Peter Lynch: Everything You Need to Know About Investing in One Video

00:47:20
https://www.youtube.com/watch?v=ol907h0G9LY

Resumo

TLDRIn this video, a financial expert discusses the principles of successful investing in the stock market. He argues that understanding what you own is crucial and that predicting market behavior is largely futile. He warns against common investor mistakes, such as assuming a stock's price cannot fall further after a decrease or that higher prices guarantee further gains. The speaker emphasizes the importance of dealing with factual data and understanding the companies behind investments. He also suggests that diversification may dilute the quality of investments and emphasizes the need to monitor the reasons for owning specific stocks, as they may change over time. Ultimately, patience and knowledge are key to making informed investment choices.

Conclusões

  • 📊 Understand what you own and why!
  • 📉 Predicting the market is often futile.
  • 🔍 Focus on facts, not speculation.
  • 💡 Avoid common investor fallacies.
  • ⏳ Patience is a virtue in investing.
  • 📈 It's okay to wait for the right opportunity.
  • 🚫 Diversification can lead to mediocre results.
  • 👥 Management quality is crucial but hard to gauge.
  • 💰 Sell if the reasons for buying change.
  • 🔄 Always be flexible and adapt your strategy.

Linha do tempo

  • 00:00:00 - 00:05:00

    The speaker criticizes the common misconceptions about economics and the stock market, emphasizing that stock prices will fluctuate without predictable patterns. He advocates for focusing on tangible data, such as inventory levels and raw material prices, rather than speculative forecasts.

  • 00:05:00 - 00:10:00

    He stresses the importance of understanding what investments are owned and being able to explain them simply. Many investors lack this fundamental knowledge, often buying stocks based solely on price movements rather than intrinsic value.

  • 00:10:00 - 00:15:00

    The speaker discusses his investment preferences, suggesting that he prefers familiar and simple businesses rather than complicated tech stocks. He illustrates this with the example of successful investments in well-known companies like Dunkin' Donuts.

  • 00:15:00 - 00:20:00

    The futility of predicting stock market trends is highlighted, underscoring that many forecasts fail to materialize. The speaker encourages dealing with facts and current market conditions instead of speculating about future economic climates.

  • 00:20:00 - 00:25:00

    Emphasizing the long-term nature of investing, the speaker states that waiting for the right opportunity can yield significant returns, as shown with Walmart, which rewarded patience and insight over time.

  • 00:25:00 - 00:30:00

    The discussion on misconceptions continues, warning against the notion that a stock cannot fall further once it has dropped significantly, using historical examples to illustrate that prices can always decline further.

  • 00:30:00 - 00:35:00

    Another myth addressed is the belief that prices will always recover, pointing to several companies that have failed to return to their previous highs, urging viewers to let go of this false notion.

  • 00:35:00 - 00:40:00

    He discusses the common fallacy that low-priced stocks present minimal risk, explaining that potential losses can be substantial. True risk assessment should not be based solely on share price but on fundamentals of the company.

  • 00:40:00 - 00:47:20

    In conclusion, the speaker calls for vigilance and flexibility in investing decisions, iterating the importance of being well-informed and proactive when considering the purchase or sale of stocks.

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Vídeo de perguntas e respostas

  • What is the main idea of the speaker about stock market predictions?

    The speaker believes that predicting the economy, interest rates, and stock market movements is futile and prefers to focus on concrete data.

  • What does the speaker mean by 'know what you own'?

    He advises that investors should fully understand the companies they invest in and why they own those shares.

  • What are some common mistakes investors make?

    Investors often rely on assumptions, such as a stock being a 'bargain' after a decline or thinking a stock can't go lower.

  • How does the speaker suggest investors should approach buying stocks?

    He recommends being patient and taking time to find good companies rather than hurrying to buy stocks.

  • Does the speaker believe in diversification?

    No, he argues that diversification can lead to poor decision-making and prefers to focus on a few solid choices.

  • What is the biggest takeaway regarding management in companies?

    Management is crucial, but it's hard to assess; good management can often be mistaken for good stock performance.

  • What is a key principle the speaker highlights about stock prices?

    Stock prices can fluctuate significantly, and just because a stock rises doesn't mean it's a good investment.

  • What does the speaker think about using economic indicators for investing decisions?

    He believes that economic indicators are often misleading and are not reliable for making investment decisions.

  • What attitudes must investors adopt, according to the speaker?

    Investors should be flexible, not let emotions dictate their decisions, and manage their expectations regarding market performance.

  • When should investors sell their stocks?

    Investors should sell when the reason they initially bought the stock no longer holds true.

