Singapore Money Mind

Competitive advantage

2011-11-27T17:36:00.001+08:00

An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.

- Jack Welch

Know whether the gamble is mispriced

2011-09-29T18:51:00.003+08:00

You're looking for a mispriced gamble. That's what investing is. And you have to know enough to know whether the gamble is mispriced. That's value investing.

- Charles Munger

Pay attention to other factors as well

2011-09-29T18:49:00.003+08:00

The risk among any group of investors is that they only pay attention to what they already agree with. That's limiting in our opinion, and dangerous.

- Michael Mauboussin

Practical test

2011-09-29T18:46:00.002+08:00

Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test. The main difference is that the hypothesis that underlies an investment decision is intended to make money and not to establish a universally valid generalization.

- George Soros

Think independently

2011-09-17T19:40:00.000+08:00

You can't be a good value investor without being an independent thinker.

- Joel Greenblatt

Forget about 'Option'

2011-09-13T11:12:00.000+08:00

You can be highly successful as an investor without having the slightest ability to value an option. What students should be learning is how to value a business. That's what investing is all about.

- Warren Buffett

Securities markets would give a bigger discount than negotiated transactions

2011-09-13T10:46:00.000+08:00

Our experience has been that pro-rata portions of truly outstanding businesses sometimes sell in the securities markets at very large discounts from the prices they would command in negotiated transactions involving entire companies.

- Warren Buffett

Economy and the Indexes may not relate very well

2011-09-13T10:43:00.000+08:00

During these seventeen years (1964-81), the size of the economy grew fivefold. The sales of the Fortune five hundred companies grew more than fivefold. Yet, during these seventeen years, the stock market went exactly nowhere.

- Warren Buffett

Screen of logic

2011-07-07T20:56:00.004+08:00

Even when the underlying motive of purchase (of stocks) is mere speculative greed, human nature desires to conceal this unlovely impulse behind a screen of apparent logic and good sense.

- Benjamin Graham

Excitement: Don't expect

2011-04-27T21:57:00.001+08:00

Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.

- Paul Samuelson

Predictions of economists

2011-04-24T22:33:00.003+08:00

Economists make predictions because they're asked, not because they know.

- John Kenneth Galbraith

Eager to search

2011-04-10T16:33:00.003+08:00

If we become increasingly humble about how little we know, we may be more eager to search.

- John Templeton

Old saying

2011-04-10T16:31:00.002+08:00

As the old saying goes, what the wise man does in the beginning, fools do in the end.

- Warren Buffett

Government

2011-04-10T16:29:00.001+08:00

A government big enough to give you everything you want is strong enough to take everything you have.

- Thomas Jefferson

Commonality Broker has with the Doctor

2011-04-10T16:25:00.001+08:00

Your broker is like a doctor who charges his patients on how often they change medicines, and he is paid more not for what will make you better but rather from the stuff that the street is promoting.

- Warren Buffett

Fully invested at all times theory

2011-03-29T21:38:00.001+08:00

When the markets are fairly ebullient, investors tend to hold the least objectionable securities rather than the truly significant bargains. But the inability to hold cash and the pressure to be fully invested at all times meant that when the plug was pulled out of the tub, all boats dropped as the water rushed down the drain.

- Seth Klarman

Public vs Private Investments

2011-03-29T21:15:00.003+08:00

At equal returns, public investments are generally superior to private investments not only because they are more liquid but also because amidst distress, public markets are more likely than private ones to offer attractive opportunities to average down.

- Seth Klarman

Buy on the way down

2011-03-29T21:14:00.003+08:00

You must buy on the way down. There is far more volume on the way down than on the way back up, and far less competition among buyers. It is almost always better to be too early than too late, but you must be prepared for price markdowns on what you buy.

- Seth Klarman

Never risk short-term cash

2011-03-29T21:13:00.001+08:00

Do not accept principal risk while investing short-term cash: the greedy effort to earn a few extra basis points of yields inevitably leads to the incurrence of greater risk, which increases the likelihood of losses and severe illiquidity at precisely the moment when cash is needed to cover expenses, to meet commitments, or to make compelling long-term investments.

- Seth Klarman

Risk: definition

2011-03-29T21:11:00.003+08:00

Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty - such as the fall of 2008 - drives securities prices to especially low leveles, they often become less risky investments.

