"Quotes" to trade by!

[bunyip]

Since Buffett has been mentioned on this thread, the following may be of interest......




BUY AND HOLD NONSENSE

Wall Street pretends that trading does not work. However, what they say and what they do is a different story. The truth is that no one really practices or uses buy and hold.

Joseph P. Kennedy, Bernard Baruch, Jesse Livermore, J.P. Morgan, John D. R Rockefeller and many more from a previous era.
George Soros, Paul Tudor Jones, Jimmy Rodgers, the Bass Brothers … and many more from the present era, are/were market timers all.
They buy stocks, currencies, bonds, commodities and gold when prices are depressed.
They sell them short when prices are high and buy them back after they decline.

Try to compile a similar list of successful buy and hold investors … perhaps the only name will be Warren Buffett …

Far from being a simple investor whom anyone can emulate, Warren made his first millions running private investment partnerships for wealthy investors. After making them huge gains in the mid-1960’s bull market, he demonstrated exquisite market timing at the bull market peak in early 1969 by withdrawing from the market entirely, liquidating the partnerships …

He began by purchasing small private companies … which were bought with the intention of operating them as subsidiaries, GIVING RISE TO THE MYTH THAT BUFFETT BUYS AND HOLDS ALL INVESTMENTS FOR THE LONG TERM.
However, that’s not close to true. When it comes to Berkshire Hathaway’s investments in publicly traded stocks, virtually none have remained in its portfolio from one bull market to the next. Buffet just over the last few years, appears to have traded in and out of large positions in Solomon Bros., U.S. Air Group, McDonald’s, zero coupon bonds, and silver. He also apparently dumped significant holdings when the market began topping out in July 1998 since, by September, Berkshire Hathaway was holding a huge $9 billion in cash.



Source: Riding the Bull by Sy Hading

 

[cuttlefish]

and while on the topic its worth mentioning that Ben Graham didn't advocate buy and hold either - he had criteria for selling (as well as buying) that would more than likely have seen him doing far more selling than buying in bull market tops.

 

[2020hindsight]

a little learning is a dangerous thing - but a lot of ignorance is just as bad

 

[Realist]

Well if Graham aint buy and hold and apparently Buffet aint either, that is fine with me.

I am buy and hold, maybe I am the only one in the world. But that suits me fine.

 

[2020hindsight]

an optimist thinks his dreams will come true - a pessimist his nightmares :run:

 

[barney]

Well if Graham aint buy and hold and apparently Buffet aint either, that is fine with me.

I am buy and hold, maybe I am the only one in the world. But that suits me fine.

You're definitely not alone Realist..........
Most of the people I know personally, "subscribe" to the buy and hold scenario, and live comfortably off their dividends ...........(but they all have a lot more money to start with than I do ......... most of them are retired anyway, so they're more interested in playing lawn bowls than sitting in front of a computer screen all day......."Horses for courses" I guess.

Hi 20/20, I used to be an optimist, but now I'm just an optimistic pessimist!..............or is that a pessimistic optimist?

 

[bunyip]

Well if Graham aint buy and hold and apparently Buffet aint either, that is fine with me.

I am buy and hold, maybe I am the only one in the world. But that suits me fine.

Realist

Like most of us you want to make a lot of money, and to that end you've chosen a very successful role model to emulate. It's one of the most effective tricks in the book.....you want to be successful in a particular endeavour, one way to do it is find someone who's already very successful in that same endeavour, then you learn from him and copy him.
Warren Buffet is without equal in the investment business...you couldn't have chosen a better role model.
However, since you've been constantly telling this forum that he made his pile with a 'buy and hold' strategy, it's pretty clear that you've been somewhat confused about the true nature of Warren's investment style.
I'm not going to ridicule you for that....we all get it wrong sometimes.

Since you now know that Buffett is a trader who pays taxes on his profits, (horrifying to you, no doubt) yet has still managed to rise head and shoulders above most people in the investment world, do you think that in the interests of achieving financial independence yourself as soon as possible, maybe you should change your own investment style to more closely match that of your role model Buffett?
I mean, you've been telling this forum that taxes kill trading as a viable investment style. Yet Buffett, by frequently liquidating huge positions for huge profits, must be subject to taxes. Surely that must make you at least reconsider your views on paying tax?

You mention that you intend holding stocks for 20 or 30 years. In fact you stated... "A smart investor may never in fact look at the stock price".
This doesn't sound like Buffett at all. He clearly doesn't hold for 20 or 30 years. And since he regularly trades in and out of large positions, you can be assured that he keeps a close eye on stock prices.
So here again I ask you.........In view of the fact that Buffett has a very different philosophy to your own, do you think that it might be in your best interests to reassess your investment strategies with a view to more closely emulating your role model, Warren Buffet?

Bunyip

 

[dr00]

yep, buffetts a trader and the CIA brought down the twin towers...

no one said buffet never sells. to state the obvious the principle behind buffetts philosophy is to buy a stock based on the fundamentals of the business, not its share price or trends as a trader does. he also has reasons for selling stock. if he can put the money in a business to better use by taking it out of there and putting it somewhere else he will.

to say that buffett is a trader based purely on the fact that he sells companies is a bit naive...

