Peter Lynch: 10 Mistakes Every Investor Makes

00:24:14
https://www.youtube.com/watch?v=rTacyRXN1Ks

概要

TLDRThe speaker conveys that successful investing hinges on understanding the company behind each stock, rather than merely reacting to price changes. Key takeaways highlight that many investors fail to appreciate the fundamental aspects of their investments. Key points include the futility of predicting economic trends, the risks of assuming drops in stock prices mean future gains, and a caution against common investment myths. Furthermore, he advocates for a concentrated portfolio approach, suggesting investors should focus on a handful of well-understood companies. This philosophy rests on the belief that, despite volatility, the overall market and individual stocks drive long-term gains.

収穫

  • 📈 Know what you own: Understand your investments!
  • 🚫 Predicting the economy is futile: Focus on facts, not forecasts.
  • ❌ Diversification can be a mistake: Consider investing deeply in fewer, well-researched stocks.
  • 🔍 Check the company story: If the narrative changes, reevaluate your investment.
  • 💔 Don't panic over drops: Temporary fluctuations don't define long-term outcomes.
  • ☠️ Don't feel regret about what you missed: You can't lose on stocks you don't own.
  • 📝 Track your reasons: Write down why you bought a stock and review it regularly.
  • ⏳ Be patient: Successful stocks often take time to appreciate significantly.
  • 💡 Focus on fundamentals: Know the businesses behind your investments.
  • 📊 Be aware of myths: Many assumptions about investing can be dangerous.

タイムライン

  • 00:00:00 - 00:05:00

    The speaker emphasizes the importance of understanding one's investments, particularly stocks. He notes that many investors cannot articulate why they own a particular stock, often relying solely on its price trend. He shares personal anecdotes about investing in familiar, straightforward businesses, contrasting those with complex companies that investors struggle to comprehend.

  • 00:05:00 - 00:10:00

    Predicting economic trends, such as interest rates and market movements, is deemed futile by the speaker. He stresses that historical evidence shows that forecasts often miss the mark and that understanding actual market behavior (up and down movements) is vital for investors. He draws from experiences in past economic downturns to illustrate the unpredictability of the market.

  • 00:10:00 - 00:15:00

    The speaker warns against misguided notions that accompany stock investing, like assuming a stock can't fall further simply because it's already dropped significantly. He shares personal experiences with substantial losses when he and others mistakenly believed stocks couldn't decline further, underlining the reality that prices can and do go lower even after steep drops.

  • 00:15:00 - 00:24:14

    He critiques the concept of waiting for a stock to return to its purchase price before selling, arguing that the stock doesn't recognize the investor's ownership or original investment. He advises that when stock investments do not perform as expected, investors should reevaluate their initial reasons for buying rather than becoming emotionally attached to their purchases.

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ビデオQ&A

  • What is the first key point about successful investing?

    Know what you own.

  • Why is it futile to predict the economy and stock market?

    It’s impossible to accurately forecast economic trends or market behavior.

  • What does the speaker say about diversification?

    He believes it's a mistake and would prefer to own one great stock.

  • How should investors approach stocks that have fallen significantly?

    Just because it has fallen does not mean it can't go lower.

  • What is the speaker's view on managing risk when investing?

    Investors should focus on understanding companies rather than worrying excessively about market fluctuations.

  • What should you do if the story behind a stock changes?

    If the reason you bought a stock changes, move on to something else.

  • How does the speaker recommend keeping track of investments?

    Keep notes on why you bought a stock and revisit those reasons periodically.

  • What is the speaker's stance on temporary losses?

    Don’t panic; stocks can fluctuate temporarily, but long-term growth is likely.

  • What does he suggest about missing out on stocks?

    You cannot lose money on a stock you don't own.

  • Why does the speaker emphasize the importance of understanding a company's story?

    Knowing the story helps investors make informed decisions rather than relying on market rumors.

