s edge is not something you get from Wall Street experts. It’s something you already have. You can outperform the experts if you use your edge by investing in companies or industries you already understand.
- Over the past 3 decades, the stock mkt has come to be dominated by by a herd of professional investors. Contrary to popular belief, this makes it easier for the amateur investor. You can beet the market by ignoring the herd.
- Often there is no correlation b/w success of a company’s operations and the success of its stock over a few months or even years. In the long term there is 100% correlation b/w the success of the company and the success of the stock. This disparity is the key to making money: it pays to be patient, and to own successful companies.
- You have to know what you own, and why you own it. “This baby is a clinch to go up!” dosen’t count. Continue reading “Some more from the likes of Peter Lynch”
For the true connoisseur, the finest expression of the art comes when a high-profile investor identifies a bubble, perhaps even makes money out of it, exits in time – and then gets sucked back in only to lose everything in the resultant bust.
An early example is the case of Sir Isaac Newton and the South Sea Company, which was established in the early 18th Century and granted a monopoly on trade in the South Seas in exchange for assuming England’s war debt.
Investors warmed to the appeal of this monopoly and the company’s shares began their rise.
Britain’s most celebrated scientist was not immune to the monetary charms of the South Sea Company, and in early 1720 he profited handsomely from his stake. Having cashed in his chips, he then watched with some perturbation as stock in the company continued to rise. Continue reading “Sir Isaac Newton !! I can calculate the movement of stars, but not the madness of men.”
Sharing the Best quotes on the question of Financial Bubble:
Justin Fox, “Bubbles arise if the price far exceeds the asset’s fundamental value, to the point that no plausible future income scenario can justify the price.” (HBR)
Jason Zweig, “Another sign to watch for: In every bubble, there are always people trying to burst it by declaring that financial assets have become overvalued. At first, Prof. Goetzmann says, such skeptics earn respectful attention. But eventually, investors turn on them with anger and ridicule.” (WSJ) Continue reading “Financial Bubbles”
Just as Gordon Gekko argued that “greed is good” in Oliver Stone’s “Wall Street” in 1987, Martin Scorsese’s exhausting three hours of money-fueled debauchery makes an even more compelling case for that tenuous argument.
The screen version of Mr. Belfort — for all of his vices — is generous, uplifting, loyal and driven by values which he unabashedly stands by.
It’s important to keep that in mind if you decide to dig into the fact and fiction of the film. The Wolf of Wall Street is quite faithful to the book by Belfort that it’s based on—though there are differences; but how faithful is that book to reality? I do not know as haven’t read the book. Throughout the movie, Leonardo DiCaprio’s, playing the lupine financial huckster Jordan Belfort. Continue reading “Wolf of Wall Street – Greed is Good but Good is better”
Recently attended a town-hall on the operational risk, the topics shared by the host was not new but it was all about awareness in the organisation. Lot of people asked why rogue traders still exist. But, that seems as if it’s an easy one to answer. Fool-proof risk management doesn’t exist and never will. At, least it won’t while the rogue traders are being covered by rogue managers.
You see, the definitions at the beginning had one thing wrong. They are definitions of solitary, lone-wolves. But, even lone-wolves belong to a group. They just prefer to avoid the assistance of others in certain matters. The rogue trader’s pack is the howling, fierce management for which he works. Lone-wolves always have alpha members they take orders from, don’t they? Lone-wolves are sometimes excluded from the pack to protect that alpha-male, thus preventing ‘in-breeding’ in the pack. It’s exactly the same in the trading world of finance. Continue reading “The Famous Rogue Traders”