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  • Todd shared from Financial Shenanigans, Third Edition by Howard M. Schilit, Jeremy Perler
    One of its principal shenanigans involved making acquisitions, writing off much of the costs immediately, creating reserves, and then releasing those reserves into income as needed. With more than 70 deals over the company’s short life, WorldCom continued to “reload” its reserves so that they were available for future release into earnings.
    Note: worldcom cash flow games $$
  • Todd shared from Financial Shenanigans, Third Edition by Howard M. Schilit, Jeremy Perler
    Moreover, profits never grew proportionally with sales, a pretty unusual occurrence and a definite warning sign of accounting tricks. If sales grow by 10 percent, for example, investors generally would expect expenses and profits to rise by a similar amount at a business with steady margins.
    Note: accoumting tricks... Enron $$
  • Todd shared from The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears
    A stockbroker dies. He gets the chance to visit both heaven and hell and then decides where he wants to spend eternity. He picks hell first. He expects to see demons with pitchforks, but all he encounters are beautiful women, great food, fine wines, and parties. Heaven is filled with little angels strumming harps. The stockbroker chooses hell. In a flash, he is standing before the devil. All around are fires and screams of torment. The stockbroker asks the devil what happened to all the beautiful women, great food, wines, and parties. The devil laughs. “That,” he says, “was the prospectus...
    Note: stockbroker joke $$
  • Todd shared from The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears
    Disagreement is a sign of a healthy bull market just as surely as sick markets are defined by unanimous opinion. The natural urge for most people is to join the comfort of the crowd. It feels good to effortlessly make money, and ride stock prices higher. It is somewhat addictive, but it always ends in tears.
    Note: Diagreement equals a healthy market
  • Todd shared from The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears
    It is an ancient fact of markets that the best investment opportunities are often draped in fear. It was true well before the Rothschilds ruled Europe’s financial markets during the nineteenth century, and one of the banking family’s members supposedly quipped during some long ago war to “buy when there’s blood in the streets, even if it is your own.” This logic will be true 2,000 years from now. It will stay true as long as stocks, bonds, and derivatives are traded. People who learn to use their fear and that of others will make money while others lose it. This macabre market dynamic...
  • Todd shared from The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears
    “Men find it equally hard to take either a profit or a loss,” Baruch explained in his memoirs. “If a stock has gone up, a man wants to hold on to it in anticipation of further rise. If a stock has gone down, he tends to hold on to it until an upward turn comes along so he will at least be even. The sensible course is to sell while the stock still is rising or, if you have made a mistake, to admit it immediately and take your loss.”18
  • Todd shared from The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears
    Selling is not about timing the stock market. It is about managing the risk of your own investment portfolio, and tempering your decisions. It is about maintaining constant touch with the market to ensure the reason you bought the stock—the investment thesis—remains valid. Over time, you will refine and personalize your selling discipline. Some selling disciplines are simple; others are complex. All of them have this in common: They help to limit losses and lock in profits.
    Note: On selling
  • Todd shared from The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears
    You would not spend $50 to buy a can of beans at one store if you can buy the same can of beans for $1 at another. That simple distinction is often blurred in the stock market. In the market, analysts at several important banks would have strong buy ratings on the $50 can of beans and sell or hold ratings on the cheap stuff. The analysts would issue research reports saying that the $50 beans are the best beans in the world, the management team exudes brilliance, and consumer demand is huge and getting huger. Soon, the price of the $50 beans would surge, driving the price into the stratosphere...
    Note: Grea analogy
  • Todd shared from The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears
    Most investors only think of buying. The only time anyone thinks of selling is when the market is declining, news is apocalyptic, and panic has replaced euphoria. Selling in panic is a surefire way to lose money.
  • Todd shared from The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails by Steven M. Sears
    In their Quantitative Analysis of Investor Behavior of 2011, DALBAR concluded: “One of the most startling, and ongoing facts is that at no point in time have average investors remained invested for sufficiently long enough periods to derive the benefit of a long-term investing strategy,”