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  • 00:00:00
    these are the key points that I've been
  • 00:00:01
    using for 25 years I think they're true
  • 00:00:03
    then I think they're true today I think
  • 00:00:04
    they'll be true in 25 years and I think
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    that's what successful investing is all
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    about and the first point is know what
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    you own I can't believe how many people
  • 00:00:13
    own stocks and they couldn't describe to
  • 00:00:15
    an 11-year-old in two minutes or less
  • 00:00:17
    why they own this thing or what it is if
  • 00:00:19
    you actually pin them down and you put a
  • 00:00:21
    whip to them they'd say the sucker is
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    going up that's the only reason they
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    have for real the uh and this is the
  • 00:00:25
    normal kind of company that people buy a
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    very simple story I own a lot of
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    companies like this they make a
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    relatively mundane product it's a 1
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    megabit SRAM Coss bipolar risk floating
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    Point data IA processor with optimizing
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    compiler now if you own a piece of
  • 00:00:40
    like
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    that you will never make money never Su
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    come with more wet Stones less wet
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    Stones big Mega flop I what do you do if
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    this thing goes from 12 to 9 you buy
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    more do you walk around the block I mean
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    you call your friends I mean what the
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    hell you do with something like that
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    people buy this stuff I mean I buy stuff
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    like Dunkin' donuts and uh stop and shop
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    and CVS and made money in all those and
  • 00:01:02
    Sally May was just here uh right before
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    me I mean there was a stock I bought
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    they had a great name was student loan
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    marketing who would ever buy anything
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    like that it was a great name if you
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    heard the story I think 100 people heard
  • 00:01:11
    the story I think if 100 people looked
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    at Sally May they would have bought it
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    but 100 people wouldn't look at it
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    because said imagine loaning money to
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    students imagine doing anything with
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    students and uh it was a great story it
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    was simple and uh no one looked at it so
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    that's the kind of stocks I like to buy
  • 00:01:24
    but I'm telling you people don't do this
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    and I'm talking sophisticated people
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    unsophisticated people they don't know
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    what the company is what's the story and
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    it's very important to know it because
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    it doesn't always work and you have to
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    keep posted now here's a big Point
  • 00:01:37
    remember this point it's futile to
  • 00:01:38
    predict the economy interest rates and
  • 00:01:40
    stock market I mean people keep trying
  • 00:01:43
    to do this I mean this would be useful I
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    would love to know when we going a
  • 00:01:46
    recession I'd love to know when interest
  • 00:01:47
    rates could go up or down I'd love to
  • 00:01:49
    know when the stock markets going up
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    that would be helpful I would like to
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    get next year's Wall Street Journal
  • 00:01:54
    unfortunately you don't get it I
  • 00:01:55
    remember in 1982 we had 20% prime rate
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    15% La governments double digit
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    unemployment double digit inflation I
  • 00:02:03
    don't remember anybody telling me about
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    that 1980 I don't remember anybody tell
  • 00:02:06
    me about that 1981 but in ' 83 I
  • 00:02:09
    remember they said well the economies
  • 00:02:10
    were bounced back we had recession 85 in
  • 00:02:13
    ' 85 they said we had recession 86 in '
  • 00:02:15
    87 something happened in October 87 I
  • 00:02:17
    forget what something happened in
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    october7 Celtics l seven in a row
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    something bad 87 they said for sure we
  • 00:02:22
    have recession 88 they said 89 for sure
  • 00:02:24
    recession and then 90 we're supposed to
  • 00:02:26
    have the so-called soft Landing which we
  • 00:02:29
    never had so I've always said if you
  • 00:02:31
    spend 13 minutes a year on economics
  • 00:02:34
    you've wasted 10 minutes all you need to
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    know about the stock market is it goes