- Seth Klarman

Bet on the asset and not on its future price

2011-03-27T21:09:00.001+08:00

When you get into buying something where you just betting on whether people will pay a little more for it next year but it doesn’t produce anything, there is nothing illegal about it. It is not illegal, it’s not immoral and probably it isn’t financial fattening either but you are betting on investor attitude or speculator attitude rather than betting on the asset itself.

- Warren Buffett

Tax without legislation

2011-03-23T21:34:00.001+08:00

Inflation is taxation without legislation.

- Milton Friedman

It isn't probabilities. It is consequences as well.

2011-03-21T22:23:00.001+08:00

Investing isn't just about probabilities. It's about consequences, and you've got to be prepared for them.

- John Bogle

Never ending cycles

2011-03-21T22:21:00.003+08:00

The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.

- Seth Klarman

'Bet' selectively

2011-03-15T21:14:00.001+08:00

To me, it's obvious that the winner has to bet very selectively. It's been obvious to me since very early in life. I don't know why it's not obvious to very many other people.

- Charles Munger

Discontent

2011-03-10T20:30:00.003+08:00

Content makes poor men rich; discontent makes rich men poor.

- Benjamin Franklin

Timidity would lead to miss the boat

2011-03-06T12:18:00.001+08:00

Timidity prompted by past failures causes investors to miss the most important bull markets.

- Walter Schloss

The crowd

2011-03-06T11:50:00.001+08:00

The stock market is a no-called-strike game. You don't have to swing at everything--you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!

- Warren Buffett

Lost money

2011-03-06T11:18:00.003+08:00

More money has been lost reaching for yield than at the point of a gun.

- Ray DeVoe

House: Dream vs Affordable

2011-03-06T10:58:00.001+08:00

A house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender – often protected by a government guarantee – facilitates his fantasy. Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.

- Warren Buffett

Real Estate: Investment?

2011-03-06T10:54:00.001+08:00

All things considered, the third best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks.

- Warren Buffett

Intrinsic value

2011-03-05T20:34:00.003+08:00

The challenge, of course, is the calculation of intrinsic value. Present that task to Charlie and me separately, and you will get two different answers. Precision just isn't possible.

- Warren Buffett

The need for business channels

2011-03-05T20:03:00.001+08:00

Nearly everyone interested in common stocks wants to be told by someone else what he thinks the market is going to do. The demand being there, it must be supplied.

- Benjamin Graham

The cycle repeats

2011-03-04T19:54:00.001+08:00

It is natural to assume that industries which have fared worse than the average are "unfavorably situated" and therefore to be avoided. The converse would be assumed, of course, for those with superior records. But this conclusion may often prove quite erroneous. Abnormally good or abnormally bad conditions do not last forever. This is true not only of general business but of particular industries as well. Corrective forces are often set in motion which tend to restore profits where they have disappeared, or to reduce them where they are excessive in relation to capital.

- Warren Buffett

Stick with predictable

2011-03-04T19:51:00.001+08:00

Stick with businesses whose profit picture for decades to come seems reasonably predictable.

- Warren Buffett

What is important

2011-02-13T11:12:00.001+08:00

It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.

- George Soros

It is not always easy to do what's not popular

2011-02-06T13:06:00.001+08:00

It's not always easy to do what's not popular, but that's where you make your money. Buy stocks that look bad to less careful investors and hang on until their real value is recognized.

- John Neff

Don't be afraid to be a loner

2011-02-06T12:53:00.002+08:00

Don't be afraid to be a loner but be sure that you are correct in your judgment. You can't be 100% certain but try to look for the weaknesses in your thinking.

- Walter Schloss

Good is always not good

2011-02-04T22:36:00.002+08:00

A good business is not always a good purchase - although it's a good place to look for one.

- Warren Buffett

Keep playing

2011-02-04T22:26:00.003+08:00

The important thing is to keep playing, to play against weak opponents and to play for big stakes.

- Warren Buffett

Work like a dog

2011-02-04T22:20:00.001+08:00

If inflation continues to soar, you're going to have to work like a dog just to live like one.

- George Gobel

Write down your goals

2011-01-23T14:42:00.002+08:00

If people commit, orally or in writing, to an idea or goal, they are more likely to honor that commitment because of establishing that idea or goal as being congruent with their self image. Even if the original incentive or motivation is removed after they have already agreed, they will continue to honor the agreement.