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  • 00:00:00
    so i've always said if you spend 13
  • 00:00:02
    minutes a year on economics you've
  • 00:00:04
    wasted 10 minutes
  • 00:00:11
    and all you need to know about the stock
  • 00:00:12
    market is it goes up and it goes down
  • 00:00:14
    and it goes down a lot
  • 00:00:16
    and that's all you need to know
  • 00:00:18
    again it'd be terrific to know what's
  • 00:00:20
    gonna happen economy but i deal with
  • 00:00:21
    facts if inventories are going up if
  • 00:00:23
    copper prices are going down if room
  • 00:00:25
    occupancy is going the wrong way people
  • 00:00:27
    building too many hotels
  • 00:00:29
    i look at freight car loadings my own
  • 00:00:30
    railroad stocks
  • 00:00:32
    i deal with facts i don't deal with
  • 00:00:34
    people tell me something's going to
  • 00:00:35
    happen the future
  • 00:00:36
    you might as well call the psychic
  • 00:00:37
    hotline for that stuff
  • 00:00:39
    to get better average
  • 00:00:49
    [Music]
  • 00:00:52
    thank you does everybody have this list
  • 00:00:54
    can everybody hear me
  • 00:00:55
    can you hear what i'm saying there's a
  • 00:00:58
    lot of microphones here the uh this is
  • 00:01:00
    what i'm going to cover today it should
  • 00:01:02
    be on your desk this is the
  • 00:01:03
    these are the key points that i
  • 00:01:05
    i've been using for 25 years i think
  • 00:01:07
    they're they're true then i think
  • 00:01:08
    they're true today i think they'll be
  • 00:01:09
    true in 25 years i think that's what
  • 00:01:12
    investing uh
  • 00:01:14
    successful investing is all about and uh
  • 00:01:17
    the first point is know what you own
  • 00:01:20
    i can't believe how many people owned
  • 00:01:22
    stocks
  • 00:01:23
    and they couldn't describe to an
  • 00:01:24
    eleven-year-old in two minutes or less
  • 00:01:27
    why they own this thing or what it is
  • 00:01:28
    they only if you actually pin them down
  • 00:01:30
    and you
  • 00:01:31
    put a whip to them they'd say the
  • 00:01:32
    sucker's going up that's the only reason
  • 00:01:34
    they have for one the uh
  • 00:01:36
    the and this is the kind of this is the
  • 00:01:37
    normal kind of company that people buy
  • 00:01:39
    this is a
  • 00:01:40
    very simple story i own a lot of
  • 00:01:42
    companies like this they make a
  • 00:01:43
    relatively mundane product
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    it's a one megabit sram cmos bipolar
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    risk floating point data io array
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    processor with optimizing compiler
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    16-bit dual port memory unix operating
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    system four whetstone mega flop poly
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    silicon emitter with a high bandwidth
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    that's important six gigahertz double
  • 00:02:01
    metallization communication protocol
  • 00:02:03
    asynchronous backward compatibility
  • 00:02:05
    peripheral bus architecture four wave
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    interleaved memory token ring
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    interchangeable backplane
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    and they do it in 15 nanoseconds of
  • 00:02:13
    capability
  • 00:02:14
    now if you want a piece of [ __ ] like
  • 00:02:15
    that
  • 00:02:17
    you will never make money never
  • 00:02:20
    somebody come with more wet stones less
  • 00:02:22
    wet stones big mega flop and what do you
  • 00:02:24
    do if this thing goes from 12 to nine do
  • 00:02:26
    you
  • 00:02:27
    do you buy more do you walk around the
  • 00:02:28
    block i mean you call your friends i
  • 00:02:30
    mean what the hell you do or something
  • 00:02:31
    like that people buy this stuff
  • 00:02:33
    i mean i buy stuff like dunkin donuts
  • 00:02:35
    and uh
  • 00:02:37
    stop and shop and cvs and made money and
  • 00:02:40
    all those and sallie mae was just here
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    uh
  • 00:02:43
    you know right before me i mean there's
  • 00:02:45
    a stock i bought that uh
  • 00:02:46
    did a great name student loan marketing
  • 00:02:48
    who would ever buy anything like that it
  • 00:02:50
    was a great name if you heard the story
  • 00:02:51
    i think 100 people heard the start in
  • 00:02:52
    fact i had the internet last night with
  • 00:02:54
    with al lord and ned fox and paul kerry
  • 00:02:57
    were on that road show in 1983.
  • 00:03:00
    i think 100 people looked at sallie mae
  • 00:03:01
    they would have bought it but 100 people
  • 00:03:02
    wouldn't look at it he said imagine
  • 00:03:04
    loaning money to students not doing
  • 00:03:05
    anything with students
  • 00:03:07
    and it was a great story it was simple
  • 00:03:09
    and
  • 00:03:10
    no one looked at it so that's the kind
  • 00:03:11
    of stocks i like to buy
  • 00:03:13
    but i'm telling you people don't do this
  • 00:03:15
    and i'm talking sophisticated people
  • 00:03:16
    unsophisticated people they don't know
  • 00:03:18
    what the company is what's the story
  • 00:03:20
    and it's very important to know it
  • 00:03:22
    because it doesn't always work and you
  • 00:03:23
    have to keep posted
  • 00:03:26
    now here's a big point
  • 00:03:29
    remember this one it's futile to predict
  • 00:03:30
    the economy interest rates and stock
  • 00:03:32
    market
  • 00:03:34
    i mean people keep trying to do this
  • 00:03:36
    i mean this would be useful i would love
  • 00:03:38
    to know we're going to have a recession
  • 00:03:40
    i'd love to know when interest rates can
  • 00:03:41
    go up or down i'd love to know when the
  • 00:03:43
    stock market's going up that would be
  • 00:03:44
    helpful i would like to get next year's
  • 00:03:46
    wall street journal
  • 00:03:47
    uh
  • 00:03:48
    unfortunately you don't get it
  • 00:03:50
    i remember in 1982 we had a lot of
  • 00:03:54
    people's room around for 82 we had uh 20
  • 00:03:56
    prime rate
  • 00:03:58
    15 long governments double-digit
  • 00:04:00
    unemployment double-digit inflation i
  • 00:04:02
    don't remember anybody tell me about
  • 00:04:03
    that 1980. i remember everybody tell me
  • 00:04:05
    about that 1981
  • 00:04:07
    but in 83 i remember they said well the
  • 00:04:09
    economies bounced back when recession
  • 00:04:11
    85.
  • 00:04:12
    85 they said whatever recession 86
  • 00:04:14
    maybe seven something happened on
  • 00:04:16
    october 87 i figured out what something
  • 00:04:17
    happened i'll do this uh celtics lost
  • 00:04:19
    seven in a row some something bad in 87.
  • 00:04:21
    they said for sure every session 88 and
  • 00:04:23
    they said 89 for sure every session and
  • 00:04:25
    then 90 we're supposed to have the
  • 00:04:27
    so-called soft landing
  • 00:04:29
    which we never had
  • 00:04:30
    so i've always said if you spend 13
  • 00:04:32
    minutes a year on economics you've
  • 00:04:34
    wasted 10 minutes
  • 00:04:41
    and uh all you need to know about the
  • 00:04:43
    stock market is it goes up and it goes
  • 00:04:44
    down and it goes down a lot
  • 00:04:47
    and that's all you need to know
  • 00:04:49
    again it'd be terrific to know what's
  • 00:04:50
    gonna happen economy but i deal with
  • 00:04:51
    facts if inventories are going up if
  • 00:04:54
    copper prices are going down if room
  • 00:04:56
    occupancy is going the wrong way people
  • 00:04:57
    building too many hotels
  • 00:04:59
    i look at freight car loadings my own
  • 00:05:01
    railroad stocks
  • 00:05:02
    i deal with facts i don't deal what
  • 00:05:04
    people tell me something's gonna happen
  • 00:05:06
    in the future
  • 00:05:07
    you might as well call the psychic
  • 00:05:08
    hotline for that stuff that's a to get
  • 00:05:10
    better average
  • 00:05:12
    you've got plenty of time
  • 00:05:15
    this is true or sallie mae has through
  • 00:05:16
    dunkin donuts is through a stop and shop
  • 00:05:18
    people are so
  • 00:05:20
    insistent on that way too i have to
  • 00:05:22
    fight it they have to buy a stock let's
  • 00:05:24
    say let's say let's see it's now
  • 00:05:26
    see it's now 501.
  • 00:05:28
    i haven't found a stock yet today you
  • 00:05:30
    know i got to find the stock before
  • 00:05:31
    sunset you know at the
  • 00:05:33
    you can buy walmart 10 years after
  • 00:05:35
    walmart went public would say a very
  • 00:05:36
    careful investor
  • 00:05:39
    you waited you said i don't know if this
  • 00:05:41
    company can make it
  • 00:05:42
    you waited for walmart to roll it out
  • 00:05:44
    you could buy walmart 10 years after
  • 00:05:46
    they went public and made 30 times your
  • 00:05:48
    money
  • 00:05:49
    30 times your money
  • 00:05:51
    10 years after they went public they're
  • 00:05:52
    only in 15 percent the united states one
  • 00:05:54
    five they unsaturated the one five you
  • 00:05:57
    could say well why can't they go to 17
  • 00:05:59
    why can't they go to 19. i mean why
  • 00:06:00
    don't i take a leap of faith here why
  • 00:06:02
    can't they go to 26. all they did for
  • 00:06:04
    the next three decades was roll it out
  • 00:06:07
    you could buy walmart if the day they
  • 00:06:08
    went public your body would make 500
  • 00:06:10
    times your money if you waited 10 years
  • 00:06:11
    in walmart you made 30 times money you
  • 00:06:13
    got plenty of time in this business
  • 00:06:17
    now what i'd like to talk about is what
  • 00:06:19
    i call the 10 most dangerous things
  • 00:06:21
    people say about stocks
  • 00:06:25
    here's a good one
  • 00:06:26
    if it's gone down this much already you
  • 00:06:28
    can't go any lower
  • 00:06:32
    iron polaroid went from 140 to about 107
  • 00:06:36
    and people said if you ever get polaroid
  • 00:06:37
    under 100
  • 00:06:38
    you got to buy it you just back up the
  • 00:06:40
    truck buy the stock tonight
  • 00:06:42
    uh
  • 00:06:42
    it's not going to get 110 that rally you
  • 00:06:44
    know fall 103 you've got 112 105 he said
  • 00:06:47
