Philip Carret has one of the longest successful track records on Wall Street. But before his Wall Street career, he was a pilot in WWI, a Harvard graduate, and finally a reporter for Barron’s.
A series of articles for Barron’s led to his first book, The Art of Speculation. In it, he describes his concept of value investing.
In 1928, Carret founded the Pioneer Fund, one of the first mutual funds in the US. The fund got off to a horrible start thanks to the ’29 crash and the Great Depression. But they both survived. And despite the early losses, the fund performed phenomenally over the 55 years he ran it.
I think it’s safe to say Carret practiced the art of patient investing longer than anyone. He was still managing money when he died in 1998 at the age of 101. Thankfully he shared some of his (almost) eight decades of investing experience over the years.
Here’s Carret:
I’ve been involved in the market too long to get excited. – Source
***
I have a very simple strategy. I buy good companies at attractive prices. Then I sit on them. – Source
***
I had a margin call in 1924, and I swore I never would buy on margin again. That’s one of the main reasons I got through the 1930s. – Source
***
We don’t invest for income. If you invest soundly for growth, the income follows. – Source
***
It makes no sense for individual investors to jump in and out of the market. People who trade in that way rarely die rich, whereas the patient investor often does. – Source
***
I’m an optimist, both as a person and an investor. It’s a big mistake to be pessimistic as long as we have a viable civilization which is reasonably well managed. – Source
***
If a company has a sound balance sheet with minimal long-term debt, good growth prospects and responsible management, then the stock should be interesting. – Source
***
If the balance sheet figures look right, I come to the next and hardest part — appraising management. – Source
***
The very top officers of a company ought to have the equivalent of one year’s salary invested in the company. If they can’t demonstrate such faith in their own ability, why should I? – Source
***
In a public service corporation, bad management may curtail profits or produce losses, good management may turn a weak corporation into a strong one. – Source
***
If managers can’t think of anything else to do with their money they should pay dividends. If they have good places to invest it, that’s much better. – Source
***
To consider stocks by groups rather than by individual companies is further to ignore the vital factor of management. – Source
***
The history of business the world over is full of examples of businesses which have grown from modest beginnings to stupendous earning power. – Source
***
Just as in the realm of pugilism, a few years of soft living will make a Dempsey easy prey for a Tunney, so a period of prosperity contains the seeds of its own destruction. – Source
***
In finance, as in other fields, theory and practice sometimes differ. – Source
***
Even in the highest grade securities, there is a certain inescapable speculative risk. – Source
***
Hindsight is easier than foresight. It would be a simple matter at this writing to analyze the position of an industrial stock as it was several years ago and show how the intelligent speculator should have known that it was destined to behave as it did in fact later do. – Source
***
Fashions play their part in the stock market as in other affairs of life. – Source
***
Stocks often sell at ridiculously low levels for considerable periods merely because few people know anything about them. – Source
***
It takes a great deal of nerve to cling to a short position in a stock in the face of an advancing market even though the stock may clearly be overvalued. – Source
***
To lose money is the conventional penalty for bad judgment in speculation. – Source
Last Call
- Art Collector Keynes – CJBS Insight
- Peter Bernstein, Rob Arnott & Richard Bernstein (video) – WealthTrack
- Different Kinds of Easy – M. Housel
- Data Update for 2020: Retrospective on a Disruptive Decade – Musings On Markets
- The Elusive Definition of Risk – ValIdea
- Three Ways to Make Better Decisions With Michael Mauboussin – Part 1, Part 2, Part 3
- Sam Zell: Strategies for High-Stakes Investing, Dealmaking, and Grave Dancing (podcast) – Tim Ferris Show
- Simon Adler: Recovery Value (podcast) – Acquirer’s Multiple
- How Immigrants Drive Entrepreneurship and Innovation – Behavioral Scientist
