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Make Something Wonderful is a personal collection of Steve Jobs’s emails, writing, speeches, and interviews from throughout his life. The work offers a behind-the-scenes look into his thoughts on creativity, technology, and business.
My ability to forecast the market is no better than anybody else’s, which means it’s quite poor. Some people are successful in calling one or two or even three turns in a row, but they are even worse off than I am because once somebody thinks he can forecast the market he tends to put increasing amounts of money behind his opinions. When he finally makes a mistake, he really gets destroyed…
As I said, I don’t know what the market is going to do. I don’t think most people are any good at forecasting swings either, so I think this leaves you with only two ways of approaching the market. In the first, you remain fully invested at all times, and every once in a while you stand up and take your losses like a gentleman. The other involves following a formula of one sort or another. — Robert Wilson (source)
Floyd Odlum was an opportunist. He took advantage of a bad situation to become one of the richest people in America shortly after the crash of 1929.
Odlum saw an opportunity amid the rubble of investment trusts. Investment trusts were like the first iteration of today’s closed-end mutual funds. They were first introduced in the U.S. around 1926, in the form of trading corporations, with the sole purpose of investing pooled capital into stocks.
And like many new investment vehicles, it didn’t take long for investment trusts to become wildly popular with investors. By 1929, roughly 640 trusts existed with about $4 billion in assets. In ’29, trusts accounted for one-third of the $6 billion in new offerings — about $1 billion of that was estimated just in August and September alone. Continue Reading…
Some years ago I was the adviser to a profit-sharing trust for a large commodities dealer, I bought for them — I think the stock has been split 15 times since then — a block of Texas Instruments at $14 a share. When the stock got up to $28, the pressure got so strong (“Well, why don’t we sell half of it, so as to get our bait back?”) I had all I could do to hold them until it got to $35. Then the same argument: “Phil, sell some of it; we can buy it back when it gets down again.”
That is a totally ridiculous argument. Either this is a better investment than another one or a worse one. Getting your bait back is just a question of psychological comfort. It doesn’t have anything to do with whether it is the right move or not.
But, at any rate, we did that. The stock subsequently went above $250 within two or three years. Then it had a wide open break and fell to the mid-50s. But it didn’t go down to $35. — Philip Fisher (source)
Value investing strategies come in many styles. However, the two styles that stand out the most act like bookends to the value philosophy.
Ben Graham pioneered the search for statistically cheap stocks. He originally looked for stocks selling far below liquidation value. That strategy worked throughout the depths of the Great Depression and well into the 1940s and ’50s. It fell out of favor during the Go-Go ’60s, back into favor with the 1973-74 crash, and bounced in and out (mostly out) of favor ever since.
Some of Graham’s more ardent followers used his strategy outside the U.S. with much success. Others adapted as the market caught on and the classic Graham bargains disappeared. They looked for hidden assets, low price-to-book, etc. They redefined what a statistical bargain looked like.
Overall, Graham’s strategy was built around estimating asset values, which change significantly less than stock prices. An investor, willing to dig through balance sheets, estimate assets conservatively, and with a little bit of patience, could earn a good return without much risk if they bought a stock cheap enough.
At the other end of the spectrum was Phil Fisher. Fisher learned that he got better returns out of the stocks of growing companies that he bought and held for several years compared to those that he bought at a low price, sold at a high price, and repeated. Continue Reading…
In emphasizing the difference between the man who sometimes quits a winner and the man who beats the game, the reader will understand that the hardest thing in the world is for a winner in any game of hazard to quit while winning. “Beginner’s luck” is probably true in Wall Street as anywhere else. But the man who says, “I will quit when I have made a certain sum” is the only man who is trying to beat the game. And the game always beats him. — Edwin Lefevre, 1915 (source)