    gets under 100 bipolar polaroid broke a
  • 00:06:49
    hundred
  • 00:06:50
    people started buying it and within nine
  • 00:06:52
    months the stock was 18.
  • 00:06:54
    uh
  • 00:06:55
    i saw sending avon products
  • 00:06:58
    so just saying
  • 00:07:00
    you know it's gone down this far you
  • 00:07:02
    know
  • 00:07:03
    how much lower i mean it's crazy but you
  • 00:07:04
    know it can keep going in fact i tried
  • 00:07:06
    this out kaiser industries i was a
  • 00:07:08
    new analyst at fidelity
  • 00:07:10
    and we were about to buy the biggest
  • 00:07:11
    block ever at kaiser industries the
  • 00:07:12
    stock had gone from 29 to 17. we're
  • 00:07:16
    about to buy the largest block ever in
  • 00:07:18
    the history of the americas exchange we
  • 00:07:19
    bought you know 10 or 15 million shares
  • 00:07:21
    at 50 and three quarters i said my god
  • 00:07:23
    the stock's gone from 29 to 17 how much
  • 00:07:25
    lower can it go so you buy this enormous
  • 00:07:27
    block at 50 and three quarters
  • 00:07:29
    so i called my mother and i said mom i
  • 00:07:31
    guess psycho kaizen says it's ten so
  • 00:07:33
    about three months later said you ought
  • 00:07:35
    to buy this it's gone from 29 to 10. how
  • 00:07:37
    much lower can it go
  • 00:07:39
    well went to nine it went to eight it
  • 00:07:40
    went to seven it went to six it went to
  • 00:07:42
    five it went to four
  • 00:07:44
    now fortunately this happened very
  • 00:07:45
    rapidly or i'd be working at the stop
  • 00:07:47
    and shop bag and behind the lines
  • 00:07:49
    instead of fidelity so fortunately this
  • 00:07:51
    was compressed in only about six months
  • 00:07:53
    so i had to go to the finance and say i
  • 00:07:54
    was a little bit early on this at
  • 00:07:55
    fifteen and three quarters uh
  • 00:07:57
    but it uh
  • 00:07:59
    we call this premature in the business
  • 00:08:00
    the uh
  • 00:08:01
    uh had a correction which you know is a
  • 00:08:03
    euphemism for losing a lot of money
  • 00:08:04
    rapidly at the uh
  • 00:08:07
    so i said let's check this again the
  • 00:08:09
    stocks for
  • 00:08:11
    they own forty five percent of kaiser
  • 00:08:12
    aluminum they own fifty nine percent of
  • 00:08:14
    kaiser steel they own thirty eight
  • 00:08:15
    percent of kai cement they own all of
  • 00:08:17
    kaiser electronics all the kaiser
  • 00:08:19
    broadcasting which had seven tv sets
  • 00:08:20
    they own jeep
  • 00:08:22
    the kaiser fiberglass said about
  • 00:08:24
    kaiser saying the gravel a bunch of
  • 00:08:25
    other kaisers and then no debt
  • 00:08:28
    now in this room because i know freeman
  • 00:08:29
    billions is very interested in financial
  • 00:08:31
    stocks no one's ever gone bankrupt
  • 00:08:32
    without any debt now that would take a
  • 00:08:34
    real i think you have to get some kind
  • 00:08:36
    of distinguished service award does
  • 00:08:37
    somebody do that
  • 00:08:38
    yeah
  • 00:08:39
    but they had no debt i said it's not
  • 00:08:41
    going to go to zero you know i was wrong
  • 00:08:44
    when i said it can't go below 15. so we
  • 00:08:47
    hung on and within three years they gave
  • 00:08:49
    out the shares and kind of still gave
  • 00:08:50
    out the shares in kaiser's men gave out
  • 00:08:51
    the shares and
  • 00:08:53
    kaiser steel and aluminum and they sold
  • 00:08:55
    off all the businesses you got about 55
  • 00:08:57
    a share
  • 00:08:58
    but if you didn't know the story
  • 00:09:00
    and the stock went from 15 to 11
  • 00:09:02
    and you're just saying how much low can
  • 00:09:04
    it go when it went to 918
  • 00:09:05
    you would have gone so you can't just
  • 00:09:07
    say you can't go any lower because i saw
  • 00:09:09
    taco bell go from 14 to 1 in 1974 and
  • 00:09:13
    they had no debt and making 60 cents a
  • 00:09:15
    share
  • 00:09:16
    uh there's a corollary to that that's
  • 00:09:18
    even more dangerous
  • 00:09:19
    if it's gone this high already how can
  • 00:09:21
    it possibly go lower
  • 00:09:24
    uh higher sorry that
  • 00:09:26
    philip morris
  • 00:09:27
    adjusted for splits uh
  • 00:09:30
    sold for 12 cents in 1951
  • 00:09:34
    and then it goes to 60 cents in 1961. so
  • 00:09:37
    it goes up fivefold and you say yourself
  • 00:09:38
    how much this never sold for that but
  • 00:09:40
    just for splits to say how much higher
  • 00:09:41
    can this go it's gone up fivefold
  • 00:09:44
    they missed the power marlboro they
  • 00:09:45
    missed the
  • 00:09:46
    there's 220 countries in the world they
  • 00:09:48
    missed the cash flow of the company they
  • 00:09:49
    missed everything
  • 00:09:51
    this stock was a hundred bagger after
  • 00:09:53
    going up five fold but people sold it
  • 00:09:55
    just saying how much higher can it go
  • 00:09:58
    can't go any higher they did the same at
  • 00:10:00
    home depot they did the same with toys r
  • 00:10:01
    us i did the same thing toys r us just
  • 00:10:04
    saying it can't go any higher it's gone
  • 00:10:05
    this much already that's very dangerous
  • 00:10:07
    and don't don't use that one and uh
  • 00:10:10
    i it's a very bad thing to do eventually
  • 00:10:12
    they always come back
  • 00:10:14
    here's another one that sucks
  • 00:10:17
    that's a technical stock market term we
  • 00:10:19
    just use only in the stock market the uh
  • 00:10:21
    uh rca just about get back to its 1929
  • 00:10:24
    price was backed out by g
  • 00:10:26
    uh manville never came back
  • 00:10:28
    international harvester
  • 00:10:29
    even with its name changed and adjusted
  • 00:10:31
    for splits doesn't get all the way back
  • 00:10:32
    yet western union double knits remember
  • 00:10:34
    those wonderful things floppy disks
  • 00:10:37
    they don't have to come back
  • 00:10:38
    but they say eventually they always come
  • 00:10:40
    back
  • 00:10:41
    not true
  • 00:10:42
    here's a great one it's three dollars
  • 00:10:44
    how much can i lose
  • 00:10:47
    this is a great one
  • 00:10:49
    you see i get get out this is i don't
  • 00:10:51
    have a computer and i can't do uh high
  • 00:10:53
    level math but uh just do this once
  • 00:10:55
    let's say you buy your neighbor buys ten
  • 00:10:57
    thousand dollars of a stock at fifty
  • 00:10:59
    the stock's now three and you put 25 000
  • 00:11:02
    in at three
  • 00:11:03
    if it goes to zero
  • 00:11:04
    who loses the most
  • 00:11:07
    a lot of people cannot answer this
  • 00:11:08
    question you know
  • 00:11:10
    the uh
  • 00:11:12
    i mean if you put a billion in at three
  • 00:11:13
    you can lose a billion you know
  • 00:11:15
    i mean they blow taps in lots of
  • 00:11:17
    companies every year you know you just
  • 00:11:18
    have they can go to zero uh
  • 00:11:21
    the uh
  • 00:11:23
    here's a good one they helped me a lot
  • 00:11:24
    it's always darkest before the dawn uh
  • 00:11:27
    the uh
  • 00:11:29
    this business is terrible it's awful you
  • 00:11:31
    ought to buy the group this is not a
  • 00:11:33
    good way of making money at the the uh
  • 00:11:35
    here's one you're probably talking about
  • 00:11:36
    before lunch uh freight car deliveries
  • 00:11:38
    uh
  • 00:11:39
    1979 there was 96 000 freight cars
  • 00:11:42
    deliver united states
  • 00:11:44
    two years later it fell to forty five
  • 00:11:46
    thousand the lowest in twenty three
  • 00:11:47
    years
  • 00:11:48
    it goes from ninety six thousand to
  • 00:11:50
    forty five thousand
  • 00:11:52
    people say business is awful it's
  • 00:11:53
    horrible pathetic
  • 00:11:55
    then it falls to 25 000. they say just
  • 00:11:57
    load up there's about 15 opportunities
  • 00:11:58
    to lose money there's about 15 suppliers
  • 00:12:00
    of freight cars 15 manufacturers
  • 00:12:02
    business was awful well last year we
  • 00:12:04
    shipped 7000 freight cars united states
  • 00:12:07
    the business just continued to be
  • 00:12:08
    miserable
  • 00:12:09
    and uh i'll give you one that's even
  • 00:12:11
    there's even greater opportunity to lose
  • 00:12:12
    money on
  • 00:12:13
    uh energy services industry this we all
  • 00:12:16
    had a great opportunity to get our heads
  • 00:12:18
    handed to us
  • 00:12:19
    in 1982 there was 11 000 of those oil
  • 00:12:23
    rigs drilling left you know drilling
  • 00:12:25
    those holes all over oklahoma and texas
  • 00:12:26
    and colorado we used to have the recount
  • 00:12:29
    every week
  • 00:12:30
    and the recount fell from 11 000
  • 00:12:32
    in 82 to 6083
  • 00:12:35
    then fell a little bit lower in 84.
  • 00:12:37
    there's hundreds and hundreds of
  • 00:12:38
    companies here companies that made the
  • 00:12:40
    muds and did the down hole stuff the
  • 00:12:41
    fracturing companies the
  • 00:12:43
    the well companies all the measuring the
  • 00:12:45
    companies the chambers the bid companies
  • 00:12:47
    lots of opportunities to lose money here
  • 00:12:49
    there's equal opportunity opportunity
  • 00:12:51
    here for serious losses
  • 00:12:53
    and the people said listen the business
  • 00:12:54
    is terrible let's buy this group
  • 00:12:56
    well the recount was only a thousand
  • 00:12:58
    three years ago so it went from eleven
  • 00:13:00
    thousand to six thousand five thousand
  • 00:13:02
    then eight years later was under a
  • 00:13:03
    thousand
  • 00:13:04
    the industry really started to turn
  • 00:13:05
    about two years ago
  • 00:13:07
    so just saying the business can't get
  • 00:13:09
    worse
  • 00:13:10
    i was lucky enough in addition of the
  • 00:13:11
    metals industry to start finally i had
  • 00:13:12
    the textile industry
  • 00:13:14
    which is a great group to follow because
  • 00:13:16
    you follow companies like jp stevens was
  • 00:13:18
    founded in the 18th century and
  • 00:13:20
    uh west point pep roll was found in the
  • 00:13:22
    18th century burlingame is one of the
  • 00:13:24
    new companies was founded in 1904
  • 00:13:27
    these people have been through
  • 00:13:28
    recessions depressions world wars
  • 00:13:30
    they've seen it all there's a great
  • 00:13:31
    expression texas industry it's always
  • 00:13:33
    darkest before pitch black
  • 00:13:37
    yeah now that's a good one to remember