  • 00:02:37
    up and it goes down it goes down a lot
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    and that's all you need to know again
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    it'd be terrific to know what's going to
  • 00:02:44
    happen the economy but I deal with facts
  • 00:02:46
    if inventories are going up if copper
  • 00:02:48
    prices are going down if R occupancy is
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    going the wrong way people people
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    building too many hotels I look at
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    freight car loadings I own railroad
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    stocks I deal with facts I don't deal
  • 00:02:56
    with people tell me something's going to
  • 00:02:58
    happen in the future you might as well
  • 00:02:59
    call the psychic hotline for that stuff
  • 00:03:01
    think you have better average at U you
  • 00:03:03
    got plenty of time this is true of Sally
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    May this is true dunan donut this is
  • 00:03:07
    true a Stop and Shop people are so
  • 00:03:09
    insistent I'm that way too I have to
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    fight it they have to buy a stock let's
  • 00:03:13
    say it's now 501 I haven't found a stock
  • 00:03:16
    yet today you know I got to find a stock
  • 00:03:17
    Before Sunset you could buy Walmart 10
  • 00:03:20
    years after Walmart went public let say
  • 00:03:21
    you're a very careful investor you
  • 00:03:23
    waited he said I don't know if this
  • 00:03:25
    company can make it you waited for
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    Walmart to roll it out you could buy
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    Walmart 10 years after they went public
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    and made 30 times your money 30 times
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    your money 10 years after they went
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    public they're only in 15% of the United
  • 00:03:36
    states5 they had saturated the5 you can
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    say well why can't they go to 17 why
  • 00:03:42
    can't they go to 19 I mean why don't I
  • 00:03:43
    take a leap of faith here why can't they
  • 00:03:45
    go to 26 all they did for the next three
  • 00:03:47
    decades was roll it out you could B
  • 00:03:50
    Walmart if the day they went public your
  • 00:03:51
    body you would made 500 times your money
  • 00:03:53
    if you waited 10 years in Walmart you
  • 00:03:54
    made 30 times M you got plenty of time
  • 00:03:57
    this business what I'd like to talk
  • 00:03:59
    about is what I the 10 most dangerous
  • 00:04:00
    things people say about stocks here's a
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    good one if it's gone down this much
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    already it can't go any lower I remember
  • 00:04:07
    when Polaroid went from 140 to about 107
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    people said if you ever get Polaroid
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    under 100 got to buy it just back up the
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    truck buy the stock you know stock you
  • 00:04:16
    get to 110 they rally you know fall 103
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    got 112 got 105 they said gets under 100
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    bipolar Polaroid broke 100 people
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    started buying it and within 9 months
  • 00:04:25
    the stock was 18 so just saying it's
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    gone down this far you know
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    how much lower I mean it's crazy but you
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    know it can keep going in fact I tried
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    this out Kaiser Industries I was a new
  • 00:04:34
    Analyst at Fidelity and we were about to
  • 00:04:36
    buy the biggest block ever at Kaiser
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    Industries the stock had gone from 29 to
  • 00:04:40
    17 we're about to buy the largest block
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    ever in the history of the American
  • 00:04:44
    Stock Exchange we bought I know 10 or 15
  • 00:04:45
    million shares at 15 and 3/4 I said my
  • 00:04:48
    God the stocks gone from 29 to 17 how
  • 00:04:50
    much lower can it go so we bought this
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    enormous block at 15 and 34s so I call
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    my mother and I said Mom I guess s kais
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    IND it's 10 so about three months later
  • 00:04:59
    said you got to buy this it's gone from
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    29 to 10 how much lower can it go well
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    it went to nine it went to eight it went
  • 00:05:05
    to seven it went to six it went to five
  • 00:05:07
    it went to four now fortunately me this
  • 00:05:09
    happened very rapidly I'd be working at
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    the Stop and Shop bag and behind the
  • 00:05:13
    line the state of fidelli so fortunately
  • 00:05:15
    this was compressed in only about 6
  • 00:05:16
    months so I had to go to fun me and say
  • 00:05:18
    I was a little bit early on this at 15
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    and 3/4 at
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    uh we call this premature in the
  • 00:05:23
    business had a correction which you know
  • 00:05:25
    is a euphemism for losing a lot of money
  • 00:05:27
    rapidly at the uh so I said let's check
  • 00:05:30
    this again the stocks for they own 45%
  • 00:05:33
    of Kaiser Aluminum they own 59% of kais
  • 00:05:35
    of Steel they own 38% of kais of cement
  • 00:05:37
    they own all of Kaiser Electronics all
  • 00:05:39
