Category Archives: Economics

Investment Wisdom (Compiled)

Risk not thy whole wad

The Best Things Ever Said About Money

(Market Advice for the Needy)

Sixty-plus years ago, I heard my father, Leo F. McManus, Sr., jokingly tell a friend that the secret of making money in the stock market was “The Wall Street Lullaby: ‘Buy Low, Sell High’.”

It took a few decades for the wisdom of that to sink in. In fact, I didn’t really understand it until I started investing myself. Then I realized that playing with the big kids on Wall Street is a cross between tip-toeing through a mine field, and walking on thin ice; or, as Johnny Carson liked to say: “Spanking sharks.”

And so, I became a stock market philosopher. You may have heard the old joke: “How do you get a philosopher off your back porch?” The answer is, “Pay him for the pizza.”

However, I only got humbled and reminded of my mortality, not kilt (lucky me). As I began to rebuild, I remembered Dad’s “Wall Street Lullaby.” I started collecting comments and aphorisms about investing in general, and the stock market in particular. Some I saw in print, and I have credited those. More were told to me by friends and colleagues, also credited where remembered. Others, I just wrote down, hoping they would be as new to you as they were to me.

You can find investment tips everywhere. Shakespeare  for example, said: “Sell when you can, you are not for all markets (“As You Like It”).”

You can even find investment advice in the Bible: Proverbs 21:5 says The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty”.

Interpretation: You couldn’t get rich overnight even way back then.

And King Solomon, the wisest and richest man of all time, had guidelines too: In his book, “Money: A User’s Manual,” Bob Russell quotes several of King Solomon’s words from Ecclesiastes and Proverbs. For example, Solomon’s guiding investment principles included:

1. Diversify: “Divide your portions into seven, or even to eight, for you do not know what misfortune may occur upon the earth.”

2. Invest Ethically: Paraphrased in modern terms, Solomon said to stick with investments that are socially responsible, and that reflect your moral values.

3. Seek Good Counsel: Again paraphrased, nobody has all the answers; Read, listen, find a trusted adviser, ask lots of questions.

Finally, in the New Testament (both Matthew and Luke), we find the parable of the talents. A master gave three servants some gold coins to invest for him while he was traveling. The first two servants invested and doubled their master’s money. They received much praise and reward. The third servant buried his coin and, alas for him, although he didn’t lose anything, he didn’t gain anything either. The master called him evil and lazy, took back the coin, and chucked this failure as an investor out into the darkness.

The master clearly appreciated initiative and some sensible risk taking.

My collection of aphorisms can’t stand up to Shakespeare, let alone King Solomon, or the New Testament parables, but here are anyway; my:

 

        Top One Hundred & Twenty-Five “Best Things Ever Said About Money.”

A Warning: Some of these thoughts are wise, funny, and insightful. Others are incredibly stupid. I leave it up to you to decide which is which. Good luck and happy landings!

 

