Andrew Carnegie was among the first to go big in the industrial age. He was a titan. He built the steel industry and, in turn, became the richest man in the world.

His autobiography details his journey from Scotland to America, from bobbin boy to captain of industry. While Carnegie paints a rosy picture at times, some lessons on business, investing, and life stand out.

It pays to be early.

Carnegie wasn’t the first to build an iron mill. He wasn’t the second or third or fourth. But he did know the railroad industry. He knew it was in its infancy based on personal experience.

When he joined the Pennsylvania Railroad, no rails had crossed the Mississippi River yet (the first bridge over the river was built at Rock Island in 1856). He recognized that industries that needed iron products had a massive growth runway.

One of Carnegie’s earliest endeavors was a rail-making company. The North had a supply problem during the Civil War. There were more than enough raw materials to supply the war effort. What they were short on was iron rails. Continue Reading…

Quote for the Week

Nothing tells in the long run like good judgment, and no sound judgment can remain with the man whose mind is disturbed by the mercurial changes of the Stock Exchange. It places him under an influence akin to intoxication. What is not, he sees, and what he sees, is not. He cannot judge of relative values or get the true perspective of things. The molehill seems to him a mountain and the mountain a molehill, and he jumps at conclusions which he should arrive at by reason. His mind is upon the stock quotations and not upon the points that require calm thought. Speculation is a parasite feeding upon values, creating none. — Andrew Carnegie (source)

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Quote for the Week

The enchantment which some growth companies convey to the stock market lends a premium to their common stocks which is not always justified by the statistical background. An investor may do well with such stocks, but there is good reason to believe that he can do even better by giving the financial results…a completely cold-blooded and objective analysis. No amount of study in this area can minimize the importance of trying to buy at a fair price; buying at any price and hoping that the future will take care of itself is a good short cut to disappointing results.

Indeed, perhaps the most important conclusion of this analysis is that the term “growth stock” is meaningless; a growth stock can be identified only with hindsight — it is simply a stock which went way up. But the concept of “growth company” can be used to identify the most creative, most imaginative management groups; and if, in addition, their stocks are valued at a reasonable ratio…the odds are favorable for appreciation in the future.  — Peter Bernstein (source)

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Quote for the Week

I started by saying that you and I probably aren’t as important to the results as it would be fun to think we are. I meant that in the same spirit that Leroy Jolley meant it when he said, “The more I am around horse racing the more I think that the most underrated thing is the horse and that it is us trainers and jockeys and owners who are overrated.” There are some qualities you and I can bring to the races. But I think it is one of those cases where less is more. Here they are:

Simple Approaches. Albert Einstein said that “…most of the fundamental ideas of science are essentially simple and may, as a rule, be expressed in a language comprehensible to everyone.” The first time I heard that I thought, “Sure, that is easy for him to say.” But as long as there are people out there who can beat us using dart boards, I urge us all to respect the virtues of a simple investment plan.

Consistent Approaches. Look at the best performing funds for the past ten years or more. Templeton, Twentieth Century Growth, Oppenheimer Special, and others. What did they have in common? It sure wasn’t their investment philosophies. It was that whatever their investment plans were, they had the discipline and good sense to carry them out consistently.

A very special tolerance for the concept of “nonsense”, or what the Zen call “Beginner’s Mind.” I could have saved myself a lot of time if I hadn’t been so quick to label as “nonsense” a lot of ideas I now accept as good sense. Expertise is great, but it has a bad side effect. It tends to create an inability to accept new ideas. — Dean Williams (source)

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