wisdom

Investment Wisdom

“A high dividend yield, like a low price/earnings multiple, is a sign the market is undervaluing a stock.” John Authers' March 4th 2011 Financial Times ( TC: A high dividend yield does not mean a usually high dividend yield. It means a dividend yield that is high in relation to its own dividend yield average. The common stocks near the top of our list have yields higher than their own average.
“If a company has been paying dividends longer than you have been around”, then “you can count on those dividends to keep coming.” Shmulik Karpf
“Investing for income moves you to a more placid realm. You are a farmer quietly harvesting crops while elsewhere the gunslingers gallop to and fro in search of plunder.” Edmund Faltermayer October 29 1990, Fortune magazine
Andrew Smithers calls 'stockbroker economics': “the art of proving that assets are always cheap, however expensive they may actually be.” (p. X) I think GARP is stockbroker economics. Forward looking P/E's are too. I use C.A.P.E. - cyclically adjusted price to earnings…back ten years.

“most companies we'd want to buy don't come at a discount” Warren Buffett, 1999 Owner's Manuel

“if a stock price declines its forward rate of return goes up” Donald Yacktman, May 2010
“Once valuations become unusually rich, disappointing long-term returns become baked in the cake” John Hussman, October 2010

GROWTH STOCKS: “the issue with growth stocks comes from speculation over their future growth since they are already expensive” - my absolute favourite sentence about growth stocks from Bull's Eye Investing by John Mauldin 257
“When a mature company's dividend yield is historically low, there's a very good chance its share price is too high.” Fabrice Taylor, April 2010 ROB magazine

“You don't get rewarded for taking risk. You get rewarded for buying cheap.” Jeremy Grantham, October 2008
“In my opinion, investors should refrain from purchasing a 'full position' (the maximum dollar commitment they intend to make) in a given security all at once.” Seth Karlman, Margin of Safety (You can buy a copy of this book for about $600.)

“There is a time to buy, a time to sell and a long time to do nothing.” Joe Goodman, Forbes columnst in 1930s, 1940s and 1950s. TCR front page headline 476 Feb 2001
“there's no sense in buying a value stock unless there's some growth to it” Stephen Jarislowsky, Globe Investor Feb 11 2010
“Income growth - increasing the amount of spendable dollars your portfolio earns each year -must be the most important goal of any investment plan.” Mal Berko, February 1993 Connolly Report

“True wisdom about the markets is knowing that you will never know.” ?
“The investment guru's [Warren Buffett] ideal holding period is forever.” The Economist Jan 23 2010, Buttonwood

“the risks of inflation fall more heavily on bond than on equity holders” Andrew Smithers, Wall Street Revalued 2009, p. 116. The long-term (1954-2008) real (after inflation) return on equities in Canada has averaged 9.24% p. 220. In the States real return averaged 5.62%.

“I believe in stocks for the long run - but only if purchased at the right price.” Bill Gross, December 2008
“losses can occur even in a solid issue with a growth trend if timing is bad and excessive premiums are paid for popularity.” Gerald M. Loeb, 1935

There is a fundamental belief that information is knowledge. It isn't.” Wm. A. Flectenstein

“Treasurys [bonds] are no more inherently safe than stocks are inherently value-laden. Safety and value are qualities conferred not by the nature of an asset but by the price at which it is acquired” James Grant, Forbes Oct 28 2002.

The`temptation to buy what has done well is the single greatest pitfall in investing` Rob Arnott, Barron´s December 20 2008

DIVERSIFICATION: “diversification does not guarantee against loss, only against losing everything all at once” Peter L. Bernstein's Against the Gods: The Remarkable Story of Risk

VALUE INVESTORS “you want to buy the very best companies and you want to buy them cheap. And it's not very often you get to do this.” Biff Matthews ROB Oct 24 2008 (Notice the date.)

“The safe time to buy quality growth stocks is when their price earning ratios are little more than the rest of the marker” John Train, quoting Ben Graham in The Money Masters p.93
First you've got to know about it [the dividend growth strategy]. Then you have to believe it works. And finally, you have to have the patience and discipline to work it.“ Tom Connolly, Globe and Mail, November 18 2006. Kindly submitted by a reader on Oakland Road in Halifax.
Stocks “are a claim to a very long term stream of future cash flows”. John Hussman November 2008
“To make money you must generally act contrary to the majority opinion.” Fear, Greed and the End of the Rainbow by Andrew Sarlos - beautifully timed in 1997

you have to do something different from every one else in order to acheive better results - Anthony Bolton in Money Makers p 22 by Jonathan Davis

“I don't really give a damn what happens this quarter, what I care about is long-term value - and that's all I care about.” James Montier
“when people start saying that something is good because of what it is called [be it growth stocks, or small-caps, or hedge funds, or private equity], then they are setting themselves up to lose money. Chances are they will overpay and be disappointed.” Howard Marks, Barron's November 15 2008

“I can honestly say that lower prices do not bother me at all. In fact, thanks to the dividend increases I received this year, my income is already greater than what I was expecting for the year. As far as I am concerned, my portfolio generated a positive return for the 2008 year” Brendan Weselake, Winnipeg November 2008
“If you want to know the value of a security”, Emanual Derman, the model person, says on page 261 of My Life as a Quant, “use the price of another security that's similar to it as possible.” (If you are thinking about buying Enbridge, for instance, look at TransCanada too.)