Your E-Mails To Us

 

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Who are you guys ?  Mark H., San Diego, Calif.
We are a group of Wall Street players who average over 25 years experience on the Street. One of us retired in our 30’s, and remained active by doing deals and working with our own portfolio. Another one of us spent a lot of time in academic circles earning an MBA from Harvard University, and then doing all the course work necessary for a Ph.D in economic finance from Harvard Business School. One of us was Senior Vice President of the Securities Division of Lehman Brothers Kuhn Loeb which was the oldest investment banking partnership in America going back over 150 years. The same individual was a limited partner of Bear Stearns in the 1980’s. We work for the pleasure of working, for the joy of creating and chasing a great stock idea.

 

 

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Do you people make money in down markets too ? Philip T. London, England
In a truly down cycle everything trades down initially. Our ideas are usually washed out, however. They have bottomed, which is why we call it Stocksatbottom.com. I am not concerned about our performance in down cycles.
You should also know that in down cycles, you still have a lot of money in the market, but it's chasing fewer stocks. As a result, the moves in those stocks can be as big as anything you have seen in the internet plays. In 1980 or 1981, Coleco went from 6 to 125 in a bear cycle. I know, I had the run.

 

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Have you known many stockbrokers that could make people money?  Leslie H.  Flint, Michigan
Have you known many stock brokers that could make people money?
Leslie H., Flint, Michigan
I have enormous respect for stock brokers. They work hard, they work smart, they are also fighting a losing battle. First of all, the firms put out nonsense for research. I sometimes have to ask if the paper they put it on is toxic, because when I burn it, I don't want to die from the fumes! Unfortunately the brokers must follow the research they are given.
In addition, they are trade oriented. They get paid for doing the trade, not by how much money you make or lose. This puts them at a severe disadvantage and is very harmful for you as an investor. The brokerage firms don't even attempt to make you money. Why is this? Because they are not measuring it as part of their managerial performance. Think about it. No office manager can tell you which broker in their office truly makes money for their clients, yet they can instantly tell you each broker's gross commission for the month. If they don't know who makes money for the clients, and they don't, it means that this objective is not being measured by management.

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Are you a trader, or do you go long-term? Martin F., Orlando, FL.
We have always preferred to go long-term on all positions. We know fabulous investors who have owned the same stocks for decades. Those who do invest long-term enjoy the magic of compounding (see article on web-site). At the same time, we can tell you that the vast majority of investors we speak with, want short-term profits without regard to tax consequences.

StocksAtBottom.com attempts to come to you with ideas when stocks are trading near their lows. If we are successful at what we do, then you can take profits anywhere on the upside while the stock is moving. Profits from these kinds of lows can be quite dramatic. Since stocks coming off the bottom can experience such incredible percentage moves, these percentage gains can equal what some portfolio managers aim for in an entire year.

 

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Are there any books that would help me be a better investor ? Gregory P., Seattle, Washington
The most important thing you can do is learn to think. Spend less time watching television and more time challenging other people's thought processes.


There are a few classic books that should be read. I'll rattle off the names and at some point in the future and tell you why you should read them. Read Security Analysis by Graham and Dodd. I understand Warrant Buffet still re-reads this book at least once a year. Speaking of Warren Buffet, call Berkshire Hathaway, the company he controls, and tell them you want to buy a copy of the Chairman's letters. They have Buffet's letters bound in hard copy. It's like reading the Bible. It does not get any better than this. The clarity of his thinking is unsurpassed. He truly is a genius.


Read Reminicences of a Stock Operator by Jesse Lefevre. Written seventy or eighty years ago, it is worth its weight in gold. It is the story of Jesse Livermore, one of the great players in Wall Street history.


These are books you should read over and over again. My copies have my writings all over them. They are underlined. You must truly make a book your own. You do this by writing in the book. You do this by challenging the author. If you want to learn how to read a book better, then get Mortimor Adler's How To Read A Book. He's probably dead now, but I knew Adler when he taught at the Aspen Institute in Colorado. He was Chairman of the Board of the Encyclopedia Britannica for decades and a professor at the University of Chicago under Robert Maynard Hutchins, another genius. If you want to learn, you must read geniuses.


One of the great stock pickers is Jimmy Rogers of Rogers Holdings. In the 70's and early 80's Rogers was George Soros' partner. Actually, he was the brain behind Soros. Rogers was one of the ten best informed people in the world for over a decade and he only read primary source material, things like government abstracts and Department of Agriculture surveys. He was not interested in the editorializing that most writers are guilty of.


Marilyn Von Savant, who reportedly has the highest IQ in the world (180 to 190), says she never reads more than the first paragraph of a newspaper. After that it's all subjective opinon. She's probably right.

 

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Do you like mutual funds at all ?  Louise G. Beverly Hills, Calif.
For the right client, they are great. If you want zero personal involvement in the market then mutual funds are the way to go. Just be very careful which ones you choose. Keep in mind that the return they advertise is not the return you get. They assume you take no money out and that you pay all the taxes you owe from funds with money from outside the fund itself. This is nonsense. If you keep this in mind and compute your real return, mutuals are still a good deal, just not the deal you think.

 

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