    of Kaiser broadcasting which had seven
  • 00:05:41
    TV sets they own Jeep they had Kaiser
  • 00:05:43
    fiberglass they about Kaiser Santa
  • 00:05:45
    gravel they had a bunch by The Kaisers
  • 00:05:46
    and they had no debt now in this room
  • 00:05:48
    because I know no one's ever gone
  • 00:05:50
    bankrupt without any debt now that would
  • 00:05:52
    take a real I think you have to get some
  • 00:05:53
    kind of distinguished service award do
  • 00:05:55
    somebody do that the uh but they had no
  • 00:05:57
    debt I said it's not going going to go
  • 00:05:59
    to zero you know I was wrong when I said
  • 00:06:01
    it can't go below 15 so we hung on and
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    within 3 years they gave out the shares
  • 00:06:07
    and Ka Ste gave out the shares in Kaiser
  • 00:06:08
    SP gave out the shares in Kaiser steel
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    and aluminum and they sold off all the
  • 00:06:12
    businesses you got about $55 a share but
  • 00:06:14
    if you didn't know the story and the
  • 00:06:16
    stock went from 1511 and you're just
  • 00:06:18
    saying how much lower can it go when it
  • 00:06:19
    went to 9 went to eight you you would
  • 00:06:21
    have gone so you can't just say it can't
  • 00:06:23
    go any lower because I saw a Taco Bell
  • 00:06:25
    go from 14 to1 in 1974 and they had no
  • 00:06:28
    debt and making 60 cents a share there's
  • 00:06:31
    a coal area to that that's even more
  • 00:06:32
    dangerous if it's gone this high already
  • 00:06:34
    how can it possibly go higher Philip
  • 00:06:37
    Morris adjusted for splits sold for 12
  • 00:06:40
    cents in 1951 then it goes to 60 cents
  • 00:06:42
    in 1961 so it goes up fivefold and you
  • 00:06:45
    say to yourself how much this never sold
  • 00:06:46
    for that but just for splits to say how
  • 00:06:47
    much higher can this go it's gone up
  • 00:06:49
    fivefold they missed the power of maror
  • 00:06:51
    they missed the this 220 countries in
  • 00:06:53
    the world they missed the cash flow of
  • 00:06:55
    the company they missed everything this
  • 00:06:56
    stock was 100 bagger after going up 5
  • 00:07:00
    but people sold it just saying how much
  • 00:07:01
    higher can it go can't go any higher
  • 00:07:03
    they did the same at Home Depot they did
  • 00:07:05
    the same with Toys R Us I did the same
  • 00:07:07
    thing toys rust just saying it can't go
  • 00:07:09
    any higher it's gone this much already
  • 00:07:10
    that's very dangerous and don't use that
  • 00:07:12
    one it's a very bad thing to do
  • 00:07:14
    eventually they always come back here's
  • 00:07:16
    another one that
  • 00:07:18
    sucks that's a technical stock market
  • 00:07:20
    term we just use only in the stock
  • 00:07:21
    market RCA just about get back to its
  • 00:07:23
    1929 price and was backed out by G
  • 00:07:26
    manvil never came back International
  • 00:07:27
    Harvester even with it name Chang ched
  • 00:07:29
    and adjusted for splits hasn't got all
  • 00:07:31
    the way back yet Western Union double
  • 00:07:32
    nits from remember those wonderful
  • 00:07:34
    things floppy discs they don't have to
  • 00:07:35
    come back but they say eventually they
  • 00:07:37
    always come back not true here's a great
  • 00:07:39
    one it's $3 how much can I
  • 00:07:42
    lose this is a great one get out this is
  • 00:07:46
    I don't have a computer and I can't do
  • 00:07:47
    high level math but just do this one
  • 00:07:49
    let's say you buy your neighbor buys
  • 00:07:50
    $10,000 of a stock at 50 the Stock's now
  • 00:07:53
    three and you put $25,000 in at three if
  • 00:07:57
    it goes to zero who loses the most
  • 00:08:00
    a lot of people cannot answer this
  • 00:08:02
    question you know I mean if you put a
  • 00:08:04
    billion in at three you can lose a
  • 00:08:06
    billion I mean they blow Taps and lots
  • 00:08:07
    of companies every year you know you
  • 00:08:08
    just have they can go to zero here's a
  • 00:08:11
    good one that helped me a lot It's
  • 00:08:12
    always darkest before the dawn this
  • 00:08:15
    business is terrible it's awful you
  • 00:08:17
    ought to buy the group this is not a
  • 00:08:19
    good way of making money here's one
  • 00:08:20
    you're probably talking about before
  • 00:08:21
    lunch freight car deliveries 1979 there
  • 00:08:24
    was 96,000 Freight cars to live United
  • 00:08:26
    States two years later it fell to 45
  • 00:08:29
    ,000 the lowest in 23 years it goes from
  • 00:08:31
    96,000 to 45,000 people say business is
  • 00:08:34
    awful it's horrible pathetic then it
  • 00:08:36
    falls to 25,000 they say just load up
  • 00:08:38
    there's about 15 opportunities to lose
  • 00:08:39
    money here there's about 15 suppliers of
  • 00:08:41
    freight cars 15 manufacturers business
  • 00:08:44
    was awful well last year we shipped
  • 00:08:45
    7,000 Freight cars United States the
  • 00:08:47
    business just contined to be miserable
  • 00:08:49
    and there's even greater opportunity to
  • 00:08:51
    lose money on Energy Services industry
  • 00:08:53
    this we all had a great opportunity to
  • 00:08:55
    get our heads hand to is in 1982 there
  • 00:08:57
    was 11,000 of those oil rigs drilling
  • 00:09:01
    those holes all over Oklahoma and Texas
  • 00:09:02
    and Colorado we used to have the rig
  • 00:09:04
    count every week and the rig count fell
  • 00:09:06
    from 11,000 in 82 to 6,000 883 then fell
  • 00:09:11
    a little bit lower in 84 there's
  • 00:09:12
    hundreds and hundreds of companies here
  • 00:09:13
    companies that made the muds and did the
  • 00:09:15
    downhole stuff the fracturing companies
  • 00:09:17
    the well companies all the measurement
  • 00:09:19
    companies the shamb the bid companies
  • 00:09:21
    lots of opportunities to lose money here
  • 00:09:22
    there equal opportunity here for serious
  • 00:09:24
    losses and people said listen the
  • 00:09:26
    business is terrible let's buy these
  • 00:09:28
    groups well thei was only a th000 3
  • 00:09:30
    years ago so it went from 11,000 to
  • 00:09:33
    6,000 to 5,000 then 8 years later it was
  • 00:09:35