- Robert Cialdini

Simple!

2011-01-19T21:00:00.003+08:00

Figure out what something is worth and pay a lot less.

- Joel Greenblatt

Abandon at the wrong time

2011-01-19T20:53:00.003+08:00

Investors repeatedly jump ship on a good strategy just because it hasn't worked so well lately, and, almost invariably, abandon it at precisely the wrong time.

- David Dreman

Time to sell

2011-01-19T20:42:00.003+08:00

Successful stocks don't tell you when to sell. When you feel like bragging, it's probably time to sell.

- John Neff

Economic forecasts

2011-01-19T20:26:00.001+08:00

I don't read economic forecasts. I don't read the funny papers.

- Warren Buffett

Long term asset?

2011-01-13T22:24:00.002+08:00

Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.

- Warren Buffett (at the height of 2008 crisis)

Market behaviour

2011-01-04T22:12:00.003+08:00

Be aware that the market does not turn when market participants begin to see light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before.

- Jeremy Grantham

It doesn't change

2011-01-02T13:52:00.002+08:00

Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.

- Warren Buffett

Bubbles give back

2011-01-02T13:48:00.001+08:00

Bubbles have always given back everything. There have been no exceptions, none.

- Jeremy Grantham

Required: Stomach

2011-01-02T13:24:00.003+08:00

Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether.

- Peter Lynch

Avoid the herd

2010-12-31T13:32:00.002+08:00

Mimicking the herd invites regression to the mean.

- Charles Munger

You don't succeed by doing this

2010-12-18T21:28:00.001+08:00

If I have noticed anything over these sixty years on Wall Street, it is that people do not succeed in forecasting what's going to happen to the stock market.

- Benjamin Graham

Don't pick a stock

2010-12-18T20:14:00.002+08:00

You shouldn't just pick a stock - you should do your homework.

- Peter Lynch

Patience needed for this to work

2010-12-18T20:00:00.001+08:00

Traditional value investing strategies have worked for years and everyone's known about them. They continue to work because it's hard for people to do, for two main reasons. First, the companies that show up on the screens can be scary and not doing so well, so people find them difficult to buy. Second, there can be one-, two- or three-year periods when a strategy like this doesn't work. Most people aren't capable of sticking it out through that.

- Joel Greenblatt

Focus Investing

2010-12-08T22:30:00.003+08:00

Our investment style has been given a name - focus investing - which implies ten holdings, not one hundred or four hundred. The idea that it is hard to find good investments, so concentrate in a few, seems to me to be an obvious idea. But 98% of the investment world does not think this way. It's been good for us.

- Charles Munger

Few winners would do

2010-12-04T19:24:00.003+08:00

All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don't work out.

- Peter Lynch

Business vs Manager

2010-12-02T20:49:00.003+08:00

However, averaged out, betting on the quality of a business is better than betting on the quality of management. In other words, if you have to choose one, bet on the business momentum, not the brilliance of the manager.

- Charles Munger

Times to look for

2010-12-02T17:22:00.002+08:00

The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.

- Sir John Templeton

Shameful

2010-12-02T17:18:00.001+08:00

There is no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock or worse to buy more of it when the fundamentals are deteriorating.

- Peter Lynch

Lousy teacher

2010-11-24T20:22:00.001+08:00

Success is a lousy teacher. It seduces smart people into thinking they can't lose.

-Bill Gates

What you should buy

2010-11-22T21:07:00.001+08:00

Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you're not going to make much different than a 6% return - even if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you'll end up with a fine result.

- Charles Munger

Inactivity also plays a part in successful investing

2010-11-22T20:56:00.001+08:00

With short-term money returning less than 1 percent after-tax, sitting it out is no fun. But occasionally successful investing requires inactivity.

- Warren Buffett

Margin of Safety is not the one and only to consider

2010-11-22T20:51:00.001+08:00

Even with a margin [of safety] in the investor's favor, an individual security may work out badly. For the margin guarantees only that he has a better chance for profit than for loss - not that loss is impossible. But as the number of such commitments is increased the more certain does it become that the aggregate of the profits will exceed the aggregate of the losses.

- Benjamin Graham

Easy ones in business are much better

2010-11-22T20:48:00.001+08:00

But the interesting thing about business, it's not like the Olympics. In the Olympics, you know, if you do some dive off the - on a high board and have four or five twists - on the way down, and you go in the water a little bad, there's a degree of difficulty factor. So you'll get more points than some guy that just does a little headfirst dive in perfectly.

