Hello and welcome to our community!

[wishmaster]

Been on this site a couple of days now. I have a ? When the MOS is reached and the tools tell you to get in you get in. When the tools tell you to get out you get out. Simple! At which point do you get back in again? I know the tools but do you have to wait for the MOS again?

[Gunnski]

Yes. Always buy only when on sale! (Proper MOS). One of the main things you will need to learn is patience. Keep a nice basket/watch list of wonderful businesses. When it is time to sell Business "A" because of 3 red tools or it is at or above Sticker Price. You sell. Go to Business "B" out of your basket/watch list. If you have proper MOS and 3 green tools your right back in the market. If not, sit in cash and keep working your watch list.

[npg]

Originally Posted by maxwes

Transaction costs are far cheaper. Discount brokers. Online access for the tools, faster trades. Online access for better/faster information regarding companies (opportunities). Better/faster information on investing in general (methods, ideas).

These all enable the small, individual investor. For those of us who work or have a life outside of Wall Street, the scene is far different then it was even a few years. Yes you could have done it, but it would have cost you more both in terms of time and transactions.

All this is designed to extract more money out of you. It encourages hyperactivity and leads to tons of errors. The misinformation is better too. And yes, it misinforms faster as well. Oh, and there are thousands of precise formulas and models. And guess what? Every frigging portfolio manager on the planet watches the 3 tools and tries to buy undervalued companies.

And indeed, they all enable the small, individual investor to play the game how it's played in Wall Street. The fine point is that in that game the Wall Street guys are the pros and the small investor is the patsy.

I prefer to play the game that is played in Omaha.

[jmbreci]

Originally Posted by jaytblankenfeld

He never claimed that all he made was a 15% return. His book will show you how to make 15% and better. It has worked for me.

One thing that is different between Phil and Warren is that Phil will get out of a company, but Warren rarely ever will.

You are comparing apples and fillet mignon. Phil doesn't have to pull billions out of a company to get out. THAT gets noticed and is much harder to do in a short amount of time. Taking 1k-100k's out of a company is a blink on the radar. Phil's investing for himself.....Warren is investing for everyone.

Ever wonder why certain companies slide for days on end, even when they have good news? The big boys are selling it off because (a) they need the cash (b) they have found something better to invest in or (c) they no longer have faith in the company.

For me, my short term dabbles sucked and about broke even. My long term play is up 25-30% right now and I have held it just over a year. I am considering getting out, but think it has a little bit of a run left and may get me to around 50% in the next month. Still, I'll take the 25%/year...now, if I would have been a bit smarter and a bit more patient, I'd already have that 50%.

And I do see what Warren means about some stocks getting to "crazy" cheap levels and am still kicking myself for not buying CSCO when it went <18 (heck <20 for that matter).

Just my 2 cents....

[maxwes]

You have to make the right decisions with the information - there is no doubt. There is no question (that has never changed).

The portfolio/fund managers are handicapped in terms of how much they can buy, what they can buy, the size of the companies, how quickly they can buy. If they decide to sell, it takes much longer. So many rules for those guys. It much easier for the individual investing. If the market corrects, the individual is out within minutes. The fund manager? Not so easy. That is an advantage that can be exploited. As I mentioned, if you are not comfortable with it, then leave it alone (or golf).

I hate golf, would rather spend time playing with my kids (which I have plenty of time to do.

[joshuat]

I see what you are saying in regards to size, and agree.

And full disclosure, I just sold several positions after holding them for a short period to get into something I expect to pop in just the next few months

[joshuat]

Originally Posted by maxwes

Transaction costs are far cheaper. Discount brokers. Online access for the tools, faster trades. Online access for better/faster information regarding companies (opportunities). Better/faster information on investing in general (methods, ideas).

These all enable the small, individual investor. For those of us who work or have a life outside of Wall Street, the scene is far different then it was even a few years. Yes you could have done it, but it would have cost you more both in terms of time and transactions.

Fisher wrote about this back in the 50s, in terms of the disadvantages that the small investor faced. Times have certainly changed in that regard, you are correct. Heck, I get free trades. But the largest transaction cost still remains capital gains taxes on short term trades. I built myself a little spreadsheet that allows me to analyze how long the payback is. It can take a long time to get back to breaking even - usually far longer than the market trend I'm trying to time. So I find myself hopefully typing in a trade, looking at the numbers, and then sitting on what I have, somewhat regretfully eyeing the low hanging fruit.

Edited to add: Say you make a sale for $2500 for stock you bought for $2000. You will pay $200 in taxes, leaving you $2300 to reinvest. Say the expected profit was 11% for the old stock, but 15% for the new one. Well, you will wait over 2 years before you break even on that sale. Add into that uncertainty for the estimates for the profits for both stocks, and you really need to add that into the MOS for buying a stock.

Also, I don't want to dismiss your point about being able to take advantage of the inability of institutional investors to react in certain situations. It's an important point many forget. I've been in the mode of buying distressed companies lately, and partially count on this effect - bond ratings go down and stock prices crater because institional buyers can no longer hold the stock because it doesn't meet some threshhold. OTOH, hedge funds and private equity don't need to follow those rules and they are very, very astute buyers. I'd hate to get on the wrong side of a deal with one of them. They have the ability to move very fast with major amounts of capital. I could care less about joe blow analyst, but it frankly unnerves me to be trading in the same pond with HF managers.

[drkjmark]

Wow, What a useful website! Now if only you can set up one that does the same thing but with Rule #1 criteria ;)

[bk44bk44]

Hi all,
Have been out of college for fives years now and am an engineer at honda. Currently i have my 401k that i usually put between 10 and 20% in. right now its at about 55,000. I have a roth ira with about 4500 and honda stock worth about 8000. I started to get in to this Rule 1 when a coworker started talking to me about 401k charges which are crazy. Tought i was being smart with that. = (
anyway, i am trying hard to learn all this and almost done with the book. looking for some other resources like list of terms with there meanings, and the best calculators.

thanks for any future help and best of luck to everyone.
Any advice is welcome

bryan

[Rooster]

Originally Posted by joshuat

Edited to add: Say you make a sale for $2500 for stock you bought for $2000. You will pay $200 in taxes, leaving you $2300 to reinvest. Say the expected profit was 11% for the old stock, but 15% for the new one. Well, you will wait over 2 years before you break even on that sale. Add into that uncertainty for the estimates for the profits for both stocks, and you really need to add that into the MOS for buying a stock.

This is sobering. I'm hoping to keep better control of my itchy trigger finger in the future.