    under a th000 the industry really
  • 00:09:36
    started turning about two years ago so
  • 00:09:38
    just saying the business can't get worse
  • 00:09:41
    I was lucky enough addition to have the
  • 00:09:42
    metals industry in start I had the
  • 00:09:43
    textile industry which is a great group
  • 00:09:45
    to follow because you follow companies
  • 00:09:46
    like JP Stevens was founded in the 18th
  • 00:09:48
    century and West Point Peril was found
  • 00:09:51
    in the 18th century these people have
  • 00:09:52
    been through recessions depressions were
  • 00:09:53
    Wars they've seen it all there a great
  • 00:09:56
    expression Tex industry It's always
  • 00:09:58
    darkest for Pitch
  • 00:10:01
    Black now that's a good one to remember
  • 00:10:03
    because when business is terrible it can
  • 00:10:04
    get considerably terrible get terrible
  • 00:10:06
    to the power of six and uh you watch
  • 00:10:09
    Jeopardy and people come out they will
  • 00:10:11
    know those numbers they'll know the
  • 00:10:12
    numbers and they'll know what country
  • 00:10:15
    box took his first vacation in and
  • 00:10:16
    they'll know Phil ruta's batting average
  • 00:10:18
    and what his wife's first name was and
  • 00:10:20
    they'll know the stock symbols of Xerox
  • 00:10:22
    before was halloy or you know they know
  • 00:10:24
    everything and you watch the show you
  • 00:10:26
    feel like an absolute idiot watching the
  • 00:10:27
    show because they answer all these
  • 00:10:28
    questions but they're really smart I own
  • 00:10:29
    this I've owned this stock before King
  • 00:10:31
    world right after it they show Wheel of
  • 00:10:32
    Fortune and what happens is they'll have
  • 00:10:34
    this word up there and it'll be th and
  • 00:10:36
    there's a t and it's I buy a v his I buy
  • 00:10:38
    a u you know a buy an i Vanna spins the
  • 00:10:42
    wheel and they buy the A and you know
  • 00:10:43
    you you're Redeemed by watching The
  • 00:10:44
    Wheel of forun after feeling like an
  • 00:10:47
    absolute jerk on the Jeopardy game and
  • 00:10:49
    uh it's really smart it uh when I
  • 00:10:52
    rebound to 10 I'll sell here's a great
  • 00:10:54
    rule somebody buys a stock at 10 and it
  • 00:10:57
    falls to 6 they say gets back to 10 I'll
  • 00:11:00
    sell now I think the math four and six I
  • 00:11:02
    can handle this love math I think that's
  • 00:11:04
    about a 66% return you ought to buy it
  • 00:11:06
    if you think it's going back to 10 you
  • 00:11:07
    ought to buy the hell of the damn thing
  • 00:11:08
    but they think if it gets back to 10
  • 00:11:10
    I'll sell now what you ought to do is
  • 00:11:12
    never put down a round number because I
  • 00:11:13
    think for the next 26 years the stock go
  • 00:11:15
    between five and N9 and a quarter it'll
  • 00:11:16
    never get to 10 so maybe put 9 and e or
  • 00:11:19
    eight 3/4 but just saying the stock if
  • 00:11:22
    it gets back what I paid for it this is
  • 00:11:24
    a very important rule this is a very one
  • 00:11:26
    of the key rules the stock doesn't know
  • 00:11:28
    you own it
  • 00:11:30
    remember that you could be a miserable
  • 00:11:32
    person you could have uh never helped
  • 00:11:34
    anybody never done anything right had 67
  • 00:11:37
    spouses never done anything right if you
  • 00:11:39
    own Coca-Cola last 50 years it's gone up
  • 00:11:41
    300 fold you could be the greatest human
  • 00:11:44
    in the world help Special Olympics help
  • 00:11:46
    the mentally challenged help poor people
  • 00:11:49
    help AIDS people if you Bethlehem Steel
  • 00:11:51
    it's lower than it was 30 years ago it's
  • 00:11:53
    not your fault don't take this personal
  • 00:11:54
    you know but people treat stocks
  • 00:11:56
    sometimes like a grandchildren or a
  • 00:11:57
    puppy they think the stock knows who you
  • 00:11:59
    are are it doesn't work that way I don't
  • 00:12:01
    have to worry I own conservative stocks
  • 00:12:03
    I'm Con Ed fell 80% then tripled Public
  • 00:12:06
    Service Indiana went down 90% Gulf
  • 00:12:08
    States utilities long on lighting this
  • 00:12:11
    may be oxymoron we had quality Texas
  • 00:12:12
    banks that went to zero we had uh
  • 00:12:15
    quality New England banks that went to
  • 00:12:16
    zero these were companies have been
  • 00:12:18
    around for 150 years 120 years saying I
  • 00:12:20
    own conservative stocks I don't have to
  • 00:12:22
    worry I've seen a lot of people they
  • 00:12:24
    inherit a stock from somebody they'll
  • 00:12:26
    say you know my mother said on her
  • 00:12:28
    deathbed don't sell the Long Island
  • 00:12:30
    lighting you know you always wondered
  • 00:12:31
    you know is it she's going to heaven or
  • 00:12:33
    hopefully where she's going to heaven
  • 00:12:34
    they talk about a lily game or a
  • 00:12:36
    vacation or game of Hearts they had or
  • 00:12:39
    imagine talking on your death bed about
  • 00:12:40
    long on the lighting you know but you
  • 00:12:42
    get these stories all the time and I
  • 00:12:44
    think your mother would have noticed she
  • 00:12:46
    wouldn't have sold at 29 but she would
  • 00:12:48
    have noticed they had this little plant
  • 00:12:49
    that was about 6 billion over budget no
  • 00:12:51
    one wanted it and wasn't working and uh
  • 00:12:53
    Long Island stopped growing so maybe she
  • 00:12:55
    would have tfed at 22 or got off at 18
  • 00:12:57
    she would have let it go to four so just
  • 00:12:59
    because you inherit some stock and it's
  • 00:13:01
    so-called conservative like Eastman
  • 00:13:02
    Kodak fell 75% IBM fell 75% don't tell
  • 00:13:06
    anybody you want a conservative stock
  • 00:13:08
    companies are very Dynamic I don't buy
  • 00:13:10
    that argument here's a very dangerous
  • 00:13:12
    one look at all the money I've lost I
  • 00:13:14
    didn't buy it people do this all the
  • 00:13:16
    time they say I didn't own Blockbuster I
  • 00:13:18
    didn't own Home Depot I didn't own Toys
  • 00:13:19
    R Us us I uh Eric it was very nice to
  • 00:13:22
    say some nice things about when I came
  • 00:13:24
    up here and Manny has been nice to me I
  • 00:13:26