  • 00:13:39
    because this is terrible it can get
  • 00:13:41
    considerably terrible you're terrible to
  • 00:13:43
    the power of six and uh
  • 00:13:45
    it
  • 00:13:46
    uh
  • 00:13:48
    i love those numbers i fake card to lose
  • 00:13:50
    you ever watch i love the show jeopardy
  • 00:13:51
    i watch jeopardy and people come out
  • 00:13:53
    they will know those numbers they'll
  • 00:13:54
    know the numbers and they'll know
  • 00:13:56
    you know what uh what country uh box uh
  • 00:14:00
    took his first vacation in and they'll
  • 00:14:01
    know phil rizzuto's batting average and
  • 00:14:04
    what his wife's first name was they'll
  • 00:14:05
    know the stock symbols of xerox before
  • 00:14:07
    was haloid or you know they know
  • 00:14:08
    everything
  • 00:14:09
    and you watch the show you feel like an
  • 00:14:11
    absolute idiot watching the show because
  • 00:14:12
    they answer all these questions but
  • 00:14:14
    they're really smart i almost i've owned
  • 00:14:15
    this stock before king world right after
  • 00:14:17
    they show a wheel of fortune
  • 00:14:19
    and they what happens is they'll have
  • 00:14:20
    this word up there it'll be th and
  • 00:14:22
    there's a t and it's like buy a bottle
  • 00:14:24
    fish i'll buy you you know to buy an eye
  • 00:14:28
    and you know
  • 00:14:29
    vanna spins the wheel and they buy the a
  • 00:14:30
    and you know you redeem by watching the
  • 00:14:32
    wheel of fortune after
  • 00:14:34
    feeling like an absolute jerk on the
  • 00:14:36
    jeopardy game and uh
  • 00:14:38
    it's really smart it uh
  • 00:14:40
    uh when i rebound to 10 i'll sell
  • 00:14:44
    here's a great rule
  • 00:14:47
    somebody buys a stock at 10
  • 00:14:50
    and it falls to 6. they say if it gets
  • 00:14:52
    back
  • 00:14:53
    to 10 i'll sell now i think the math
  • 00:14:56
    four and six i can handle this little
  • 00:14:57
    math i think that's about a sixty-six
  • 00:14:58
    percent return
  • 00:15:00
    you gotta buy if you think it's going
  • 00:15:01
    back to ten-yard buy the hell out of the
  • 00:15:02
    damn thing but they think if it gets
  • 00:15:04
    back to ten i'll sell
  • 00:15:05
    now what you ought to do is never put
  • 00:15:07
    down a round number these i think for
  • 00:15:08
    the next 26 years to start going between
  • 00:15:10
    five and nine and a quarter it'll never
  • 00:15:11
    get to ten
  • 00:15:12
    so maybe put nine and eight or eight
  • 00:15:14
    three quarters but just saying the stock
  • 00:15:17
    if it gets back what i paid for it is a
  • 00:15:19
    very important rule this is a very it's
  • 00:15:20
    one of the key rules the stock doesn't
  • 00:15:23
    know you own it
  • 00:15:27
    remember that
  • 00:15:30
    you could be a miserable person you
  • 00:15:31
    could have uh
  • 00:15:33
    you know
  • 00:15:34
    never helped anybody
  • 00:15:35
    never done anything right had 67 spouses
  • 00:15:38
    never done anything right if you owned
  • 00:15:40
    coca-cola the last 50 years it's gone up
  • 00:15:42
    300-fold
  • 00:15:44
    you'd be the greatest human in the world
  • 00:15:45
    help special olympics help
  • 00:15:47
    the mentally challenged help poor people
  • 00:15:50
    help aids people if you own bethlehem
  • 00:15:52
    steel it's lower than it was 30 years
  • 00:15:53
    ago it's not your fault don't take this
  • 00:15:55
    personal you know
  • 00:15:56
    but people treat stocks sometimes like a
  • 00:15:58
    grandchildren or a puppy they think they
  • 00:16:00
    think the stock knows who you are you
  • 00:16:02
    know it's you know
  • 00:16:03
    it doesn't work that way it uh
  • 00:16:07
    let me worry i own conservative stocks
  • 00:16:09
    uh
  • 00:16:10
    i don't have to worry i own conservative
  • 00:16:12
    stocks irman con ed fell uh 80 then
  • 00:16:15
    tripled uh
  • 00:16:17
    public service indiana went down 90 gulf
  • 00:16:19
    states utilities long on lighting this
  • 00:16:22
    may be oxymoron with quality texas banks
  • 00:16:24
    that went to zero we had
  • 00:16:27
    quality new england banks that went to
  • 00:16:28
    zero uh
  • 00:16:29
    these are companies have been around for
  • 00:16:30
    150 years 120 years saying i own
  • 00:16:33
    conservative stocks i don't have to
  • 00:16:34
    worry
  • 00:16:35
    i've seen a lot of people don't inherit
  • 00:16:37
    a stock from somebody
  • 00:16:39
    they'll say you know my mother said
  • 00:16:42
    on her deathbed don't sell the long
  • 00:16:44
    island lighting you know
  • 00:16:45
    you always wondered you know is it she's
  • 00:16:46
    going to heaven or hopefully where she's
  • 00:16:48
    going heaven you know they talk about a
  • 00:16:50
    lilly game or a vacation or game of
  • 00:16:52
    hearts they had or imagine talking on
  • 00:16:55
    your deathbed about long island lighting
  • 00:16:56
    and he said you know
  • 00:16:57
    but you get these stories all the time
  • 00:16:58
    and i think your mother would have
  • 00:17:00
    noticed she would have sold at 29 but
  • 00:17:02
    she went she would have noticed that
  • 00:17:04
    this little plant that was about 6
  • 00:17:06
    billion over budget no one wanted it and
  • 00:17:08
    wasn't working and uh long island
  • 00:17:10
    stopped growing so maybe she would have
  • 00:17:11
    turfed at 22 or got up at 18. she
  • 00:17:14
    wouldn't let it go to four
  • 00:17:15
    you know so just because you inherit
  • 00:17:17
    some stock and so-called conservative
  • 00:17:19
    like eastman kodak fell 75 ibm fell 75
  • 00:17:23
    don't tell anybody you own a
  • 00:17:24
    conservative stock companies are very
  • 00:17:26
    dynamic i don't buy that argument
  • 00:17:29
    here's a very dangerous one look at all
  • 00:17:32
    the money i've lost
  • 00:17:34
    i didn't buy it it uh
  • 00:17:36
    people do this all the time they say i
  • 00:17:38
    didn't own blockbuster i didn't own home
  • 00:17:39
    depot i know toys r us
  • 00:17:42
    i uh eric it was very nice to say some
  • 00:17:44
    nice things about when i came up here
  • 00:17:46
    and manny has been nice to me
  • 00:17:48
    one of my books listed on two pages
  • 00:17:51
    in the 13 years of ramagellan
  • 00:17:53
    i listed uh i think about 200 stocks
  • 00:17:56
    a through l on the new york stock change
  • 00:17:59
    they went up 10 fold or more that i
  • 00:18:00
    didn't know
  • 00:18:02
    well i ran magellan i had owned lots of
  • 00:18:03
    stocks i listed 200 stocks afl i stopped
  • 00:18:06
    the letter l
  • 00:18:08
    and i didn't know any of the shares
  • 00:18:09
    they went up tenfold or more and i was
  • 00:18:11
    able to do okay with magellan
  • 00:18:13
    and people worry all the time about
  • 00:18:14
    missing microsoft missing western
  • 00:18:17
    digital
  • 00:18:18
    missing united airlines they spend all
  • 00:18:20
    their time worrying about stocks they
  • 00:18:21
    miss
  • 00:18:23
    you cannot lose money in a stock you
  • 00:18:24
    don't own
  • 00:18:26
    that's a variable you important the only
  • 00:18:27
    way to lose money is buy stock have it
  • 00:18:29
    go down and sell it that's the only way
  • 00:18:31
    and i swear that people that their
  • 00:18:33
    spouse has to cut out the newspaper in
  • 00:18:35
    the morning cut out the seas and the
  • 00:18:36
    person will look at the ams oh my god
  • 00:18:38
    microsoft's up three you know i had i
  • 00:18:40
    was gonna buy a thousand shares of
  • 00:18:41
    microsoft i lost three thousand
  • 00:18:42
    microsoft last night while i was
  • 00:18:43
    sleeping you know
  • 00:18:45
    the uh
  • 00:18:46
    you know i was gonna buy
  • 00:18:47
    seven thousand shares a national
  • 00:18:48
    semiconductor at ten
  • 00:18:50
    it's now seventeen i just lost forty
  • 00:18:52
    nine thousand dollars on
  • 00:18:54
    national semiconductor they do this all
  • 00:18:55
    the time they may have to cut holes the
  • 00:18:56
    block thank god blockbuster finally went
  • 00:18:58
    away because that was early in the
  • 00:18:59
    alphabet people would always be looking
  • 00:19:00
    at how much they lost in blockbuster
  • 00:19:02
    uh
  • 00:19:03
    i missed that one i'll catch the next
  • 00:19:05
    one
  • 00:19:06
    that usually does not work
  • 00:19:08
    toys r us there's a lot of copycats at
  • 00:19:10
    toys r us there's trial world there was
  • 00:19:12
    lionel there's copycats from home depot
  • 00:19:15
    buying the next of something usually
  • 00:19:16
    doesn't work it's uh
  • 00:19:18
    it's very bad it's like buying on dips i
  • 00:19:20
    think it's always better to buy from
  • 00:19:22
    dips i was that was a better rule than
  • 00:19:23
    bioentex
  • 00:19:24
    you may have to explain this to some
  • 00:19:26
    other people uh
  • 00:19:27
    this is another technical term they have
  • 00:19:29
    to explain after hours where the dip is
  • 00:19:30
    at that
  • 00:19:32
    i usually refer to as plurals dips i
  • 00:19:34
    never heard dip you know he's a dip
  • 00:19:35
    because she's a dip usually only the
  • 00:19:37
    plural tense for it's a
  • 00:19:38
    and it's a gender non-specific it's
  • 00:19:40
    usually plural
  • 00:19:42
    is never used um
  • 00:19:44
    uh stock has gone up i must be right
  • 00:19:47
    stock has gone down it must be wrong
  • 00:19:49
    i'm convinced that people do this all
  • 00:19:51
    the time they buy a stock at 10 they buy
  • 00:19:53
    a little bit of it
  • 00:19:54
    it goes to 13 that they now say they
  • 00:19:56
    don't know anything more about it than
  • 00:19:57
    they knew when they bought 10. they have
  • 00:19:58
    no idea what this company does it's gone
  • 00:19:59
    13 now
  • 00:20:01
    they take a second mortgage in the house
  • 00:20:02
    and buy the 13.
  • 00:20:04
    the best thing could happen for us to
  • 00:20:05
    stuck up directly from ten to four for
  • 00:20:07
    these folks you know it's gonna go to
  • 00:20:08
    four eventually but it goes to 13 in the
  • 00:20:10
    middle they're convinced now they bought
  • 00:20:11
    a hundred shares of ten not only by
  • 00:20:13
    twenty thousand and thirteen
  • 00:20:14
    and uh all the fact is the stock went
  • 00:20:16
    from 10 to 13 is it went up
  • 00:20:19
    the average movement of a stock in the
