The Third Pig

With the Thanksgiving holiday coming up and people somewhat depressed about the market and the economy, I tried to find some things to be thankful for in a tough environment like this. I thought I’d list a few, at least five, leading up to the holiday. The following is #1:

1.     The Teachings of Benjamin Graham:

Benjamin Graham is perhaps best known today from frequent references made to him by billionaire investor Warren Buffett. Besides giving us Security Analysis in 1934 and his 1949 classic, The Intelligent Investor, he gave us short but meaningful quips about keeping our collective heads as investors in any market, let alone a bear market where we have seen a 52% drop. Some of my favorites are: 

“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.”

“Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to…the operating results of his companies.”

“…in the short run, the market is a voting machine but in the long run it is a weighing machine.”

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Posted by Benjamin Taylor at 04:38 PM |
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"Individuals who cannot master their emotions are ill-suited to profit from the investment process."

-Benjamin Graham

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Posted by Benjamin Taylor at 02:04 PM |
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"Well, you know, I haven't given a firm number. Here's my belief, that we can't go back to some of the, you know, confiscatory rates that existed in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was the 28 percent. I would — and my guess would be it would be significantly lower than that. I think that we can have a capital gains rate that is higher than 15 percent. If it — and if it, you know — when I talk to people like Warren Buffet or others and I ask them, you know, what's — how much of a difference is it going to be if it's 20 or 25 percent, they say, look, if it's within that range then it's not going to distort, I think, economic decision making.

On the other hand, what it will also do is first of all help out the federal treasury, which is running a credit card up with the bank of China and other countries. What it will also do, I think, is allow us to make investments in basic scientific research, in infrastructure, in broadband lines, in green energy and will allow us to give us — give some relief to middle class and working class families who have been driving this economy as consumers but have been doing it through credit cards and home equity loans. They're not going to be able to do that. And if we want the economy to continue to go strong, then we've got to make sure that they're getting a little relief as well."

Obama went on to further state that he'd be open to some sort of exemption for people making under a certain amount of money. I'm sure the Republican party will shout, "Obama will raise your taxes!" But at least Obama is listening to the right advisor.

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Posted by Benjamin Taylor at 12:58 PM |
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"People would rather be promised a (presumably) winning lottery ticket next week than an opportunity to get rich slowly."

- Warren Buffett

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Posted by Benjamin Taylor at 08:22 AM |
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"We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic."

- Warren Buffett

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Posted by Benjamin Taylor at 03:05 PM |
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Posted by Benjamin Taylor at 02:14 PM |
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"You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."

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Posted by Benjamin Taylor at 01:54 PM |
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"Scared money don't make none."

 - Sean "P. Diddy" Combs

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Posted by Benjamin Taylor at 05:08 PM |
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"Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases."

-Warren Buffett

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Posted by Benjamin Taylor at 02:23 PM |
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"[Value investing] ideas seem so simple and commonplace. It seems like a waste of time to go to school and get a PhD in economics. It's a little like spending eight years in divinity school and having someone tell you the ten commandments are all that matter."

 - Warren E. Buffett

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Posted by Benjamin Taylor at 03:14 PM |
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''We got no wealthy black people. We got rich people. Shaq is rich. The guy who signs his check is wealthy. Here you go Shaq! Go buy yourself a bouncin' car. Bling Bling!"

"If Bill Gates woke up with Oprah's money, he'd throw himself out the mother-bleeping-ing window.''

"Wealth will set us bleep-ing free, okay? 'Cause wealth is empowering, wealth can uplift communities from poverty, okay? A white man gets wealthy, he builds Wal-Marts and makes other white people have some mother-bleep-ing money. A brother gets rich, he buys some mother-bleep-ing jewelry."

 - Chris Rock

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Posted by Benjamin Taylor at 05:52 PM |
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"Charlie [Munger] and I have absolutely no complaints about these taxes. We work in a market-based economy that rewards our efforts far more bountifully than it does the efforts of other whose output is of equal or greater benefit to society. Taxation should, and does, partially redress this inequity. But we remain extraordinarily well treated."

- Warren E. Buffett

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Posted by Benjamin Taylor at 11:37 AM |
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[Fortune] Even so, you and Susie (Buffett) set up the Buffett Foundation way back in the 1960s, which means you obviously expected to be giving away money sometime. What was your thinking back then?

[Warren E. Buffett] Well, when we got married in 1952, I told Susie I was going to be rich. That wasn't going to be because of any special virtues of mine or even because of hard work, but simply because I was born with the right skills in the right place at the right time.

I was wired at birth to allocate capital and was lucky enough to have people around me early on - my parents and teachers and Susie - who helped me to make the most of that.

In any case, Susie didn't get very excited when I told her we were going to get rich. She either didn't care or didn't believe me - probably both, in fact. But to the extent we did amass wealth, we were totally in sync about what to do with it - and that was to give it back to society.

In that, we agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to society. In my case, the ability to allocate capital would have had little utility unless I lived in a rich, populous country in which enormous quantities of marketable securities were traded and were sometimes ridiculously mispriced. And fortunately for me, that describes the U.S. in the second half of the last century.

Certainly neither Susie nor I ever thought we should pass huge amounts of money along to our children. Our kids are great. But I would argue that when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home - I would say it's neither right nor rational to be flooding them with money.

In effect, they've had a gigantic headstart in a society that aspires to be a meritocracy. Dynastic mega-wealth would further tilt the playing field that we ought to be trying instead to level.

Read the entire article by clicking here.

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Posted by Benjamin Taylor at 12:03 PM |
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Posted by Benjamin Taylor at 03:33 PM |
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"I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things."

-Benjamin Franklin

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Posted by Benjamin Taylor at 06:22 PM |
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"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
"

-Warren E. Buffett

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Posted by Benjamin Taylor at 03:10 PM |
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"Money without brains is always dangerous."

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Posted by Benjamin Taylor at 02:07 PM |
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