    L one of my books listed on two pages in
  • 00:13:29
    a 13 years of ram mellan I listed I
  • 00:13:32
    think about 200 stocks a through L on
  • 00:13:34
    the New York Stock Exchange they went up
  • 00:13:36
    10-fold or more that I didn't own while
  • 00:13:38
    I ran M I had own lots of stocks I
  • 00:13:40
    listed 200 stocks a for I stopped at
  • 00:13:42
    letter L and I didn't own any of the
  • 00:13:44
    shares they went up tenfold or more and
  • 00:13:46
    I was able to do okay with mellin and
  • 00:13:48
    people worry all the time about missing
  • 00:13:50
    Microsoft missing Western Digital
  • 00:13:53
    missing United Airlines they spend all
  • 00:13:55
    their time worry about stocks they miss
  • 00:13:57
    you cannot lose money in a stock you
  • 00:13:58
    don't own the only way to lose money is
  • 00:14:01
    buy a stock have it go down and sell it
  • 00:14:03
    that's the only way and I swear that
  • 00:14:04
    people their spouse has to cut out the
  • 00:14:06
    newspaper in the morning cut out the
  • 00:14:07
    Seas and personal look at the am oh my
  • 00:14:10
    God Microsoft's up three you know I had
  • 00:14:11
    I was going to buy a thousand shares of
  • 00:14:13
    Microsoft I lost 3,000 on Microsoft last
  • 00:14:14
    night while I was sleeping you know you
  • 00:14:16
    know I was going to buy 7,000 shares of
  • 00:14:19
    national semic contractor at 10 it's now
  • 00:14:21
    17 I just lost $49,000 on National
  • 00:14:24
    semiconductor they do this all the time
  • 00:14:25
    I mean they have to cut holes the block
  • 00:14:26
    thank God Blockbuster found one way that
  • 00:14:28
    would early alphabet people would always
  • 00:14:30
    be looking how much they lost in
  • 00:14:31
    Blockbuster I missed that one I'll catch
  • 00:14:33
    the next one that usually does not work
  • 00:14:36
    Toys R Us there was a a lot of copycats
  • 00:14:38
    of Toys R R Us there was child World
  • 00:14:39
    there was lion L there's copycats of
  • 00:14:41
    Home Depot buying the next of something
  • 00:14:43
    usually doesn't work it's very bad it's
  • 00:14:45
    like buying on dips I think it's always
  • 00:14:47
    better buy from dips I that was a better
  • 00:14:49
    rule than Buy on dips you may have to
  • 00:14:51
    explain this to some other people uh
  • 00:14:53
    this another technical term you have to
  • 00:14:54
    explain after hours what a dip is
  • 00:14:56
    usually refer to as plurals dips I never
  • 00:14:58
    heard dip you know he's a dip she's a
  • 00:15:00
    dip usually only the plural tense for
  • 00:15:02
    and it's a gender non-specific it it's
  • 00:15:04
    usually plural dip is never used stock
  • 00:15:06
    is gone up I must be right stock has
  • 00:15:08
    gone down I must be wrong I'm convinced
  • 00:15:10
    that people do this all the time they
  • 00:15:12
    buy a stock at 10 they buy a little bit
  • 00:15:13
    of it it goes to 13 that they now say
  • 00:15:16
    they don't know anything more about it
  • 00:15:16
    than they knew when they bought a 10
  • 00:15:18
    they have no idea what this company does
  • 00:15:19
    it's gone to 13 now they take a second
  • 00:15:21
    morage in the house and buy a 13 the
  • 00:15:23
    best thing could happen for is to stck
  • 00:15:24
    up directly from 10 to four for these
  • 00:15:26
    folks it's going to go to four
  • 00:15:27
    eventually but it goes to 13 in the
  • 00:15:28
    middle they're convinced now they bought
  • 00:15:30
    100 shares at 10 now they buy 20,000 at
  • 00:15:32
    13 and all the fact is the stock from 10
  • 00:15:35
    to 13 is it went up the average movement
  • 00:15:38
    of a stock in the New York Stock
  • 00:15:39
    Exchange this Century between its high
  • 00:15:40
    and low has been 50% the average stock
  • 00:15:43
    New York Stock Exchange that means a
  • 00:15:44
    stock started the year at 20 sometimes
  • 00:15:46
    during the year sold at 16 sometimes
  • 00:15:48
    during the year sold at 24 might have
  • 00:15:50
    finished year at 21 might have finished
  • 00:15:51
    year at 19 the average range of a stock
  • 00:15:53
    and change it's 50% in 12 months between
  • 00:15:56
    it's high it's slow so stocks go up and
  • 00:15:58
    down a lot within a year and say this
  • 00:16:01
    stock is going up means you're right
  • 00:16:02
    doesn't mean a damn thing so don't buy
  • 00:16:04
    off on that one that is not a good one
  • 00:16:07
    void long shots these are the companies
  • 00:16:09
    that we have this very technical term
  • 00:16:11
    for this called whisper stocks everybody
  • 00:16:13
    familiar with whisper stocks the great
  • 00:16:14
    call up they'll say hi P how's Carolyn
  • 00:16:17
    how's Beth's Annie how's Mary have you
  • 00:16:19
    played any golf and then they'll say I
  • 00:16:20
    want to talk to you about International
  • 00:16:22
    bivet and they'll get a shorter term in
  • 00:16:24
    those places where they they have Nordic
  • 00:16:25
    tracks and they put them away and they
  • 00:16:27
    don't they don't have to make big rock
  • 00:16:29
    in the small rocks they just watch
  • 00:16:30
    movies and they have Nordic tracks but
  • 00:16:31
    they won't they will not get these
  • 00:16:32
    people if they whisper into the phone
  • 00:16:34
    and these are always these long shots
  • 00:16:36
    you know these are the stocks that are
  • 00:16:37
    going to uh grow hair and make your kid
  • 00:16:39
    have better spelling and your breaths
  • 00:16:41
    going to improve and you won't have to
  • 00:16:43
    iron your pants you it's one of those
  • 00:16:44
    stocks you they always do everything for
  • 00:16:45
    you but they're missing they don't have
  • 00:16:47
    any sales yet you know that's the
  • 00:16:48
    missing element of the story the story
  • 00:16:49
    is sensation there's no profits here no
  • 00:16:52
    sales yet but my God if this works if
  • 00:16:54
    this works it's going to be the next
  • 00:16:55
    zero you know and uh and it's going to
  • 00:16:57
    help M and space and everything it's a
  • 00:16:59
    very very good deal now this is not a
  • 00:17:00
    long shot this is a no shot you have to
  • 00:17:02
    separate these out I've tried 30 of
  • 00:17:04
