Money and Finance
- Some Thoughts From Phil Fisher On Selling A Great (and Growing) Business...
From Common Stocks and Uncommon Profits:A word of caution may not be amiss, however, in regard to too readily selling a common stock in the hope of switching these funds into a still better one. There is always the risk that some major element in...
- Berkshire Hathaway's Stock Price Performance In The Past
Berkshire Hathaway included the yearly stock performance in the annual report this year. After slower growth in book value in the 1973-1974 recession, book value growth picked up in 1975. Berkshire's stock price, which was down a bit in 1973, took...
- Howard Marks Quote
I've posted this quote before, but was reminded of it recently and since it is probably especially relevant today, I thought it was worth posting again. “If you buy a cheap stock when the market is high, it is a challenge because, if the market...
- Graham And Dodd Quotes
From Security Analysis, 1940 edition. “If the analyst is convinced that a stock is worth more than he pays for it, and if he is reasonably optimistic as to the company’s future, he would regard the issue as a suitable component of a group investment...
- Hedging And The 1988-1990 Japanese Stock Market
Interesting lesson/piece of history, from Seth Klarman’s book Margin of Safety: “In the best of all worlds, an investment that has valuable hedging properties may also be an attractive investment on its own merits. By way of example, from mid-1988...
Money and Finance
Excerpt from Warren Buffett’s 1957 Partnership Letter
An excerpt from Warren Buffett’s 1957 letter that may be useful to think about in regards to current stock market levels:
In last year's letter to partners, I said the following:
My view of the general market level is that it is priced above intrinsic value. This view relates to blue-chip securities. This view, if accurate, carries with it the possibility of a substantial decline in all stock prices, both undervalued and otherwise. In any event I think the probability is very slight that current market levels will be thought of as cheap five years from now. Even a full-scale bear market, however, should not hurt the market value of our work-outs substantially.
If the general market were to return to an undervalued status our capital might be employed exclusively in general issues and perhaps some borrowed money would be used in this operation at that time. Conversely, if the market should go considerably higher our policy will be to reduce our general issues as profits present themselves and increase the work-out portfolio.
All of the above is not intended to imply that market analysis is foremost in my mind. Primary attention is given at all times to the detection of substantially undervalued securities.
The past year witnessed a moderate decline in stock prices. I stress the word "moderate" since casual reading of the press or conversing with those who have had only recent experience with stocks would tend to create an impression of a much greater decline. Actually, it appears to me that the decline in stock prices has been considerably less than the decline in corporate earning power under present business conditions. This means that the public is still very bullish on blue chip stocks and the general economic picture. I make no attempt to forecast either business or the stock market; the above is simply intended to dispel any notions that stocks have suffered any drastic decline or that the general market, is at a low level. I still consider the general market to be priced on the high side based on long term investment value.
- Some Thoughts From Phil Fisher On Selling A Great (and Growing) Business...
From Common Stocks and Uncommon Profits:A word of caution may not be amiss, however, in regard to too readily selling a common stock in the hope of switching these funds into a still better one. There is always the risk that some major element in...
- Berkshire Hathaway's Stock Price Performance In The Past
Berkshire Hathaway included the yearly stock performance in the annual report this year. After slower growth in book value in the 1973-1974 recession, book value growth picked up in 1975. Berkshire's stock price, which was down a bit in 1973, took...
- Howard Marks Quote
I've posted this quote before, but was reminded of it recently and since it is probably especially relevant today, I thought it was worth posting again. “If you buy a cheap stock when the market is high, it is a challenge because, if the market...
- Graham And Dodd Quotes
From Security Analysis, 1940 edition. “If the analyst is convinced that a stock is worth more than he pays for it, and if he is reasonably optimistic as to the company’s future, he would regard the issue as a suitable component of a group investment...
- Hedging And The 1988-1990 Japanese Stock Market
Interesting lesson/piece of history, from Seth Klarman’s book Margin of Safety: “In the best of all worlds, an investment that has valuable hedging properties may also be an attractive investment on its own merits. By way of example, from mid-1988...