So degree of difficulty counts in the Olympics. It doesn't count in business. Now, you don't get any extra points for the fact that something's very hard to do. So you might as well just step over one-foot bars instead of trying to jump over seven-foot bars.

- Warren Buffett

Look for the moat

2010-11-17T14:04:00.003+08:00

We don't do due diligence or go out kicking tires. It doesn't matter. What matters is understanding the competitive dynamics of a business. We can't be taken by a guy with a sales pitch... What really counts is the presence of a competitive advantage. You want a business with a big castle and a moat around it, and you want that moat to widen over time. Coke and Kodak both had marvelous moats 20 or 25 years ago. Kodak's has narrowed, while Coke has been building its moat. We want an economic castle.

- Warren Buffett

When to buy

2010-11-17T14:02:00.001+08:00

The best thing that happens to us is when a great company gets into temporary trouble... We want to buy them when they're on the operating table.

- Warren Buffett

Lot of money: The disadvantage

2010-11-17T13:37:00.002+08:00

If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.

- Warren Buffett

Know the pitfalls

2010-11-17T13:36:00.003+08:00

A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc.

- Charles Munger

Physical growth doesn't translate into profits

2010-11-16T21:50:00.001+08:00

Obvious prospects for physical growth in a business do not translate into obvious profits for investors.

- Benjamin Graham

Be open-minded

2010-11-14T15:54:00.002+08:00

Never adopt permanently any type of asset or any selection method. Try to stay flexible, open-minded, and skeptical.

- Sir John Templeton

Train your brain to work better

2010-11-14T15:44:00.001+08:00

I think it is undeniably true that the human brain must work in models. The trick is to have your brain work better than the other person's brain because it understands the most fundamental models- ones that will do most work per unit.

- Charles Munger

It is not easy

2010-11-14T15:39:00.002+08:00

Why should it be easy to do something that, if done well, two or three times, will make your family rich for life?

- Charles Munger

It is not a simple formula

2010-11-14T15:17:00.001+08:00

Stock picking can't be reduced to a simple formula or a recipe that guarantees success if strictly adhered to.

- Peter Lynch

Swings in stock returns

2010-11-14T15:11:00.003+08:00

The boom and the bust were normal—just two more swings in stock returns over the past century. Reversion to the mean is the iron rule of the financial markets.

- John Bogle

Be prepared for the emergency

2010-11-06T22:24:00.001+08:00

We never want to count on the kindness of strangers in order to meet tomorrow's obligations. When forced to choose, I will not trade even a night's sleep for the chance of extra profits.

- Warren Buffett

Learn every day

2010-10-24T16:48:00.003+08:00

Learn every day, but especially from the experiences of others. It's cheaper!

- John Bogle

Unpopularity as a measure

2010-10-18T19:40:00.003+08:00

Acquire worldly wisdom and adjust your behavior accordingly. If your new behavior gives you a little temporary unpopularity with your peer group…then to hell with them.

- Charles Munger

Three steps

2010-10-17T20:01:00.001+08:00

Determine value apart from price; progress apart from activity; wealth apart from size.

- Charles Munger

Entitled to opinion

2010-10-17T19:42:00.001+08:00

I'm not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I've reached that state.

- Charles Munger

IPO's

2010-10-17T19:08:00.001+08:00

Investors should be very wary of purchasing today's hot issue. Most initial public offerings underperform the stock market as a whole. The managers of the companies themselves try to time their sales to coincide with a peak in the prosperity of their companies.

- Burton Malkiel

Bet big when you have the odds

2010-10-01T21:50:00.001+08:00

It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a mispriced bet - that they can occasionally find one. And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time they don't. It's just that simple.

- Charles Munger

How to succeed

2010-10-01T21:42:00.001+08:00

If you are honest, hardworking, reasonably intelligent and have good common sense, you can do well in the investment field as long as you are not too greedy and don't get too emotional when things go against you.

- Walter Schloss

Stare at the ticker?

2010-10-01T21:21:00.001+08:00

What's the sense in getting rich if you just stare at the ticker tape all day?

- Warren Buffett

It will happen again

2010-10-01T21:16:00.001+08:00

I'm sure a crash like 1929 will happen again. The only thing is that one doesn't know when. All it takes for another collapse is for the memories of the last insanity to dull.