    these I have never broken even on a long
  • 00:17:06
    shot never I've made 25 30 times my
  • 00:17:09
    money on some stocks I never thought
  • 00:17:10
    about Sally May or mbia or Fanny May or
  • 00:17:13
    some of the banks or soping shop i' make
  • 00:17:15
    20 times the money 30 times money I had
  • 00:17:17
    no idea I thought the stock are going
  • 00:17:19
    north I had no idea you look back 10
  • 00:17:21
    years later you say my God I made a lot
  • 00:17:23
    of money in this thing but once I went
  • 00:17:25
    into thinking I can make four times my
  • 00:17:27
    money I've never broken even so don't do
  • 00:17:30
    the long shot guys they don't work they
  • 00:17:32
    simply don't work and again if a Stock's
  • 00:17:35
    three and it has huge potential write
  • 00:17:37
    down the story take the stock symbol if
  • 00:17:40
    it's going to 300 it's okay to buy it at
  • 00:17:42
    15 check in later check a year later see
  • 00:17:44
    if it's still listed see if they still
  • 00:17:45
    get a quote on it see if they still have
  • 00:17:47
    any orangs yet but if it's going write
  • 00:17:49
    the story down some of these work I
  • 00:17:51
    haven't heard yet but maybe they will
  • 00:17:52
    work but it's worth tuning in six months
  • 00:17:54
    later don't buy it then the single most
  • 00:17:57
    important thing very hard to measure
  • 00:17:59
    I've always said I'd like to a company
  • 00:18:01
    any fool can run he's eventually one
  • 00:18:03
    will and uh you really want to do that
  • 00:18:05
    when I bought Toys R R Us they had the
  • 00:18:07
    formula right any four people in this
  • 00:18:09
    room and me could have run toys Russ we
  • 00:18:12
    wouldn't have done as well as they did
  • 00:18:13
    they're spectacular but for the next 15
  • 00:18:15
    years we had no competition we had a
  • 00:18:17
    great formula we could have rolled with
  • 00:18:18
    it they probably would have done three
  • 00:18:20
    times as good they were the frosting on
  • 00:18:21
    the cake but they had the form the right
  • 00:18:23
    no competition the Departments does know
  • 00:18:24
    what they're doing there's no copycats
  • 00:18:26
    and they were going to just roll for the
  • 00:18:27
    next 25 years so I want the story to be
  • 00:18:30
    solid if management can add anything on
  • 00:18:32
    top of it that's great I want to buy the
  • 00:18:34
    story assume management leaves the next
  • 00:18:36
    day and they're replaced by the Next
  • 00:18:38
    Generation that's fine with me if
  • 00:18:40
    management can add something to it
  • 00:18:41
    that's great I'm not going to buy these
  • 00:18:43
    people say they have great management
  • 00:18:44
    because you'll notice great management
  • 00:18:45
    is always attached to stocks been up the
  • 00:18:47
    last eight years you ever notice that
  • 00:18:49
    now we'll get to the important stuff
  • 00:18:50
    there's always something to worry about
  • 00:18:53
    this is the difference this is what
  • 00:18:54
    happens in the stock market because see
  • 00:18:55
    everybody's got the brain power to do
  • 00:18:57
    well in the stock market question is
  • 00:18:57
    where they have the stomach for that's
  • 00:18:59
    the key organ in the body there's always
  • 00:19:01
    something to worry about if I went to
  • 00:19:02
    school grew up with a kid in the 50s in
  • 00:19:04
    the decade of the 50s this's this big
  • 00:19:06
    theory that the Depression was caused by
  • 00:19:09
    stock market crash totally wrong less
  • 00:19:11
    than 1% of Americans own stocks in 29 we
  • 00:19:13
    had this big time recession in fact it
  • 00:19:16
    was a depression it wasn't caused by the
  • 00:19:18
    stock market the economy went down the
  • 00:19:19
    Federal Reserve raised interest rates
  • 00:19:21
    and we had a big time depression in fact
  • 00:19:22
    we had several depressions like that
  • 00:19:24
    from 1850 on we had this is only one of
  • 00:19:26
    about eight depressions since 1850 but
  • 00:19:28
    but people thought the only reason we
  • 00:19:29
    got the Depression was World War II and
  • 00:19:31
    they said once we get back next time we
  • 00:19:33
    have a recession we're going to have a
  • 00:19:34
    depression and it's going to be a Great
  • 00:19:35
    Depression I never understood that
  • 00:19:37
    adjective in front of depression you
  • 00:19:38
    ought be crummy depression or bad
  • 00:19:39
    depression but it's Great Depression I
  • 00:19:41
    never quite understood that one so
  • 00:19:43
    people weren't buying stocks in the 50s
  • 00:19:44
    because they thought another Great
  • 00:19:45
    Depression is going to happen in
  • 00:19:46
    addition people were very scared about
  • 00:19:49
    nuclear warheads and nuclear war in the
  • 00:19:51
    50s people were building FID shelters
  • 00:19:53
    stocking canned goods there's something
  • 00:19:55
    about going to Vermont building a FID
  • 00:19:57
    shelter putting canned goods in it that
  • 00:19:58
    you don't buy Minnesota Mining or you
  • 00:20:00
    don't buy easta I mean just the
  • 00:20:01
    syllogism just doesn't work out with you
  • 00:20:03
    buying lots of water buying a shotgun
  • 00:20:05
    buying frozen food that will stay in the
  • 00:20:07
    freezer with your own generator and
  • 00:20:08
    you're looking at grow
  • 00:20:10
    stocks doesn't seem to work out that way
  • 00:20:12
    you know and I remember in the 50s I
  • 00:20:14
    mean I remember literally in classes I
  • 00:20:16
    was in elementary school in the 50s and
  • 00:20:18
    they would come in they'd have one of
  • 00:20:19
    these air raid drills somebody a yellow
  • 00:20:21
    hat would come in they blow a whistle
  • 00:20:22
    and you get under your desk even then I
  • 00:20:24
    says I don't think this is going to do a
  • 00:20:25
    lot of good you
  • 00:20:26
    know but people are worried about a
  • 00:20:29
    depression in nuclear war in the 50s and
  • 00:20:32
    then they I mean the WarHeads they
  • 00:20:33
    couldn't do much damage back in the 50s
  • 00:20:35
    now one of these stand countries you
  • 00:20:36
    know these kakistan and kazakistan all
  • 00:20:38
