Home › Forums › Financial Markets/Economics › Jeremy Grantham’s 1Q09 Letter: Fantastic as usual
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May 12, 2009 at 5:13 PM #398090May 12, 2009 at 5:19 PM #397427
Allan from Fallbrook
Participant[quote=carlsbadworker][quote=Allan from Fallbrook]Most investors, however, cannot read a financial statement. A lot of CEOs cannot read one, either (I’ve worked with more than my fair share of them). [/quote]
I would agree with that completely, but I’m afraid that it may help scaredycat’s argument that any fool with enough luck can be a good investor as wll as a CEO. It is true that luck could explain almost everything in the world, but still I think we piggs analyze the data rigorously because we think it will impact the probability of the luck to our favors. Otherwise, what’s the point of learning anything?
[/quote]No disagreement on the luck part. However, I used the phrase “long haul” for a reason. Lucky investors can ride a cycle, or even two, but don’t fare well over the long haul. Long term investors who know their stuff might take a beating over the short term (as Dave points out), but with perseverance will do far better long term. It does take fortitude, especially while watching complete morons celebrate their “winnings” (a certain poster on this site comes to mind).
I’ve spent a lot of time analyzing and investing in specifically targeted small and mid-cap companies and have used Graham’s Theorem (company valuation based on the net value of the balance sheet) extensively. It isn’t foolproof, nor is it the only valuation tool I use.
It has, however, prevented me from investing in Pets.com, Kozmo.com and eToys, as well as quite a few other, larger and supposedly more valuable (from a P/E ratio vantage) companies.
Whether you’re buying a car, refrigerator, or house, do your homework. But you do have to know what you’re looking for and at in order for the homework to have any true value. Sometimes it is better to be lucky than good, but Chance does indeed favor the prepared mind.
May 12, 2009 at 5:19 PM #397675Participant[quote=carlsbadworker][quote=Allan from Fallbrook]Most investors, however, cannot read a financial statement. A lot of CEOs cannot read one, either (I’ve worked with more than my fair share of them). [/quote]
I would agree with that completely, but I’m afraid that it may help scaredycat’s argument that any fool with enough luck can be a good investor as wll as a CEO. It is true that luck could explain almost everything in the world, but still I think we piggs analyze the data rigorously because we think it will impact the probability of the luck to our favors. Otherwise, what’s the point of learning anything?
[/quote]No disagreement on the luck part. However, I used the phrase “long haul” for a reason. Lucky investors can ride a cycle, or even two, but don’t fare well over the long haul. Long term investors who know their stuff might take a beating over the short term (as Dave points out), but with perseverance will do far better long term. It does take fortitude, especially while watching complete morons celebrate their “winnings” (a certain poster on this site comes to mind).
I’ve spent a lot of time analyzing and investing in specifically targeted small and mid-cap companies and have used Graham’s Theorem (company valuation based on the net value of the balance sheet) extensively. It isn’t foolproof, nor is it the only valuation tool I use.
It has, however, prevented me from investing in Pets.com, Kozmo.com and eToys, as well as quite a few other, larger and supposedly more valuable (from a P/E ratio vantage) companies.
Whether you’re buying a car, refrigerator, or house, do your homework. But you do have to know what you’re looking for and at in order for the homework to have any true value. Sometimes it is better to be lucky than good, but Chance does indeed favor the prepared mind.
May 12, 2009 at 5:19 PM #397900Participant[quote=carlsbadworker][quote=Allan from Fallbrook]Most investors, however, cannot read a financial statement. A lot of CEOs cannot read one, either (I’ve worked with more than my fair share of them). [/quote]
I would agree with that completely, but I’m afraid that it may help scaredycat’s argument that any fool with enough luck can be a good investor as wll as a CEO. It is true that luck could explain almost everything in the world, but still I think we piggs analyze the data rigorously because we think it will impact the probability of the luck to our favors. Otherwise, what’s the point of learning anything?
[/quote]No disagreement on the luck part. However, I used the phrase “long haul” for a reason. Lucky investors can ride a cycle, or even two, but don’t fare well over the long haul. Long term investors who know their stuff might take a beating over the short term (as Dave points out), but with perseverance will do far better long term. It does take fortitude, especially while watching complete morons celebrate their “winnings” (a certain poster on this site comes to mind).
I’ve spent a lot of time analyzing and investing in specifically targeted small and mid-cap companies and have used Graham’s Theorem (company valuation based on the net value of the balance sheet) extensively. It isn’t foolproof, nor is it the only valuation tool I use.
