viernes, 23 de octubre de 2009

Market evolution. Jorge de Lalama. Chapter V. The intelligent investor Benjamin Graham. Part VII.

It is easy to live in the world according to world opinion, it's easy to live in solitude in our own measure, but the great man is he who in the midst of the crowd keeps with perfect equanimity the independence of solitude. Ralph Waldo Emerson.

Many of the best professional investors are interested in first time by a company when its stock price low, not when it rises.

Whatever the terms for selecting actions, the investment professionals who are successful share two traits: first, are disciplined and consistent, and refuse to change its method but fashion is not. Second, think a lot about what to do, but pay little attention to what the market is doing.

The warrants of stock options are a fraud, imminent danger and potential disaster. Have created enormous monetary aggregates values from nothing. They have no reason to exist except as may be considered that served to deceive speculators and investors. Should be prohibited by law. The crime of the warrants is being born.

We'd much rather that the analyst's work consisted, to tell, in trying to identify minority or exceptional cases where it can reach a reasonably accurate assessment of the price is well below the value.

There are only good stock prices come and go.

If you buy a stock simply because its price has risen, instead of wondering if the underlying value of the company is growing, sooner or later end up very sorry. Not a chance. It is a certainty.

The profits belong to shareholders and are entitled to be supplied to them provided they respect the limits of prudent management, many shareholders need dividend income to live, the benefits to shareholders as dividends are money real while they are retained in the company can later be converted into tangible value for shareholders ... or not.

The most dangerous lies are truths slightly distorted. G.C. Lichtenberg.

The shareholders are an absolute disaster. Together, they show neither intelligence nor available. Votan, as if they were a herd of sheep, any proposal to recommend the direction, however bad it may seem the performance record of the address.

The shareholder is part of the company is an owner who may legitimately require more explanation to its board if you are unhappy management.

The professors of accounting at Columbia University, Dorom Nissim and Amir Ziv, found that companies that raise their dividends not only get a better return on their actions, but also increases in dividends are associated with higher future returns for a period minimum of four years from the change in dividend policy.

When a company repurchases of its capital, reduces the number of shares outstanding. Although its net income will remain constant, earnings per share of the firm will increase, since their total profits will be divided among fewer shares. This in turn raises the share price. Even better, unlike dividends, share repurchase transaction is a tax-exempt for investors who do not sell their shares. Therefore, this increases shareholder value without increasing the amount to be paid as a tax. Moreover, if the shares are cheap, the use of available cash to repurchase shares is an excellent way to use the capital of the company.

The major losses to investors come from the acquisition of low-quality stocks at a time when economic conditions were favorable.

For most investors, diversification is the simplest and cheapest way to extend its margin of safety.

The safety margin is the excess of assets over debt or whatever ratio the same heritage / net debt should be less than or equal to 50%.

Property stocks in the decade of the 20 were recommended as good investments when the safety margin was small. During the depression of the decade of the 30 with a 90% depreciation of the same consultants who had recommended the "speculation" when at that time were extremely attractive and reasonably safe, because the real values behind them were four or five times higher than the market rate.

Graham is saying that there are good actions and bad actions, only actions are cheap and expensive stocks. Even the best company shares become candidates for sale when its price gets too high, while worth buying shares in the company if your quote worst low enough if the long-term trend is bullish.

People who make the biggest bets and get the biggest gains during periods of market bulls are almost always the same ones who suffer the worst losses in bearish market periods which inevitably follow the first.

After losing large amounts of money, it is necessary to spend even more to return to the starting place, as with the casino or racetrack players who play it all or nothing bet after each failure. Unless you have extraordinary luck, that's a recipe for disaster.

You should always remember, in the words of psychologist Paul Slovia that risk is a combination of equal doses of two ingredients: probabilities and consequences. Before investing, you should ensure that you have to realistically assess your chances of hitting and how they will react to the consequences of being wrong.

The intelligent investor should focus not only on making the analysis is correct. You must also ensure against losses if their analysis is wrong, which happens occasionally even in the best analysis.

The investors simply focus on two variables: price and value. Taking advantage of divergences between price and value.

Beta measures the risk. Must be less than one.

The safety margin is the difference between the price and the asset value or accountant. The higher margin will be more.

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