1. Your first loss is always your least loss.

2. No matter how low a stock goes, it can never be less than zero. -Jake Dias

3. When a stock splits it can go down twice as fast. -Jake Dias

4. Bulls make money, Bears make money, Pigs get roasted.

5. You can love a stock, but a stock can never love you back.

6. The market abhors uncertainty.

7. The market always repeats itself: It goes up and down.

8. 1% of something is better than 10% of nothing. –Joe Grammel

9. Patience is an investor’s greatest asset.

10. There’s no such thing as a sure thing.

11. Markets are efficient – just incomprehensible.

12. Buy on the bad news, sell on the good.

13. There’s a big difference between losing money and not making as much as you planned.

14. Heaven helps the Needy, not the Greedy.

15. Nobody ever went broke taking profits.  –Frank Keaney

16. Enjoy the party but dance near the door.

17. There are always more buyers than sellers, unless there are more sellers than buyers.

18. By the time you hear about it, it’s too late.

19. Profits will be offset by earlier losses and higher expenses.

20. Markets are unpredictable, but seldom illogical.

21. Judge the company by what it does, not what it says.

22. The market is about money. It is always and only about money.

23. The only one who really cares about your investment is you. -Johnny Keaveny

24. The market responds to world news, government policy, business developments, and how the traders feel that day.

25. It is hard to tell the truly competent from the truly lucky.

26. Don’t confuse a bull market with management genius.

27. Insider information is always illegal – and often incorrect.

28. Futures and other sophisticated instruments are attractive only if you can’t get to Las Vegas.

29. When the market rises, your stock will not participate. When the market falls, you will be ruined.

30. When the insiders sell some, you should sell some too.

31. The good stuff always comes back.

32. The market keeps a lot of incompetent people busy and out of politics.

33. Any outcome that can be predicted with a dartboard does not warrant serious study.

34. The stock market is a racetrack complete with fast action, touts, and tired old nags.

35. The market reacts to reality – but perception is reality.

36. If it don’t go up, don’t buy it. –Will Rogers

37. There’s no such thing as a “one decision” stock.

38. There are only two kinds of publicly traded stock: Those that have been humbled, and those that have not yet been humbled.

39. Blue Chips are forever.

40. Buy what you understand.

41. Don’t play with borrowed money.

42. Markets reflect current emotions.

43. The long-term trend favors the upside.

46. The market swings between fear and greed.

44. You can’t fight the Fed.

45. You only pay a lot of taxes if you make a lot of money. –Joe Grammel

46. Take the money and run. –Woody Allen

47. When the time comes to sell stock, investors act perversely – unloading winners and keeping losers. –Mark Hulbert.

48. Walk the malls and buy stock in the crowded stores.

49. No amount of expertise will ever match dumb luck.

50. Players are sometimes Flummoxed by the Fickle Finger of Fate, Screwed by the Screaming Scorpion of Skepticism, and Reamed by the Wretched Ramrod of Reality. -Ed McManus

51. If you want to sleep nights, buy CD’s and Savings Bonds.

52. Charting is much like Astrology – but less accurate.

53. Investors vacillate between anxiety and confidence.

54. A dartboard has the same long term hit rate as an expensive advisor.

55. When in doubt – do nothing.

56. The market always goes back up – otherwise nobody would be in it by now.

57. Bonds have maturity, not all investors do.

58. You must speculate to appreciate.

59. Never tell anybody that you’re smart. That just tees them off. Tell them you’re lucky.  –Fred Adler, Investor

60. Ethical Advice? Sure: Cross the line, and you’ll do time.

61. Up is always better than down. Unless you go short.

62. Sell on the rally.

63. An incoming tide raises all boats.

64. No tree ever grows to the sky. – Dr. Michael Schneider

65. Some profits are created by circumstance. Others are destroyed by circumstance. If you’re lucky, it’s a wash.

66. This too shall pass.

67. More people have been ruined by hanging on when it was falling, than selling when it was rising.

68. “The tape doesn’t lie” was the sucker’s folk wisdom. In fact, the tape can be made to lie.” – Once in Golconda, A True History of Wall Street, 1920 – 1938 by John Brooks

69. “I have a general rule: Whenever anything becomes worth more than the State of California, I sell it.” -Alan Blinder on Internet Stocks.

70. The market plays the candle to every new generation of moths.

71. Scan the proxy, read the 10K.

72. I bought stock for my old age and it worked! A month later I was old.  -Henny Youngman.

73. Joe Kennedy left the market when a shoeshine boy gave him a stock tip. He knew the market was oversold.

74. Companies do unnatural things to make the stock go up.  –Dr. Mike Schneider

75. If you make money, don’t tell anyone. They will ask you for some.

76. If the bankers are busy, something is wrong.  -Walter Bagehat

77. A bear market is a bull in gestation.

78. “Buy and Hold” have replaced “I Love You” as our three most important words.

79. Mergers make a few people rich, several do okay, most are unaffected, and many are screwed.

80. Make sure there’s only one guy in charge. No company is ever big enough for two. -Leo F. McManus, Sr.

81. Most people trade on the “Greater Fool Theory”: Whatever you pay for it today, a Greater Fool will give you more for it tomorrow.