It has, however, prevented me from investing in Pets.com, Kozmo.com and eToys, as well as quite a few other, larger and supposedly more valuable (from a P/E ratio vantage) companies.
Whether you’re buying a car, refrigerator, or house, do your homework. But you do have to know what you’re looking for and at in order for the homework to have any true value. Sometimes it is better to be lucky than good, but Chance does indeed favor the prepared mind.
May 12, 2009 at 5:19 PM #397957Participant[quote=carlsbadworker][quote=Allan from Fallbrook]Most investors, however, cannot read a financial statement. A lot of CEOs cannot read one, either (I’ve worked with more than my fair share of them). [/quote]
I would agree with that completely, but I’m afraid that it may help scaredycat’s argument that any fool with enough luck can be a good investor as wll as a CEO. It is true that luck could explain almost everything in the world, but still I think we piggs analyze the data rigorously because we think it will impact the probability of the luck to our favors. Otherwise, what’s the point of learning anything?
[/quote]No disagreement on the luck part. However, I used the phrase “long haul” for a reason. Lucky investors can ride a cycle, or even two, but don’t fare well over the long haul. Long term investors who know their stuff might take a beating over the short term (as Dave points out), but with perseverance will do far better long term. It does take fortitude, especially while watching complete morons celebrate their “winnings” (a certain poster on this site comes to mind).
I’ve spent a lot of time analyzing and investing in specifically targeted small and mid-cap companies and have used Graham’s Theorem (company valuation based on the net value of the balance sheet) extensively. It isn’t foolproof, nor is it the only valuation tool I use.
It has, however, prevented me from investing in Pets.com, Kozmo.com and eToys, as well as quite a few other, larger and supposedly more valuable (from a P/E ratio vantage) companies.
Whether you’re buying a car, refrigerator, or house, do your homework. But you do have to know what you’re looking for and at in order for the homework to have any true value. Sometimes it is better to be lucky than good, but Chance does indeed favor the prepared mind.
May 12, 2009 at 5:19 PM #398100Participant[quote=carlsbadworker][quote=Allan from Fallbrook]Most investors, however, cannot read a financial statement. A lot of CEOs cannot read one, either (I’ve worked with more than my fair share of them). [/quote]
I would agree with that completely, but I’m afraid that it may help scaredycat’s argument that any fool with enough luck can be a good investor as wll as a CEO. It is true that luck could explain almost everything in the world, but still I think we piggs analyze the data rigorously because we think it will impact the probability of the luck to our favors. Otherwise, what’s the point of learning anything?
[/quote]No disagreement on the luck part. However, I used the phrase “long haul” for a reason. Lucky investors can ride a cycle, or even two, but don’t fare well over the long haul. Long term investors who know their stuff might take a beating over the short term (as Dave points out), but with perseverance will do far better long term. It does take fortitude, especially while watching complete morons celebrate their “winnings” (a certain poster on this site comes to mind).
I’ve spent a lot of time analyzing and investing in specifically targeted small and mid-cap companies and have used Graham’s Theorem (company valuation based on the net value of the balance sheet) extensively. It isn’t foolproof, nor is it the only valuation tool I use.
It has, however, prevented me from investing in Pets.com, Kozmo.com and eToys, as well as quite a few other, larger and supposedly more valuable (from a P/E ratio vantage) companies.
Whether you’re buying a car, refrigerator, or house, do your homework. But you do have to know what you’re looking for and at in order for the homework to have any true value. Sometimes it is better to be lucky than good, but Chance does indeed favor the prepared mind.
May 12, 2009 at 5:25 PM #397437Participant[quote=scaredycat]im not sure how “investment” is defined, but all i want is to preserve some value out of the something of value i’ve managed to save. I could “invest” it in thebank, or in stoks, or in “value” stocks, ot gold, or oil, or whatever i think is most liekly to retain that “value’. I tend to think the best way to preserve value is gold, silver and oil. held for 10, 20, 30, 100 years, gold and silver will definitely hold value. oil, probably. most stocks will be gone. if indeed there is still an exchange.[/quote]
Scaredy: If you want to view this objectively, look at the gold market from about 1981 to present. Gold and silver are NOT possessed of any intrinsic value. Oil certainly isn’t, especially since it’s a commodity.
Limiting your investment horizon to stocks or commodities only ignores entire markets and completely passes over bonds. The stock market, by and large, is a sucker play and watching the gyrations as of late should make that obvious.
There are some excellent investment primers out there, including many with an eye on bonds (I need to be slightly careful discussing bonds, given the Chrysler debacle).