  • 00:20:21
    near side exchange this century
  • 00:20:22
    between high and slow
  • 00:20:24
    has been 50 percent
  • 00:20:26
    the average stock in your sections
  • 00:20:28
    that means the stock start of the year
  • 00:20:29
    20
  • 00:20:30
    sometime during the year sold 16
  • 00:20:32
    sometimes during the year sold at 24
  • 00:20:34
    might have finished a year 21. my
  • 00:20:35
    official year at 19. the average range
  • 00:20:37
    of a stock in the stock change is 50
  • 00:20:40
    in 12 months between tied slow
  • 00:20:42
    so stocks go up and down a lot within a
  • 00:20:45
    year
  • 00:20:46
    and say this
  • 00:20:47
    stock is going up means you're right
  • 00:20:48
    doesn't mean a damn thing
  • 00:20:50
    so don't buy off an allen that uh
  • 00:20:54
    that is not a good one
  • 00:20:55
    the uh
  • 00:20:58
    avoid long shots uh
  • 00:21:02
    these are the companies that
  • 00:21:04
    uh we have this very technical term for
  • 00:21:06
    this uh called whisper stocks
  • 00:21:08
    the uh everybody whisper stocks they're
  • 00:21:10
    uh they're great call you up and they'll
  • 00:21:12
    say
  • 00:21:13
    hi pierre caroline's how's beth doing he
  • 00:21:15
    comes mary
  • 00:21:16
    have you played any golf and then i'll
  • 00:21:18
    say i want to talk to you about
  • 00:21:19
    international blivet and
  • 00:21:21
    the next
  • 00:21:23
    one of those they'll get a shorter term
  • 00:21:24
    in those places where they
  • 00:21:26
    have nordic tracks and they put them
  • 00:21:27
    away and they don't have to make
  • 00:21:29
    big rocks into small rocks they just
  • 00:21:31
    watch movies and have nordic tracks but
  • 00:21:33
    they won't they will not catch these
  • 00:21:34
    people if they whisper in the phone
  • 00:21:35
    and these are always these long shots
  • 00:21:38
    you know these are stocks that are going
  • 00:21:39
    to
  • 00:21:40
    grow hair and make your kid have better
  • 00:21:42
    spelling and your breasts can improve
  • 00:21:44
    and you won't have to iron your pants
  • 00:21:45
    you know it's one of those stocks they
  • 00:21:46
    always do everything for you
  • 00:21:48
    but they're missing they don't have any
  • 00:21:49
    sales yet you know that's the missing
  • 00:21:51
    element of the story the story is
  • 00:21:52
    sensational there's no prophecy no sales
  • 00:21:54
    yet but my god if this works
  • 00:21:56
    if this works it's going to be the next
  • 00:21:58
    xerox you know and uh
  • 00:22:00
    and it's going to help burn space and
  • 00:22:01
    everything it's a very very good deal
  • 00:22:03
    now this is not a long shot this is a no
  • 00:22:04
    shot
  • 00:22:06
    you have to separate these out i've
  • 00:22:07
    tried 30 of these i have never broken
  • 00:22:09
    even on a long shot
  • 00:22:11
    never i've made 25 30 times my money on
  • 00:22:14
    some stocks i never thought about sallie
  • 00:22:16
    mae or mbia or fannie mae or some of the
  • 00:22:18
    banks or
  • 00:22:20
    stopping shop i made 20 tons of money 30
  • 00:22:21
    times money i had no idea
  • 00:22:23
    i thought the stocks are going north
  • 00:22:25
    i had no idea you look back 10 years
  • 00:22:27
    later you say my god i made a lot of
  • 00:22:29
    money in this thing but once i went into
  • 00:22:31
    thinking i can make four times my money
  • 00:22:32
    i've never broken even
  • 00:22:35
    so don't do the long shot guys they
  • 00:22:37
    don't work at the
  • 00:22:39
    the
  • 00:22:40
    they simply don't work
  • 00:22:43
    and again if a stock's three
  • 00:22:46
    and it has huge potential write down the
  • 00:22:48
    story take the stock symbol
  • 00:22:50
    if it's going to 300 it's okay to buy it
  • 00:22:52
    at 15.
  • 00:22:53
    check in later check it here later see
  • 00:22:55
    if it's still listed so you can still
  • 00:22:56
    get a quote on it
  • 00:22:58
    see if they sell the orange yet
  • 00:23:00
    but if it's going write the story down
  • 00:23:02
    some of these work i haven't heard yet
  • 00:23:03
    but maybe they will work but it's worth
  • 00:23:05
    tuning in six months later don't buy it
  • 00:23:07
    then it uh
  • 00:23:09
    uh
  • 00:23:11
    importance of management
  • 00:23:14
    management's the single most important
  • 00:23:15
    thing in a company
  • 00:23:17
    but for an outsider
  • 00:23:18
    to know great management versus good
  • 00:23:20
    management first terrific management
  • 00:23:22
    versus average management
  • 00:23:24
    tough to do
  • 00:23:25
    tough to do
  • 00:23:27
    because you only get an hour at people
  • 00:23:28
    sometimes a half an hour
  • 00:23:30
    and uh how do you know what decisions
  • 00:23:33
    they didn't make a lot of great
  • 00:23:34
    companies have been made because the
  • 00:23:35
    company didn't make an acquisition
  • 00:23:38
    they didn't get rid of the division they
  • 00:23:39
    don't buy the end report we didn't get
  • 00:23:40
    rid of the tubing division
  • 00:23:42
    you know you don't hear about that
  • 00:23:44
    somebody said made a brilliant decision
  • 00:23:46
    we're gonna hold on to that thing we're
  • 00:23:47
    gonna fix it and it's doing great now
  • 00:23:50
    they might be doing great because some
  • 00:23:51
    management eight years ago did it right
  • 00:23:52
    or some did something right five years
  • 00:23:54
    ago that person isn't there anymore
  • 00:23:57
    or they didn't make any acquisitions
  • 00:23:59
    or they expanded at the right time
  • 00:24:02
    so knowing what management what they can
  • 00:24:04
    add to it's the single most important
  • 00:24:05
    thing very hard to measure
  • 00:24:07
    i've always said
  • 00:24:09
    i like to accompany any fool can
  • 00:24:11
    run is eventually one will and
  • 00:24:15
    you really want to do that when i bought
  • 00:24:16
    toys r us they had the formula right
  • 00:24:19
    any four people in this room and me
  • 00:24:22
    could have run toys r us
  • 00:24:24
    we wouldn't done as well as they did
  • 00:24:26
    they're spectacular but for the next 15
  • 00:24:28
    years with no competition we had a great
  • 00:24:30
    formula we could have roll with it
  • 00:24:33
    they probably would have done three
  • 00:24:34
    times as good they were the frosting on
  • 00:24:35
    the cake but they had to form the right
  • 00:24:37
    no competition the department stores
  • 00:24:38
    know what they're doing there's no
  • 00:24:39
    copycats and they were going to just
  • 00:24:41
    roll for the next 25 years
  • 00:24:43
    same with circuit city
  • 00:24:44
    so i want the story to be solid if
  • 00:24:47
    manager can add anything on top of it
  • 00:24:48
    that's great i want to buy the story
  • 00:24:51
    assume management leaves the next day
  • 00:24:53
    and they're replaced by the next
  • 00:24:54
    generation that's fine with me
  • 00:24:56
    if manager can add something to it
  • 00:24:57
    that's great i'm not going to buy it
  • 00:24:59
    because people say they have great
  • 00:25:00
    management
  • 00:25:01
    because you'll notice great management
  • 00:25:02
    is always attached to stocks been up the
  • 00:25:04
    last eight years you ever notice that
  • 00:25:06
    because i looked at reynolds medals i
  • 00:25:07
    used to follow around middles the stock
  • 00:25:09
    has had the same person runner for like
  • 00:25:11
    30 years
  • 00:25:12
    was when this aluminum was typed that
  • 00:25:14
    say rounds metals has great management
  • 00:25:15
    aluminum going over surprises these
  • 00:25:17
    people are idiots then aluminum get
  • 00:25:18
    tight they say these people are terrific
  • 00:25:20
    i mean it all to do with the price of
  • 00:25:21
    aluminum
  • 00:25:23
    and they keep rating the management by
  • 00:25:24
    how the stock's doing
  • 00:25:26
    it's very hard to measure management
  • 00:25:28
    it'd be wonderful to do if you could
  • 00:25:29
    spend months with them really see them
  • 00:25:31
    in action
  • 00:25:32
    then you know but you don't really get
  • 00:25:33
    that chance uh be flexible
  • 00:25:38
    people have all these biases all these
  • 00:25:40
    prejudices
  • 00:25:41
    they want to buy high growth industries
  • 00:25:42
    they won't buy financial companies they
  • 00:25:44
    won't buy
  • 00:25:45
    savings and loans
  • 00:25:47
    they won't buy
  • 00:25:48
    companies that start with a letter r i
  • 00:25:50
    mean you know there's all these rules
  • 00:25:52
    they all hurt you
  • 00:25:54
    there are great stocks everywhere
  • 00:25:55
    there's stocks that are near bankruptcy
  • 00:25:56
    stocks in bankruptcies stocks are about
  • 00:25:58
    to go on bankruptcy
  • 00:26:00
    there are companies on the new high list
  • 00:26:01
    that are attracted this comes a new low
  • 00:26:02
    list they're all over the place they're
  • 00:26:04
    in growth industries non-growth
  • 00:26:05
    industries don't cut yourself off to one
  • 00:26:08
    segment
  • 00:26:09
    people have way too many prejudices
  • 00:26:11
    too many biases
  • 00:26:13
    and i always thought of it i don't know
  • 00:26:14
    women in the audience uh see this many
  • 00:26:16
    times but i always thought these buy
  • 00:26:17
    lists at some institutions we don't have
  • 00:26:18
    this the fidelity they was biased i
  • 00:26:21
    think kmart got on some of these
  • 00:26:22
    companies buy this three years ago you
  • 00:26:24
    know with the microsoft may get on it
  • 00:26:26
    about 12 years from now but they they
  • 00:26:27
    have these buy lists and i always
  • 00:26:28
    thought the buy list is uh you know you
  • 00:26:30
    buy a new shirt
  • 00:26:32
    you ever look in the pocket you get
  • 00:26:33
    inspected by six or
  • 00:26:35
    inspected by eight do you ever see those
  • 00:26:36
    numbers i mean i always wondered about
  • 00:26:37
    that i always think of those buy lists
  • 00:26:39
    at those institutions so i see that
  • 00:26:40
    inspected by six and inspected by eight
  • 00:26:43
    in fact i'm absolutely if somebody call
  • 00:26:45
    me i could do it any time of day has
  • 00:26:47
    anybody ever got a shirt inspected by
  • 00:26:49
    one i mean do they retire these numbers
  • 00:26:51
    they have a meeting
  • 00:26:53