82. Take calculated risks. That is different from being rash.  –General George S. Patton

83. Never invest your money in anything that eats or needs repairing.  –Billy Rose

84. If you want to win the lottery, you’ve got to buy a ticket.

85. If to the Stock Exchange you speed/ To try with Bulls and Bears your luck/ ‘Tis odds you soon from gold are freed/ And waddle forth a limping duck. -William H. Ireland – 1807

86. I lost my money in the market even though I got in on the ground floor; it turned out everybody else got in at the basement.  -–Mark Twain

87. There are only three safe ways to make money in the market. Unfortunately, no one knows what they are.

88. I asked the market maker for a statement. He said, “I’m optimistic.”

89. There is no finer investment than putting milk into babies. –Winston Churchill

90. Companies pay shareholder money for investment bankers to write shareholder reports that shareholders cannot understand.

91. The Crash of ’29 Rule: It’s a bad day when the jumpers come out.

92. The trend is your friend.

93. If the people who sell advice were really good at what they do, they wouldn’t have to sell advice.

94. The four most dangerous words in stock market analysis are, “It’s different this time.”      -–Neil T. Naftalin

95. Nobody really knows what’s going on, including you, me, and them.

96. If you’re a serious investor, keep your office in a one story building. You won’t get badly hurt jumping off the roof.

97. It costs a lot to be rich.

98. “Markets are a great way to organize economic activity, but they need adult supervision.”   — Wall Street Journal, August 28, 2003, quoted by Bob Herbert

99. Wall Street never changes. The pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes. – Jesse Livermore

100. If you own a lot of stock, the stock owns you.

101. “Beware of Wall Street lawyers with their legalistic tricks.  I knew an honest lawyer once; he died in Fifty-Six.” –Ed McManus, “The Oracle and the Entrepreneur”

102. A merger of two losers never made a winner. -Ed de Castro

103. Rely first on what you see;  second on what you know; and only third, on what you think.

104. Things that don’t make sense are most often not true.

105. Don’t over analyze. When all is said and all is done one dollar is as good as another.             -Angelo Guadagno

106. Ask yourself: What’s the worst that can happen? What happens if that happens?

107. It’s okay to be a little fish, until the sharks go into a feeding frenzy.

108. Stock Price Forecasting: Stocks will rise and fall; or fall and rise, or rise and rise, or fall and fall. Guaranteed

109. Buy to the sound of cannons. -–Baron Rothschild

110. I expect the stock market to be less appealing once other forms of gambling are legalized.

111.  Mess with the Bull, you get the horns.

112. Wall Street: Where people in Rolls Royces drive to get advice from people who commute by subway. –Warren Buffet

113. Cut your losses and ride your winners.

114. “Occam’s Razor:” Things are most often what they look like.

115. Markets can remain irrational longer than you can remain solvent. – Maynard Keynes, Economist

116. It’s better to be lucky than smart.

117. Don’t trust anyone with a foolproof plan. They’re wrong.

118. The winner is always the person who makes the fewest mistakes.

119. Investing is a triumph of Hope over Experience.

120. Markets never forget, unless it’s in their interest to forget.

121. Shorting is basically buying high and selling low.

122.  Never average down – Jesse Livermore

123. Men go mad in herds  -Charles MacKay

124. Profits take care of themselves; losses never do. -Jesse Livermore

125. It’s only money.

Oh, two more things. If you have a favorite investment aphorism, or guideline, of your own that I missed, please send it to me at Jokesmith1@aol.com.

And finally,  if you make a lot of money using any of these thoughts and observations to guide your investment decisions, email me for the mailing address to which you may send my check.

Thanks, good luck, and if it seems too good to be true, it isn’t true.

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Money: Data Points

Over my lifetime, I have been fascinated by numbers; especially numbers relating to money, income, savings, expenses, and debt.

I have the following memories from my own experience. The numbers in brackets are taken from the US Government’s economic inflation algorithym (Google: “Value of Money Calculator”) It shows the value of the money from years past in 2010 dollars (the latest year available). It makes for an interesting comparison.

My grandmother told me that my grandfather, they were both Irish immigrants who worked in the paper mills, supported a family of 8 on $10./week (no taxes) (In 2012: $240.) in 1905.

My father supported a family of 6 on $75./week (In 2010: $1,153.) during World War II.

When my Uncle George retired from 30 years in the paper mills in 1941, he received a gold watch (which I proudly own) and a pension amounting to $1./month for every year he worked for the company. In his case, that was $30./month (In 2010: $439.)

