The Double-Play

[8/3/17] Jeff Auxier looks for double-plays too (don't know what he means by triple-play though)

[2/14/06] Seth Jayson chimes in with a couple of made-up examples.

[6/27/05] Nathan Parmelee writes about the Davis Double-Play, a situation where a company's earnings and p/e expand. I always thought it was a Peter Lynch concept (GARP), but perhaps not so. In any case, that's the kind of potential situations that I like to look for too.

Here's another way to word it. Buy relentless growers when they're cheap. (Another advertisement for Phil Durrell's letter.)

methods in valuing stocks

While researching DDM and DCF, I was led to moneychimp which led me to this article on valuing stocks, eBay in particular. It was interesting to note the different methods available and the assumptions that must be made in using them.

... Then while googling moneychimp, I stumbleupon.

AmeriTrade buys TD Waterhouse

will now become the largest online broker. I wonder if my commission rate will go down?

Creative Stock Scams

http://www.caseyresearch.com/displayArchiveArticleWwnk.php?id=158

To Everything There Is A Season

After taking some profits on PRASX Thursday, I dusted off Lichello's How To Make $1,000,000 In The Stock Market. Chapter 4 caught my eye. It was titled "The Reliefer Who Made A Fortune In The Stock Market" which was about a man on welfare who turned his $71 welfare checks into $21,000. (I suppose that was a lot of money back whenever the story was written -- especially considering that a year's worth of those welfare checks comes out to less than a grand).

One farmer is rich, the other poor, but they both have the same harvest ... It is not the size of the harvest, but the price you paid for the seed.

... Money is the seed, the stock is the soil. You do not plant in the fall, you do not harvest in the spring ... If you plant in the proper season, then even a small amount of seed will bring many crops.

Then I picked off my shelf John Train's The Craft of Investing and found a similar note. In the appendix is a chapter called "The Man Who Never Lost".

He equated stocks with buying a truckload of pigs. The lower he could buy the pigs, when the pork market was depressed, the more profit he would make when the next seller's market would come along.

... He took a farming approach to the stock market in general. In rice farming there is a planting season and a harvesting season; in his stock purchases and sales, he strictly observed the seasons.

Searching google, I see this chapter is reprinted in the book What Do I Do With My Money Now?

Turning to "Beating The Street", Lynch writes

After the Great Correction, when 508 points were shaved from the Dow Jones average in a single day, a symphony of experts predicted the worst, but as it turned out, the 1000-point decline in the Dow (33 percent from the August high) did not bring on the apocolypse that so many were expecting. It was a normal, albeit server, correction, the latest in a string of 13 such 33 percent drops in this century.

The next 10 percent decline, which may already have occurred since I've written this, will be the 41st in recent history, or, if it happens to be a 33 percent decline, the 14th. In Magellan's annual reports, I often reminded the shareholders that such setbacks were inevitable.

The story of the 40 percent declines continue to comfort me during gloomy periods when you and I have another chance in a long string of chances to buy great companies at bargain prices.

The book was written in 1993. The Dow declined from near 12000 at the beginning of 2000 to near 7000 in 2002. So I'd say that qualifies as number 14. I won't even mention that the Nasdaq declined from 5000 to around 1100 in a little over two years.

Berkshire IV

jkish who maintains intrinsivaluator says Berkshire is trading at 83% of IV. (That's the conservative calculation. His webpage defaults to the optimistic IV of 153860, so at the current price of 83,520, it would be 54%.)

The discussion conjectures that if BRK can grow IV at 8% a year and can close the gap on IV in three years, that would work out to a 15% compounded return.

should you listen to the news?

Though Ritholtz says no, in the second breath he says it can be a great contrary indicator.

So in my book that means yes. He also references an article by Gary B. Smith which found that after an initial response to disastrous news, "the markets resume whatever their prior trend was". In other words, buy on bad news, assuming that the prior trend was up.

Panning for Gold

Rich Smith offers 7 Steps to finding hidden gems (small-caps).

Apprenticed Investor

There is more to investing than just picking stocks explains Barry Ritholtz in a new column.

Who is Nicolas Darvas?

I came across this guy's book, How I Made $2,000,000 in the Stock Market as an Amazon recommendation probably because I had bought William O'Neil's book years ago.

Who is he? He was ballroom dancer who turned $25,000 into $2.25 million between 1956 and 1958 and made the cover of Time Magazine.

*** [4/14/10]

I bought this book from Borders on the mainland when I went up to California for Timmy's graduation. I recently posted it on paperbackswap and somebody requested it. But now I see you can get it on the web for free (though I still kind of find a book more convenient than reading it on the web. Well maybe if I had a Kindle or IPad..

Joe Oddlot

Do you need formal training to pick your own stocks?

decency or freedom

Wal-Mart chooses decency.