    i've never had a shirt inspect by one or
  • 00:26:54
    by two
  • 00:26:55
    i think they must put the raise their
  • 00:26:57
    numbers in a meeting up to the rafters
  • 00:27:00
    but i always think every time i get that
  • 00:27:01
    number in the shirt i think of these
  • 00:27:02
    people working off a buy list of rapidly
  • 00:27:04
    growing companies only they have unit
  • 00:27:06
    growth rate of x or 6x or whatever
  • 00:27:08
    numbers it doesn't work uh
  • 00:27:12
    the
  • 00:27:14
    another thing about it is is
  • 00:27:16
    math and the kind of math you need to do
  • 00:27:18
    this
  • 00:27:19
    i don't use a computer i don't have a
  • 00:27:21
    computer
  • 00:27:22
    uh
  • 00:27:23
    i really was doing great math i was
  • 00:27:26
    i remember 7 times 7 was 41 and 9 times
  • 00:27:28
    9 is 81 and
  • 00:27:30
    you know 12 times 12 i think it was 144
  • 00:27:32
    so it was some big number i got that one
  • 00:27:34
    down cold i said this is great i love
  • 00:27:36
    this stuff and the barge left st louis
  • 00:27:38
    going at eight miles an hour and the
  • 00:27:39
    train left pittsburgh and
  • 00:27:41
    this stuff is easy i remember one day i
  • 00:27:44
    think it was ninth grade it was a grim
  • 00:27:45
    day
  • 00:27:46
    somebody introduced cosine
  • 00:27:49
    that day i mean remember cosine i mean
  • 00:27:51
    does anybody use cosine the last couple
  • 00:27:52
    years i mean
  • 00:27:54
    yeah
  • 00:27:56
    let's have a show hand some of you have
  • 00:27:57
    used cosine the last six months
  • 00:27:59
    but i remember tangent and cotangent why
  • 00:28:02
    would you want to know about tangent
  • 00:28:03
    then remember the area under the curve
  • 00:28:05
    remember that crazy your calculus area
  • 00:28:07
    under the curve i mean what the hell
  • 00:28:09
    would you want to measure area on the
  • 00:28:10
    curve for you know
  • 00:28:11
    the uh
  • 00:28:12
    that is such garbage you know you don't
  • 00:28:14
    need this for the stock market if you
  • 00:28:15
    can measure if you can add eight and
  • 00:28:17
    eight and get fairly close to 16
  • 00:28:20
    that's all you need you know you say 400
  • 00:28:22
    million in debt
  • 00:28:24
    no equity
  • 00:28:26
    no cash losing money forget it you know
  • 00:28:28
    they're good
  • 00:28:29
    300 million in cash
  • 00:28:30
    no debt 200 million in net worth they're
  • 00:28:33
    losing 10 million a quarter they'll be
  • 00:28:34
    around that's all you need you have to
  • 00:28:35
    get that's all you need that does is not
  • 00:28:37
    that hard if you made through fifth
  • 00:28:38
    grade math you can handle this stuff
  • 00:28:41
    and i had a roommate in the army and uh
  • 00:28:44
    it uh
  • 00:28:45
    it's a story i always remember he was
  • 00:28:47
    talking about he went to this very good
  • 00:28:49
    school in uh in the south that i won't
  • 00:28:52
    tell you the name of it but it's in
  • 00:28:53
    atlanta and rhymes with roger wreck the
  • 00:28:56
    uh
  • 00:28:56
    and they had this uh
  • 00:28:59
    my hero uh at the school uh was a very
  • 00:29:02
    good football player this is this is my
  • 00:29:04
    friend my roommate telling me the story
  • 00:29:05
    about this guy's a freshman this great
  • 00:29:07
    school
  • 00:29:08
    and he'd go the line of scrimmage and
  • 00:29:09
    they changed the play
  • 00:29:11
    he couldn't figure this out you know i
  • 00:29:13
    don't know if you realize how
  • 00:29:13
    complicated football is half the plays
  • 00:29:15
    are changed the line of scrimmage is
  • 00:29:16
    about 300 plays you go there think it's
  • 00:29:18
    a run to the right it turns out it's a
  • 00:29:20
    screen pass the left or it's a draw it's
  • 00:29:22
    all the blocking assignments have
  • 00:29:23
    changed all the passing's different you
  • 00:29:26
    can do you have to instantly think oh
  • 00:29:28
    new play what do i do in this new play
  • 00:29:30
    just like that and do it he could not
  • 00:29:32
    handle these deals just give me the ball
  • 00:29:34
    i'll tote it and he'd go for about eight
  • 00:29:36
    yards he was really good at this
  • 00:29:38
    now this is not why he's my hero
  • 00:29:40
    the reason is my hero in a classroom
  • 00:29:42
    about this size his freshman year he
  • 00:29:44
    asked the question
  • 00:29:46
    does x always equal seven
  • 00:29:49
    yeah
  • 00:29:51
    now he
  • 00:29:52
    he never made it to the second semester
  • 00:29:54
    he never
  • 00:29:56
    he never made it to the varsity he never
  • 00:29:57
    made the nfl because he that damn
  • 00:29:59
    x he never could figure out x you know
  • 00:30:02
    the uh
  • 00:30:03
    now i always thought if you win they
  • 00:30:04
    could they could resolve what the hell x
  • 00:30:06
    people you know they could say give us
  • 00:30:07
    247 and a quarter you know they just
  • 00:30:09
    finally resolve what x was we could save
  • 00:30:10
    all this time and do something useful
  • 00:30:12
    you know
  • 00:30:14
    you don't need it in stock market
  • 00:30:17
    okay
  • 00:30:18
    now we'll get to the important stuff
  • 00:30:20
    there's always something to worry about
  • 00:30:22
    uh
  • 00:30:24
    this is the difference this is what
  • 00:30:25
    happens in the stock market because
  • 00:30:27
    see everybody's got the brain power to
  • 00:30:28
    dwell in stock market questions where
  • 00:30:30
    they have the stomach for it that's the
  • 00:30:31
    key organ in the body
  • 00:30:33
    there's always something to worry about
  • 00:30:36
    i grew up i went to school grew up with
  • 00:30:37
    a kid in the 50s in the decade of the
  • 00:30:39
    50s there's this big theory
  • 00:30:42
    that the depression was caused by stock
  • 00:30:43
    market crash totally wrong
  • 00:30:45
    less than one percent of americans owned
  • 00:30:47
    stocks in 29
  • 00:30:48
    we had this big time recession
  • 00:30:51
    in fact it was a depression
  • 00:30:53
    that's what it wasn't caused by the
  • 00:30:55
    stock market with the economy went down
  • 00:30:57
    the federal reserve raised interest
  • 00:30:58
    rates and we had a big time depression
  • 00:31:00
    in fact we had several depressions like
  • 00:31:01
    that from 1850 on with this is only one
  • 00:31:04
    of about eight depression since 1850
  • 00:31:06
    but people in the
  • 00:31:08
    people thought the only reason we got
  • 00:31:09
    the depression was world war ii and they
  • 00:31:10
    said once we get back
  • 00:31:12
    next time every session we're gonna have
  • 00:31:14
    a depression
  • 00:31:15
    and it's gonna be a great depression i
  • 00:31:16
    never understood that adjective in front
  • 00:31:17
    of depression you might be crummy
  • 00:31:19
    depression or bad depression but it's a
  • 00:31:21
    great depression i never quite
  • 00:31:22
    understood that one the uh
  • 00:31:24
    so people weren't buying stocks in the
  • 00:31:25
    50s because they thought another great
  • 00:31:26
    depression is going to happen in
  • 00:31:28
    addition
  • 00:31:29
    people were very scared about nuclear
  • 00:31:31
    warheads and nuclear war
  • 00:31:33
    in the 50s
  • 00:31:35
    people building fallout shelters stock
  • 00:31:36
    mccann goods there's something about
  • 00:31:38
    going to vermont building a fall shelter
  • 00:31:40
    putting canned goods in it that you
  • 00:31:42
    don't buy minnesota mining or you don't
  • 00:31:43
    buy some gold i mean just the syllogism
  • 00:31:45
    just doesn't work out that you're buying
  • 00:31:47
    uh lots of water buying a shotgun buying
  • 00:31:50
    frozen food that will stay in the
  • 00:31:51
    freezer with your own generator and
  • 00:31:53
    you're looking at growth stocks
  • 00:31:55
    doesn't seem to work out that way you
  • 00:31:57
    know
  • 00:31:58
    and i remember in the 50s i mean i
  • 00:32:00
    remember literally in classes i was in
  • 00:32:02
    elementary school in the 50s and they'd
  • 00:32:04
    come in that have one of these air raid
  • 00:32:05
    drills somebody yell a hat and come and
  • 00:32:07
    they blow a whistle and you get under
  • 00:32:08
    your desk
  • 00:32:10
    even then i says i don't think this is
  • 00:32:11
    going to do a lot of good you know
  • 00:32:13
    the uh
  • 00:32:15
    but people were worried about a
  • 00:32:16
    depression and nuclear war in the 50s
  • 00:32:20
    and then i mean the warheads they
  • 00:32:22
    couldn't do much damage back in the 50s
  • 00:32:24
    now one of these stan countries you know
  • 00:32:25
    these kakistan and zakistan all these
  • 00:32:27
    stand guys that have spun off these
  • 00:32:29
    these freeman building spin-offs from
  • 00:32:30
    them so i've been doing the uh
  • 00:32:32
    the uh
  • 00:32:33
    they didn't lead it was a co-deal with
  • 00:32:34
    somebody else
  • 00:32:36
    goldman sachs and they did it
  • 00:32:38
    they're on the left side the
  • 00:32:40
    uh every one of these little countries
  • 00:32:42
    has enough warheads to blow the world up
  • 00:32:43
    88 times right who's built a fallout
  • 00:32:45
    shelter you know
  • 00:32:47
    we stopped worrying about it and there's
  • 00:32:48
    always something to worry about in the
  • 00:32:49
    50s it was depression and nuclear war
  • 00:32:52
    the 50s was the best decade this century
  • 00:32:54
    let's stock market
  • 00:32:56
    except for the 80s only slightly better
  • 00:32:58
    these are only slightly better people
  • 00:32:59
    they expect a lot
  • 00:33:01
    we don't okay it wasn't a great uh
  • 00:33:03
    decade they just didn't expect much
  • 00:33:05
    we made it through
  • 00:33:06
    and uh stock market was terrific
  • 00:33:09
    do you remember when oil went from four
  • 00:33:10
    to forty remember that period
  • 00:33:13
    oil went from four to forty
  • 00:33:15
    and the expert said it was gonna go to
  • 00:33:16
    100
  • 00:33:17
    and all the countries of the world gonna
  • 00:33:19
    go bankrupt
  • 00:33:20
    and then and the big banks go bankrupt
  • 00:33:22
    and we're gonna have a great depression
  • 00:33:23
    and the stock markets go down and you're
  • 00:33:25
    gonna wind up selling pencils and apples
  • 00:33:26
    you know
  • 00:33:27
    the uh