- John Kenneth Galbraith

Wisdom

2010-09-25T13:38:00.002+08:00

Acknowledging what you don't know is the dawning of wisdom.

- Charles Munger

Address the problem immediately

2010-09-18T13:23:00.001+08:00

Some people seem to think there's no trouble just because it hasn't happened yet. If you jump out the window at the 42nd floor and you're still doing fine as you pass the 27th floor, that doesn't mean you don't have a serious problem. I would want to address the problem right now.

- Charles Munger

Look differently

2010-09-10T18:05:00.001+08:00

Everyone tends to see the same things, read the same newspapers and get the same data feeds. The only way to arrive at a different answer from everybody else is to organize the data in different ways, or bring to the analytic process things that are not typically present.

- Bill Miller

Don't dip your toes where you don't have a clear understanding

2010-09-10T18:01:00.001+08:00

On one point, I am clear. I will not abandon a previous approach whose logic I understand (although I find it difficult to apply) even though it may mean foregoing large, and apparently easy, profits to embrace an approach which I don't fully understand, have not practiced successfully, and which possibly could lead to substantial permanent loss of capital.

- Warren Buffett

Wall Street way

2010-09-08T21:34:00.001+08:00

There seems to be an unwritten rule on Wall Street: If you don't understand it, then put your life savings into it. Shun the enterprise around the corner, which can at least be observed, and seek out the one that manufactures an incomprehensible product.

- Peter Lynch

Count no more than ten

2010-09-07T20:48:00.001+08:00

Our life is frittered away by detail. An honest man has hardly need to count more than his ten fingers, or in extreme cases he may add his ten toes, and lump the rest. Simplicity, simplicity, simplicity! I say, let your affairs be two or three, and not a hundred or thousand; instead of a million count a half a dozen, and keep your accounts on your thumb-namil.

- Henry David Thoreau

Responsibilities

2010-09-05T18:02:00.002+08:00

Questioning GAAP figures may seem impious to some. After all, what are we paying the accountants for if it is not to deliver us the "truth" about our business. But the accountants' job is to record, not to evaluate. The evaluation job falls to investors and managers.

- Warren Buffett

Why companies are valuable

2010-09-05T17:58:00.003+08:00

What makes a company valuable, and why it will be more valuable tomorrow than it is today... earnings and assets.

- Peter Lynch

Why people are buying stocks?

2010-09-05T17:57:00.001+08:00

Volatility is a symptom that people have no idea of the underlying value - that they have stopped playing the asset game. They're not buying because it's a company with certain attributes. They're buying because the price is rising.

- Jeremy Grantham

Retailed earnings

2010-09-05T17:48:00.003+08:00

Since the long-term corporate outlook changes only infrequently, dividend patterns should change no more often. But over time distributable earnings that have been withheld by managers should earn their keep. If earnings have been unwisely retained, it is likely that managers, too, have been unwisely retained.

- Warren Buffett

Value business in order to value the stock

2010-09-05T17:45:00.001+08:00

All intelligent investing is value investing – acquiring more than you are paying for. You must value the business in order to value the stock.

- Charles Munger

Risk of being a value investor

2010-09-05T16:55:00.001+08:00

To thrive as a value investor, you have to risk being called a dummy from time to time.

- Christopher Browne

What to look for in "record" earnings

2010-09-05T16:49:00.003+08:00

Most companies define "record" earnings as a new high in earnings per share. Since businesses customarily add from year to year to their equity base, we find nothing particularly noteworthy in a management performance combining, say, a 10% increase in equity capital and a 5% increase in earnings per share. After all, even a totally dormant savings account will produce steadily rising interest earnings each year because of compounding.

- Warren Buffett

Graham's idea will never obsolete

2010-09-05T16:44:00.003+08:00

The idea of a margin of safety, a Graham precept, will never be obsolete. The idea of making the market your servant will never be obsolete. The idea of being objective and dispassionate will never be obsolete.

- Charlie Munger

Man's imperfect

2010-09-05T16:42:00.001+08:00

Man's imperfect, limited-capacity brain easily drifts into working with what's easily available to it. And the brain can't use what it can't remember or when it's blocked from recognizing because it is heavily influenced by one or more psychological tendencies bearing strongly on it.

- Charlie Munger