May 12, 2009 at 5:25 PM #397685Participant[quote=scaredycat]im not sure how “investment” is defined, but all i want is to preserve some value out of the something of value i’ve managed to save. I could “invest” it in thebank, or in stoks, or in “value” stocks, ot gold, or oil, or whatever i think is most liekly to retain that “value’. I tend to think the best way to preserve value is gold, silver and oil. held for 10, 20, 30, 100 years, gold and silver will definitely hold value. oil, probably. most stocks will be gone. if indeed there is still an exchange.[/quote]
Scaredy: If you want to view this objectively, look at the gold market from about 1981 to present. Gold and silver are NOT possessed of any intrinsic value. Oil certainly isn’t, especially since it’s a commodity.
Limiting your investment horizon to stocks or commodities only ignores entire markets and completely passes over bonds. The stock market, by and large, is a sucker play and watching the gyrations as of late should make that obvious.
There are some excellent investment primers out there, including many with an eye on bonds (I need to be slightly careful discussing bonds, given the Chrysler debacle).
May 12, 2009 at 5:25 PM #397910Participant[quote=scaredycat]im not sure how “investment” is defined, but all i want is to preserve some value out of the something of value i’ve managed to save. I could “invest” it in thebank, or in stoks, or in “value” stocks, ot gold, or oil, or whatever i think is most liekly to retain that “value’. I tend to think the best way to preserve value is gold, silver and oil. held for 10, 20, 30, 100 years, gold and silver will definitely hold value. oil, probably. most stocks will be gone. if indeed there is still an exchange.[/quote]
Scaredy: If you want to view this objectively, look at the gold market from about 1981 to present. Gold and silver are NOT possessed of any intrinsic value. Oil certainly isn’t, especially since it’s a commodity.
Limiting your investment horizon to stocks or commodities only ignores entire markets and completely passes over bonds. The stock market, by and large, is a sucker play and watching the gyrations as of late should make that obvious.
There are some excellent investment primers out there, including many with an eye on bonds (I need to be slightly careful discussing bonds, given the Chrysler debacle).
May 12, 2009 at 5:25 PM #397967Participant[quote=scaredycat]im not sure how “investment” is defined, but all i want is to preserve some value out of the something of value i’ve managed to save. I could “invest” it in thebank, or in stoks, or in “value” stocks, ot gold, or oil, or whatever i think is most liekly to retain that “value’. I tend to think the best way to preserve value is gold, silver and oil. held for 10, 20, 30, 100 years, gold and silver will definitely hold value. oil, probably. most stocks will be gone. if indeed there is still an exchange.[/quote]
Scaredy: If you want to view this objectively, look at the gold market from about 1981 to present. Gold and silver are NOT possessed of any intrinsic value. Oil certainly isn’t, especially since it’s a commodity.
Limiting your investment horizon to stocks or commodities only ignores entire markets and completely passes over bonds. The stock market, by and large, is a sucker play and watching the gyrations as of late should make that obvious.
There are some excellent investment primers out there, including many with an eye on bonds (I need to be slightly careful discussing bonds, given the Chrysler debacle).
May 12, 2009 at 5:25 PM #398110Participant[quote=scaredycat]im not sure how “investment” is defined, but all i want is to preserve some value out of the something of value i’ve managed to save. I could “invest” it in thebank, or in stoks, or in “value” stocks, ot gold, or oil, or whatever i think is most liekly to retain that “value’. I tend to think the best way to preserve value is gold, silver and oil. held for 10, 20, 30, 100 years, gold and silver will definitely hold value. oil, probably. most stocks will be gone. if indeed there is still an exchange.[/quote]
Scaredy: If you want to view this objectively, look at the gold market from about 1981 to present. Gold and silver are NOT possessed of any intrinsic value. Oil certainly isn’t, especially since it’s a commodity.
Limiting your investment horizon to stocks or commodities only ignores entire markets and completely passes over bonds. The stock market, by and large, is a sucker play and watching the gyrations as of late should make that obvious.
There are some excellent investment primers out there, including many with an eye on bonds (I need to be slightly careful discussing bonds, given the Chrysler debacle).
May 12, 2009 at 5:29 PM #397442scaredyclassic
ParticipantI tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.
you can’t run your car on cash.
May 12, 2009 at 5:29 PM #397690ParticipantI tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.
you can’t run your car on cash.
May 12, 2009 at 5:29 PM #397915ParticipantI tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.
you can’t run your car on cash.
May 12, 2009 at 5:29 PM #397972ParticipantI tend to look at performance over the long haul, like from say, 1500 B.C. up to today. gold has done well for something with “no intrinsic value”.
you can’t run your car on cash.
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