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.