  • 00:33:28
    well i'm going to oil one from four to
  • 00:33:30
    four and the experts said it was gonna
  • 00:33:31
    go 100. within two years oil was at 14
  • 00:33:34
    the experts now much higher paid at this
  • 00:33:36
    point are saying it's gonna go to four
  • 00:33:38
    and we're gonna have a depression
  • 00:33:41
    and people believe it again you know the
  • 00:33:43
    uh
  • 00:33:44
    i remember when the money supply was
  • 00:33:45
    growing too fast they said we're gonna
  • 00:33:47
    have a depression that was going too
  • 00:33:48
    slow we're gonna have a depression
  • 00:33:50
    remember the ldc debt remember the ldc
  • 00:33:52
    debt all the banks our banks are very
  • 00:33:54
    smart they lend all their net worth to
  • 00:33:56
    zimbabwe and botswana and bova salon and
  • 00:33:58
    all these countries chile a lot of
  • 00:34:00
    countries they can't pronounce this is
  • 00:34:01
    chase manhattan and chemical it
  • 00:34:02
    manufactures hanover
  • 00:34:04
    these countries weren't doing so well
  • 00:34:05
    then they were called undeveloped
  • 00:34:07
    countries or less developed countries
  • 00:34:08
    now you have to call them emerging
  • 00:34:10
    countries it's not politically correct
  • 00:34:11
    to call anybody an undeveloped country
  • 00:34:14
    it's like i just found out the other day
  • 00:34:15
    that
  • 00:34:16
    the term for somebody that's overweight
  • 00:34:17
    is laterally challenged you i was
  • 00:34:19
    laterally challenged yeah but these are
  • 00:34:21
    ldc debt they're all gonna go bankrupt
  • 00:34:24
    and we're gonna have a depression uh
  • 00:34:26
    then the mideast was going on the world
  • 00:34:27
    remember that one the middle east around
  • 00:34:28
    the world they weren't gonna buy our
  • 00:34:29
    bonds and market crashing would have
  • 00:34:31
    depression
  • 00:34:32
    then japan was going lower man that one
  • 00:34:34
    japan would have all the assets and they
  • 00:34:35
    weren't gonna buy our bonds and we're
  • 00:34:36
    gonna have a depression
  • 00:34:38
    within three years the nikai dao had
  • 00:34:40
    gone from 40 000 to
  • 00:34:42
    16 000 the banking system's in trouble
  • 00:34:45
    and people said japan was going to
  • 00:34:46
    collapse and we're gonna have a
  • 00:34:47
    depression
  • 00:34:49
    i mean people on their prayer list the
  • 00:34:51
    other day they eliminate crippled
  • 00:34:52
    children mother teresa they're praying
  • 00:34:53
    for japan i mean you know
  • 00:34:55
    it's a country with a 15 savings rate
  • 00:34:57
    you know it's something bizarre you know
  • 00:34:58
    commercial real estate global warming uh
  • 00:35:02
    you know
  • 00:35:03
    and i think it's the older you get the
  • 00:35:04
    more nerves you get about these things
  • 00:35:06
    i think it's very valuable i think while
  • 00:35:08
    younger people are better investors is
  • 00:35:09
    they're not worried they haven't heard
  • 00:35:10
    about all these crises
  • 00:35:12
    and they're with children i think if you
  • 00:35:13
    don't have any kids you gotta rent some
  • 00:35:15
    kids for the weekend
  • 00:35:16
    you know get a seven-year-old and ask if
  • 00:35:18
    he knows about the money supply you know
  • 00:35:20
    how fast he's grown
  • 00:35:21
    asking he knows about the shape of the
  • 00:35:23
    yield curve is the wrong shape of the
  • 00:35:24
    yield curve
  • 00:35:25
    or that we're 48.3 months into the
  • 00:35:27
    economic recovery the average recovery
  • 00:35:28
    is less 52.3 banks
  • 00:35:30
    you know ask an eight-year-old if they
  • 00:35:32
    know about that eight-year-olds have a
  • 00:35:33
    very high expectation about the next 20
  • 00:35:35
    years
  • 00:35:36
    that's what you need to do
  • 00:35:38
    the more you get away from eight year
  • 00:35:39
    olds the more you away from living roles
  • 00:35:41
    the more you start reading these crazy
  • 00:35:42
    things you read over the weekend the uh
  • 00:35:45
    in fact from 1955 to 1985
  • 00:35:49
    the stock market uh went up a grand
  • 00:35:51
    total of a thousand points
  • 00:35:53
    but it was down 800 on mondays so it's
  • 00:35:55
    down it was there for up 1800 on non
  • 00:35:57
    mondays
  • 00:35:59
    it wasn't an accident
  • 00:36:01
    the stock market went down october the
  • 00:36:02
    1987 was a monday
  • 00:36:05
    people of the weekend become economists
  • 00:36:07
    and portfolio strategists you know
  • 00:36:09
    and they're bull if they take their
  • 00:36:10
    lunch on the way to work you know
  • 00:36:13
    in fact i knew very well that mark was
  • 00:36:14
    going down in october of 1987 uh
  • 00:36:17
    dave ellison remembers that my first
  • 00:36:19
    vacation is going to take in six years
  • 00:36:22
    and we decided ireland and uh
  • 00:36:25
    we stayed all these little cottages and
  • 00:36:27
    play golf and i left on thursday after
  • 00:36:29
    the close of trademark was down 55
  • 00:36:31
    points
  • 00:36:32
    which wasn't a good start but it was
  • 00:36:33
    down 55 points and we got over there and
  • 00:36:35
    because of the time zone we were able to
  • 00:36:36
    do we want to do and get down to cork
  • 00:36:38
    and called in the market was down about
  • 00:36:40
    118.
  • 00:36:41
    i said to carolyn if the market goes
  • 00:36:43
    down on monday we better go back
  • 00:36:45
    but we're already here so uh i'll stay
  • 00:36:47
    for the weekend so
  • 00:36:49
    as you know the mark went down 508 on
  • 00:36:51
    monday so i flew home
  • 00:36:53
    because my funding gone for i think from
  • 00:36:54
    13 billion to 9 billion in two working
  • 00:36:56
    days and i uh
  • 00:36:58
    it was uh
  • 00:37:00
    the trend here is not positive like i
  • 00:37:01
    could do something about it you know you
  • 00:37:02
    know
  • 00:37:03
    yeah but there's time when they call it
  • 00:37:05
    they wanted to say well what's doing
  • 00:37:06
    right now well he's on the 10th hole
  • 00:37:08
    he's even part on the front nine but you
  • 00:37:09
    know
  • 00:37:11
    he's in a trap right now this could be a
  • 00:37:12
    double bug this could be a quadruple
  • 00:37:13
    buggy right here could could blow the
  • 00:37:15
    entire front nine right here you know
  • 00:37:16
    this is not what they want to hear you
  • 00:37:17
    know
  • 00:37:20
    so i have no idea when the market's
  • 00:37:21
    gonna go down and uh
  • 00:37:23
    no idea when it's gonna go up i'm
  • 00:37:24
    totally shocked the market was four
  • 00:37:26
    thousand two and a half years ago a
  • 00:37:28
    while ago it's eight thousand uh
  • 00:37:30
    i had no idea about this
  • 00:37:31
    uh very surprisingly but i'll guarantee
  • 00:37:34
    you
  • 00:37:35
    the mark will be a lot higher in 15
  • 00:37:36
    years it'll be a lot higher than 25
  • 00:37:38
    years
  • 00:37:39
    what it's gonna do next one or two years
  • 00:37:40
    i don't have any idea and if somebody in
  • 00:37:42
    this room knows about it they're not
  • 00:37:43
    telling anybody
  • 00:37:45
    or they're not in this room they're down
  • 00:37:46
    in palm springs somewhere you know
  • 00:37:49
    they've made a billion dollars or if
  • 00:37:50
    they know anything about interest rates
  • 00:37:51
    because interest rates you can be right
  • 00:37:52
    five times in a row and ten grand you
  • 00:37:54
    can have two billion
  • 00:37:55
    it's not that many people with two
  • 00:37:56
    billion there's a lot of people
  • 00:37:57
    predicting interest rates did you ever
  • 00:37:58
    think about that one
  • 00:37:59
    yeah just five times right around ten
  • 00:38:01
    grand
  • 00:38:02
    two billion
  • 00:38:03
    it uh
  • 00:38:05
    if you write sometimes a row you can
  • 00:38:06
    have the gnp of uh
  • 00:38:08
    you know the united kingdom you know
  • 00:38:09
    it's a big number at the
  • 00:38:11
    uh
  • 00:38:12
    so
  • 00:38:13
    i don't worry about that i know we've
  • 00:38:14
    had uh
  • 00:38:15
    96 years a century and the market's
  • 00:38:18
    fallen 53 times
  • 00:38:20
    we've had 53 declines of 10 or more
  • 00:38:23
    so 53 declines in 96 years once every
  • 00:38:25
    two years we have a 10 decline
  • 00:38:28
    of the 53 declines
  • 00:38:30
    15 1 5 have been 25 more
  • 00:38:34
    so 15 and 96 years but once every six
  • 00:38:36
    years the market falls 25 percent more
  • 00:38:39
    that's what we call a bear market you
  • 00:38:40
    know you know that
  • 00:38:42
    and it's going to happen
  • 00:38:45
    i don't care when it's gonna happen
  • 00:38:47
    i would love to know obviously it'll be
  • 00:38:48
    very useful to know when it's gonna
  • 00:38:49
    happen it doesn't make any difference to
  • 00:38:51
    me corbett drives me a lot higher eight
  • 00:38:52
    years from now a lot higher 16 years now
  • 00:38:54
    a lot higher 30 years from now that's
  • 00:38:55
    what i deal with
  • 00:38:57
    i'll be glad to answer your questions
  • 00:38:58
    it's great uh enjoyed it and
  • 00:39:01
    want to start the questions
  • 00:39:12
    [Music]
  • 00:39:13
    [Applause]
  • 00:39:15
    they don't get the question i'll read
  • 00:39:16
    the calendar of offerings for free
  • 00:39:17
    billings for the next month
  • 00:39:24
    do you like international stocks uh
  • 00:39:29
    uh
  • 00:39:30
    the question is i always i found i was
  • 00:39:32
    better overseas than i was domestic
  • 00:39:34
    because it's just less coverage
  • 00:39:36
    there's less people following these
  • 00:39:37
    companies so i think
  • 00:39:39
    my big theory and i think it's valid if
  • 00:39:41
    you look at 10 companies you'll find one
  • 00:39:42
    that's mispriced you look at 20 you'll
  • 00:39:44
    find two you look at 100 you'll find 10.
  • 00:39:47
    the person that turns over the most
  • 00:39:49
    rocks
  • 00:39:50
    wins the game
  • 00:39:51
    overseas the numbers are much better
  • 00:39:54
    it's just not that much coverage so i
  • 00:39:56
    think international stocks are
  • 00:39:56
    definitely worth looking at
  • 00:39:58
    when do you sell stocks
  • 00:40:00
    when you sell stock is exactly the
  • 00:40:01
    reason you buy you write down the reason
  • 00:40:04
    you bought it i bought subaru