 

[bunyip]

yep, buffetts a trader and the CIA brought down the twin towers...

no one said buffet never sells. to state the obvious the principle behind buffetts philosophy is to buy a stock based on the fundamentals of the business, not its share price or trends as a trader does. he also has reasons for selling stock. if he can put the money in a business to better use by taking it out of there and putting it somewhere else he will.

to say that buffett is a trader based purely on the fact that he sells companies is a bit naive...

I didn't say Buffett is a trader based purely on the fact that he sells companies.
Nor did I say he's a trader and nothing else.
Sometimes he sells companies, other times he hangs on to them after buying them cheaply in a run down state, and returning them to profitability.
Sometimes he buys stocks in a company, then sells out for a profit some time down the track. Sometimes he does the same thing with commodities such as silver.
Occasionally he buys, then sells out for a loss.
Buffet is definitely a trader...no question about it.
And he's definitely a long term investor....no question about that either.
The man is a multi-talented businessman and investor who employs a range of strategies to make money.
But he is NOT, as Realist and many others believe, solely a long term buy and hold investor.

Bunyip

 

[Realist]

While I respect Buffett, I do not use him as a role model, I use Ben Graham. Buffett uses 85% of Graham's methodology.

The difference is Buffett is smarter than me, spends more time researching and hedges like hell into stocks he is certain of. I'm not smart enough to be certain of any stocks the way he is. He does hold though, that article is complete bollocks, one of his favourite sayings is "our favourite holding period is forever". I do not believe he has ever sold any Coke shares, probably not Gilette, Washington Post or Amex either. He's holding forever - or at least until he gives it over to charity I suppose.

I do not believe pissant investors like ourselves should follow Buffett's methodology, I believe they should follow Graham's. Buffett is in a different league, Grahams theories work for the common man. The main difference is do not take margin loans and do diversify and leave money in the bank just in case - aim for adequate returns. That way you are not risking losses the way a Buffett investor is.

Graham's theory is buy many different successfull undervalued companies and sell them if they become overvalued, minimise tax but it is unavoidable. Buffetts theory invest all your money and OPM into a few awesome companies and hold forever even if they become overvalued and don't pay tax.

Graham's the man to study, Buffetts just a freakish investor that is near impossible to emulate.

 

[Realist]

But he is NOT, as Realist and many others believe, solely a long term buy and hold investor.

I would not say he is soley a long term buy and hold investor. Because he is a business owner, and has hedged on foreign currencies etc. so that is obviously wrong.

I would say that he is essentially a long term buy and hold investor though.

 

[Julia]

I can't help feeling the above posts are more of an exercise in semantics than anything more useful.

Surely any long term investor has to be ready to sell when market factors indicate some adverse conditions (other than very temporary ones) on any given stock? I can't see that that makes him/her a "trader".

And in the event, who really gives a damn about what labels we might wish to apply to ourselves or others. We all simply want to be profitable, and I'm damned if I can see that applying labels or restricting our stock market activity to purely one approach or the other is even remotely useful.

To suggest that an investor may never, by definition of the term, sell a falling stock is simply silly.

Julia

 

[wayneL]

yep, buffetts a trader and the CIA brought down the twin towers...

a classic non sequitur

From the information offered here, there is a probality that Buffett is, in fact, a trader

 

[Realist]

I can't help feeling the above posts are more of an exercise in semantics than anything more useful.

Surely any long term investor has to be ready to sell when market factors indicate some adverse conditions (other than very temporary ones) on any given stock? I can't see that that makes him/her a "trader".

And in the event, who really gives a damn about what labels we might wish to apply to ourselves or others. We all simply want to be profitable, and I'm damned if I can see that applying labels or restricting our stock market activity to purely one approach or the other is even remotely useful.

To suggest that an investor may never, by definition of the term, sell a falling stock is simply silly.

Julia

So what is an example of why someone should sell for example Westfield or Fosters Julia assuming they still make good profits and still pay good dividends from now on?

If you say because such and such (bad news) then you are too late, the stock has already fallen. Would you simply sell a stock cause it goes down? I would be tempted to buy more.

I am more likely to sell a stock because it goes up.

 

[carmo]

" The two greatest disappointments in life, one you don't get what you want,
and the other you do"

 

[chops_a_must]

"[Investment is] intolerably boring and over-exacting to any one who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll."

 

[noirua]

"My Fundamental assessment was, of course, spot on but the force was not with me" - by the infamous shorter "Evil Knieval".

 

[Kimosabi]

"The market can be a cruel mistress"

I made it up myself, and thats all I'm seeing today...

 

[nizar]

I am more likely to sell a stock because it goes up.

Yeah?
I am more likely to top up and hold.

Though im very quick to chop my dogs - sometimes too quick - but thats another story.

 

[rub92me]

"One cannot judge the performance of trading by results, but by the cost of the alternative. "