In the late 1940’s, I sat with my father while an insurance salesman pitched him on a retirement plan. He showed Dad pictures of an older man, happily fishing in Florida, on his handsome pension of $250./month (In 2010: $2,228.)

In 1947 I was 10 years old and got my first part-time job locking up our local church at 9pm, 4 nights each week. They paid me $1./week (In 2010: $8.90).

In 1953, I got my first part-time job, on a soda fountain, after high school. I averaged $18./week (In 2010: $145.).

I attended UMass in Amherst starting in 1955. Tuition, room, board, and fees cost me about $1600./year ( In 2010: $12,879.). I worked 30 hours a week in the school cafeteria for about $24/week. I also was in ROTC, and the Army paid me another $200./month. I had about $74./week (In 2010: $238.) spending money. I worked vacations at the post office and summers in the mill. I could almost save the $1600./year college costs myself. My father filled in the shortfalls. There were no school loans.

In 1961, the Treasurer of the company I worked for made $15,000./year. (In 2010: $101K.). He had a beautiful home, drove a Chrysler Imperial, and belonged to the country club. I told my father. He said, “Do your job and maybe when you’re his age you’ll be earning $15,ooo./year.”

In 1967, we bought our first home. It was a  comfortable, 8 room Cape on an a half acre lot. It cost $24,500 (In 2010: $158,200.). My father came to see it. He inspected the house and property and asked: “Do you plan to live here for the rest of your life?” I said I didn’t know. Why? He said, “Because you’ll never get your money back.” We’re still living in it.

In 1970, I bought a 1969 Ford XL convertible for $2,500. (In 2010: $13,898.)

In the 1970’s, the talk was of “make your age.” If you were making $30K/year (In 2010: $159,674.) when you turned 30 years of age, you were on the fast track.

In the 1980’s, they said you were a success when your tax deductions exceeded your starting salary with the firm. I never knew anybody who did that.

In the 1990’s college grads wanted to make their age as a starting salary: 21 years old = $21K (In 2010: $34,584.).

I had retired by the new millennium, so I’ll end it here.

Two final thoughts: I ran events around the world for a Fortune 500 manufacturing company, and I created what I called “The Cheeseburger Index.” It was how much a cheeseburger cost at a first class hotel. I remember how shocked I was in the early 1980’s when cheeseburgers passed the $5.00 threshold. My all-time record was at the Ritz Carlton in Paris, circa 1992, when we paid $40. each (In 2010: $66.) for a cheeseburger, fries, and a Diet Coke. Ray Kroc of McDonald’s fame should have been alive to see that. God only knows what it would be today.

And a personal favorite: I read that Charles A. Schwab, the steel magnate and president of Bethlehem Steel, was the first man in America to make a salary of $1,000,000/year, in 1905. In today’s money, that would be $239,949,480. Remember: That was net dollars, as there were no taxes at that time. He lived the high life and they say he died broke. There’s got to be a lesson in there somewhere.

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Economics #101: Losing Jobs vs. Higher Profits, Why?

People ask: “Why are we losing jobs when corporate profits are at an all time high?”

It’s a good question. The answer is: Because the people on top are on compensation plans based on ever increasing profits. I will explain:

There are two ways for a company to increase profits: Sell more stuff, or cut costs. It is very difficult to sell more stuff; so they cut costs.

There are two ways for a company to cut costs: Get more productive, or cut expenses out of the business. It is very difficult to get more productive; so they cut expenses out of the business.

There are two ways for a company to take expenses out of the business: Reduce spending on everything from parts to perks, or get rid of people. It is very difficult to reduce spending on everything from parts to perks; so they get rid of people.

There are two ways for a company to get rid of people:  Take out a few highly compensated people, or a lot of middle and lower level employees. It is very difficult to take out a few highly compensated people (they have contracts and connections and are often involved in the decision making process themselves; remember: The Queen of Hearts never cried, ‘Off with my head!’); so they cut lots of middle and lower level employees out of the business – and freeze hiring, just to be sure.

This results in higher profits (which is a good thing), but it also results in higher goals for next year (which is a bad thing). So, the process endlessly repeats itself until the company is fully automated, except for the contract assembly work done offshore, and there are no employees at all; except for the CEO and a compensation clerk.

The compensation clerk is a Temp.

And then they are acquired.

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