    these stand guys that have spun off
  • 00:20:39
    these fre been building spin-offs from
  • 00:20:40
    the Soviet Union the uh the uh they
  • 00:20:43
    didn't lead it it was a co- deal with
  • 00:20:44
    somebody else saxs they were on the left
  • 00:20:47
    side though every one of these little
  • 00:20:48
    countries has enough Warheads to blow
  • 00:20:50
    the world up 88 times right who's built
  • 00:20:51
    a Fallout sh you know we stop worrying
  • 00:20:53
    about it I mean there's always something
  • 00:20:54
    to worry about in the 50s it was
  • 00:20:56
    depression and nuclear war the ' 50s was
  • 00:20:58
    was the best decade of this Century for
  • 00:21:00
    the stock market except for the ' 80s
  • 00:21:01
    only slightly better the 8S are only
  • 00:21:03
    slightly better people didn't expect a
  • 00:21:04
    lot okay wasn't a great decade they just
  • 00:21:06
    didn't expect much we made it through
  • 00:21:08
    and the stock market was terrific and I
  • 00:21:10
    think it's the older you get the more
  • 00:21:11
    nervous you get about these things I
  • 00:21:13
    think it's very viable I think while
  • 00:21:14
    younger people are better investors is
  • 00:21:16
    they're not worried they haven't heard
  • 00:21:17
    about all these crisises and they're
  • 00:21:18
    with children I think if you don't have
  • 00:21:20
    any kids you got to rent some kids for
  • 00:21:21
    the weekend you know get a
  • 00:21:23
    seven-year-old and ask him if he knows
  • 00:21:25
    about the money supply you know how fast
  • 00:21:26
    he grown ask if he knows about the shape
  • 00:21:28
    of curve is the wrong shape of yel curve
  • 00:21:30
    or that we're 48.3 months into the
  • 00:21:32
    economic recovery and the average
  • 00:21:33
    recoveries last 52.3 months you know ask
  • 00:21:36
    an 8 year- Old if they know about that
  • 00:21:37
    8-year-olds have a very high expectation
  • 00:21:39
    about the next 20 years that's what you
  • 00:21:41
    need to do the more you get away from
  • 00:21:43
    11y Olds the more you start reading
  • 00:21:44
    these crazy things you read over the
  • 00:21:45
    weekend so I have no idea when the
  • 00:21:47
    Market's going to go down and uh no idea
  • 00:21:49
    when it's going to go up I'm totally
  • 00:21:50
    shocked the market was 4,000 2 and a
  • 00:21:52
    half years ago and I had no idea about
  • 00:21:54
    this very surprising to me but I'll
  • 00:21:56
    guarantee you the market will be lot
  • 00:21:58
    higher in 15 years it'll be a lot higher
  • 00:22:00
    in 25 years what it's going to do next
  • 00:22:02
    one or two years I don't have any idea
  • 00:22:04
    and if somebody in this room knows about
  • 00:22:05
    it they're not telling anyone or if they
  • 00:22:07
    know anything about interest rates
  • 00:22:08
    because interest rates if you can be
  • 00:22:09
    write five times in a row and 10 grand
  • 00:22:11
    you can have two billion it's not that
  • 00:22:12
    many people with two billion there's a
  • 00:22:13
    lot of people predicting interest trat
  • 00:22:14
    did you ever think about that one uh
  • 00:22:17
    just five times right in a row and 10
  • 00:22:18
    grand too good so I don't worry about
  • 00:22:21
    that I know we've had the century and
  • 00:22:23
    the Market's Fallen 53 times we had 53
  • 00:22:25
    declines of 10% or more so 53 declines
  • 00:22:28
    in 96 years once every two years we have
  • 00:22:30
    a 10% decline of the 53 declines
  • 00:22:33
    155 been 25% so 15 and 96 years about
  • 00:22:38
    once every six years the market Falls
  • 00:22:40
    25% more that's what we call a bare
  • 00:22:41
    Market you know and it's going to happen
  • 00:22:44
    I don't care when it's going to happen I
  • 00:22:45
    would love to know I obviously it would
  • 00:22:47
    be very useful to know when it's going
  • 00:22:48
    to happen doesn't make difference to me
  • 00:22:49
    corporate profits be a lot higher eight
  • 00:22:50
    years from now a lot higher 16 years
  • 00:22:52
    from now a lot higher 30 years from now
  • 00:22:54
    that's what I deal with when do you sell
  • 00:22:56
    stocks when you sell a stock is exact
  • 00:22:58
    the reason you buy it you write down the
  • 00:23:00
    reason you bought it that's what you're
  • 00:23:02
    looking for the reason you buy a stock
  • 00:23:03
    you keep it posted if the reason changes
  • 00:23:06
    you go on to something else do you
  • 00:23:07
    believe the S&P 500 Market is expensive
  • 00:23:10
    yes I don't believe in diversification
  • 00:23:12
    at all I would own one stock if I could
  • 00:23:14
    find one great stock diversification is
  • 00:23:16
    a big mistake I call it
  • 00:23:18
    diversification you buy this thing that
  • 00:23:21
    might balance this other thing and they
  • 00:23:22
    both go down I don't believe in
  • 00:23:23
    diversification at all I would own one
  • 00:23:24
    stock but what I do believe in is if I
  • 00:23:26
    find 10 good stories they're all equally
  • 00:23:29
    attractive I buy all 10 and I wait to
  • 00:23:31
    see them unfold it's like watching 10
  • 00:23:33
    poker games 10 games of stud poker you
  • 00:23:36
    watch the cards turn over Story three
  • 00:23:38
    gets better story six slips story seven
  • 00:23:41
    stays the same but it goes up 50% you
  • 00:23:43
    sell seven and buy two that's all I do
  • 00:23:45
    so if they're equally attractive I buy
  • 00:23:47
    all 10 then gradually some story says oh
  • 00:23:50
    my God this is getting better and better
  • 00:23:52
    and guess what the stock just went down
  • 00:23:54
    so you keep watching the 10 stories and
  • 00:23:56
    magically because of that rule of stocks
  • 00:23:58
    going up and down down a lot then you
  • 00:23:59
    load up you really you know take a big
  • 00:24:01
    Advantage so that that either happens
  • 00:24:03
    because something happens to the company
  • 00:24:04
    or the market goes down and all stocks
  • 00:24:05
    go down they're in the fifth ining of
  • 00:24:07
    the current bu Market this is also
  • 00:24:09
    the only difference this is
  • 00:24:12
    more current
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