  • 00:40:06
    super was a distributor they didn't make
  • 00:40:07
    any they didn't actually make the cars i
  • 00:40:09
    think it was fuji heavy industries made
  • 00:40:11
    the cars
  • 00:40:12
    they distributed subarus in the united
  • 00:40:14
    states
  • 00:40:15
    the stock was uh i think the stock was
  • 00:40:17
    80.
  • 00:40:18
    it was up from 6 to 80.
  • 00:40:19
    i was a little late on this but i didn't
  • 00:40:21
    bother me and i should never let that
  • 00:40:22
    bother you i didn't let it bother me
  • 00:40:23
    paid forty dollars a share in cash did a
  • 00:40:25
    very low price car
  • 00:40:27
    it was well liked
  • 00:40:28
    you did well for about five or six years
  • 00:40:30
    in the slamming the stock from 80 to
  • 00:40:31
    320.
  • 00:40:32
    the reason i saw subaru thank you
  • 00:40:34
    the reason i saw subaru is hyundai came
  • 00:40:36
    in with low-cost car chrysler caught the
  • 00:40:38
    cut the price on the horizon ford came
  • 00:40:40
    out with a low price car at the end also
  • 00:40:42
    the super was no longer unique
  • 00:40:44
    so if the car's not a buy the stock's
  • 00:40:46
    not a buy that's what you're looking for
  • 00:40:48
    the reason you buy a stock you keep it
  • 00:40:49
    posted if the reason changes you go onto
  • 00:40:52
    something else
  • 00:40:54
    what industries do you like best today
  • 00:40:56
    and why
  • 00:40:56
    uh no idea
  • 00:40:59
    what's your favorite stock investment
  • 00:41:00
    today no idea
  • 00:41:03
    what i'd rather tell you is there lots
  • 00:41:04
    of great stocks out there you'll find
  • 00:41:06
    them
  • 00:41:08
    i mean i can recommend this stock and
  • 00:41:09
    three months later go up or go down
  • 00:41:12
    but the great stocks that imagine if you
  • 00:41:14
    worked i mean i worked the investment
  • 00:41:15
    business i missed franklin i missed
  • 00:41:17
    dreyfus
  • 00:41:18
    frank went up 300
  • 00:41:20
    drivers went up 50 fold i didn't miss
  • 00:41:22
    drive this twice
  • 00:41:24
    it was my industry when dreyfuss went in
  • 00:41:26
    the crash this is bizarre drivers went
  • 00:41:28
    from 50 to 30 and the crash had felt 18.
  • 00:41:31
    they had 17 share in cash and no debt
  • 00:41:35
    you're selling for one i did that math
  • 00:41:36
    very rapidly
  • 00:41:38
    and the week of the crash there were
  • 00:41:39
    like 90 percent the money market assets
  • 00:41:41
    and bonds their assets didn't go down
  • 00:41:42
    the week of the crash stuck went from 50
  • 00:41:44
    18 with 17 a year in cash
  • 00:41:47
    so i i paid attention to my own industry
  • 00:41:50
    imagine being in the retailing industry
  • 00:41:51
    you would see home depot using circuit
  • 00:41:53
    city you're just seeing all these great
  • 00:41:55
    companies these people buying
  • 00:41:56
    biotechnology stuff it's like crazy
  • 00:41:59
    the do you believe the s p 500 market is
  • 00:42:01
    expensive
  • 00:42:02
    yes
  • 00:42:03
    uh which industries look the most
  • 00:42:04
    attractive now
  • 00:42:06
    i would say
  • 00:42:07
    if you look at the secondary stocks
  • 00:42:10
    we've had three thousand companies come
  • 00:42:11
    public the last four years that's two a
  • 00:42:13
    business day three thousand companies
  • 00:42:16
    one third of the lower the price and
  • 00:42:17
    came public at
  • 00:42:20
    some of these are not great companies
  • 00:42:21
    but some are good companies they have a
  • 00:42:22
    glitch and no one cares about them
  • 00:42:25
    so it's the secondary companies to me is
  • 00:42:27
    the research list that's where i'll be
  • 00:42:28
    looking today uh
  • 00:42:32
    let's see if you believe you should not
  • 00:42:33
    owe what you own please discuss the pros
  • 00:42:34
    and cons of conservating your estimates
  • 00:42:36
    versus diversification
  • 00:42:38
    okay very good question
  • 00:42:40
    i don't believe in diversification at
  • 00:42:41
    all
  • 00:42:43
    i would own one stock
  • 00:42:45
    if i could find one great stock
  • 00:42:49
    diversification is a big mistake
  • 00:42:51
    i call it diversification but the
  • 00:42:54
    you buy this thing that might balance
  • 00:42:56
    this other thing and they both go down
  • 00:42:57
    it uh
  • 00:42:58
    i gotta get enough questions i don't
  • 00:43:00
    have questions just come at your fifth
  • 00:43:02
    annual conference here right now
  • 00:43:04
    i think we have enough coverage thank
  • 00:43:06
    you very much well that's pretty good
  • 00:43:08
    the uh
  • 00:43:09
    so i don't believe in diversity at all i
  • 00:43:10
    would own one stock
  • 00:43:12
    but what i do believe in is if i find 10
  • 00:43:14
    good stories they're all equally
  • 00:43:16
    attractive i buy all 10
  • 00:43:19
    and i wait to see them unfold it's like
  • 00:43:20
    watching 10
  • 00:43:21
    poker games
  • 00:43:23
    10 games of stud poker you watch the
  • 00:43:24
    cards turn over story three gets better
  • 00:43:26
    story six slips story seven stays the
  • 00:43:29
    same but it goes up fifty percent so you
  • 00:43:31
    sell seven and buy two
  • 00:43:33
    that's all i do so if they're equally
  • 00:43:35
    attractive i buy all ten then gradually
  • 00:43:37
    some story says oh my god this is
  • 00:43:39
    getting better and better and guess what
  • 00:43:41
    the stock just went down
  • 00:43:43
    so you keep watching 10 stories and
  • 00:43:44
    magically because of that rule of stocks
  • 00:43:46
    going up and down a lot
  • 00:43:49
    then you load up you really
  • 00:43:51
    you know take a big advantage so that
  • 00:43:52
    either happens to be something happens
  • 00:43:54
    the company or the market goes down and
  • 00:43:55
    all stocks go down
  • 00:43:57
    will you please please cause writing
  • 00:43:59
    articles on mutual fund conversions oh
  • 00:44:01
    c's cease writing articles
  • 00:44:03
    i'm not going to cease writing articles
  • 00:44:05
    on mutual conversions
  • 00:44:07
    it gets me mad
  • 00:44:09
    that 99 people that have deposits in a
  • 00:44:11
    thrift when it goes public this thing
  • 00:44:14
    comes to him throws it in the trash
  • 00:44:17
    i mean they don't even look at it
  • 00:44:19
    i mean it's sad they don't even consider
  • 00:44:20
    buying it because they're used to
  • 00:44:21
    getting something from a savings loan
  • 00:44:22
    they gave a calendar and a free toaster
  • 00:44:24
    and they're not used to something that
  • 00:44:25
    has you know 75 pages of black ink and
  • 00:44:28
    they have to put money up
  • 00:44:30
    so i'm still trying to educate the
  • 00:44:31
    public to take a look when thrifts come
  • 00:44:32
    public
  • 00:44:35
    if you believe what you should know
  • 00:44:37
    you should own you should know could you
  • 00:44:38
    discuss the pros and cons of console oh
  • 00:44:40
    i did that one that was a great one
  • 00:44:41
    i love my answer what's your opinion of
  • 00:44:43
    wayne hey zanga's style
  • 00:44:45
    great style
  • 00:44:46
    okay uh yeah
  • 00:44:50
    uh
  • 00:44:51
    statistics show women control most of
  • 00:44:53
    the money in the us
  • 00:44:55
    where are they at this moment no wait no
  • 00:45:00
    there's some male is trying to find
  • 00:45:01
    these rich women
  • 00:45:02
    there where are they
  • 00:45:05
    at this lunch
  • 00:45:08
    okay all the way with this okay
  • 00:45:10
    why are there some men trying to
  • 00:45:13
    drill them no do uh
  • 00:45:15
    looks like drill them i can't believe it
  • 00:45:17
    oh tell them what to do okay
  • 00:45:19
    uh
  • 00:45:22
    don't know i uh
  • 00:45:24
    i've got three daughters we specialize
  • 00:45:26
    in that gender and they're great and
  • 00:45:28
    they're bright as hell and i think
  • 00:45:29
    they're going to be terrific so i don't
  • 00:45:31
    know why there's so many men in this
  • 00:45:32
    room
  • 00:45:34
    i think it'll even out over time it
  • 00:45:35
    takes a little while to catch up i
  • 00:45:37
    remember when our business school and
  • 00:45:38
    wharton had no women in it now they're
  • 00:45:40
    50 so
  • 00:45:41
    it's working the right way
  • 00:45:42
    barton biggs says we are in a bear
  • 00:45:44
    market rally do you agree
  • 00:45:46
    i don't have the freaking idea what
  • 00:45:48
    rallies smelly this is [ __ ]
  • 00:45:51
    total [ __ ]
  • 00:45:52
    yeah
  • 00:45:55
    yeah
  • 00:45:56
    [Applause]
  • 00:45:57
    now here's something manny freeman
  • 00:45:59
    listen manny freeman said this morning
  • 00:46:00
    they're in the fifth inning of the
  • 00:46:02
    current world market this is also
  • 00:46:03
    [ __ ]
  • 00:46:07
    the only difference
  • 00:46:08
    this is more current [ __ ]
  • 00:46:12
    uh okay
  • 00:46:18
    how many banks will there be in 10 years
  • 00:46:20
    okay
  • 00:46:21
    uh
  • 00:46:22
    we still have 7 500 deposit takers
  • 00:46:24
    united states
  • 00:46:26
    in in england
  • 00:46:28
    they have seven commercial banks they
  • 00:46:30
    have three building loans societies
  • 00:46:31
    they're totally ten depositators in
  • 00:46:33
    canada there are eight banks in the
  • 00:46:35
    whole country
  • 00:46:36
    my town we have over nine banks a little
  • 00:46:38
    town eighteen thousand we have nine
  • 00:46:39
    banks i thought
  • 00:46:40
    we have 7 500 deposit takers united
  • 00:46:42
    states become credit unions they all
  • 00:46:44
    have their own audit their own
  • 00:46:46
    advertising jingle their own software
  • 00:46:47
    systems their own or directors in
  • 00:46:50
    unbelievable ways so
  • 00:46:51
    how many banks will be in 10 years a lot
  • 00:46:53
    less than there is now how many threats
  • 00:46:54
    will be a lot less
  • 00:46:56
    this industry is gonna have a serious
  • 00:46:57
    consolidation it's an unbelievable
  • 00:46:59
    redundancy waste duplication
  • 00:47:02
    and it's gonna shrink and it works now
  • 00:47:04
    these stocks are up they use paper it
  • 00:47:05
    doesn't cost anything to do it done
  • 00:47:07
    okay that's it i appreciate it very much
  • 00:47:09
    thank you
  • 00:47:09
    [Applause]
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