Tuesday, March 14, 2006

A Commercial and a Comment

As I indicated on the right a rescues website that I feel is helpful is http://www.oid.com/.

This is the website for "Outstanding Investor Digest." There are some free parts of the site that has good material, the best parts though are subscriber only. Now I must say that I subscribed to OID last month. The beauty of an OID subscription is that it does not run on time (i.e. 12 issues a year or whatever) but on pages.

A subscription to OID gives you ten 32 page issues or 5 64 double issues or any combination. There is no set timeline for publication as the publisher only sends out an issue when there is enough relevant information to fill an issue. But you can read about that at the site.

Now OID has been around for about 20 years. Initially, the true value of OID came when material was not as easy to get in the age of the internet. Accessing shareholder letters and reports from various fund managers or investors was not as easy as it is now. So the publisher would go to the meetings..Take notes...And report on it. Now today I won’t deny that if you look long enough some of the material can be found for free on the net...But obviously that has a cost of its own.

But here is why I feel that OID is priceless..,if you were to go to the local bookstore and go to the investing section...Take down the books on investing and separate them into categories, i.e. TA, short-term trading, and long term investing (using Graham and Fisher principals of growth and value) you would probably see that there is like a 10 to one ratio of short term trading books to long term (if not greater) I think that is probably because human beings want the instant gratification over delayed but anyway... the point is...20 years ago "value" investors like Buffett et. al. Were not the rock stars they are today. While I was only 15 back then I am pretty sure they were probably pretty much ignored in the mainstream of the public conscious.

Now along comes this guy, the publisher of OID, who wants to actually interview these relatively ignored individuals about how they invest and why. So since he is the only one doing it they talk to him. And over the last 20 years OID has built up a level of trust and access that few others can offer when it comes to the experts on long term, value investing.

So even though currently you can get some of the material in OID off the web for free (other than your time to find it) you can’t get the in depth interviews and discussions that OID's access gives them. To me that is worth the price of admission.

So I recommend OID..Go to their website check them out...Order the free sample..And if you subscribe realize you are not paying for stock picks but for ideas..

now here is the commercial part...If you decide to sign up..If you tell them it was because of me I will get 4 issues added to my subscription...So if you do sign up email me before and I will give you my full name to put down on the subscription form... now on to the comment...

So I was reading the Bonus collection OID sent me when I signed up (when you sign up they send you a nice book of about 250 pages with 11 articles form previous editions as well as the last issue for free, so if you cant the last issue with the 10 you buy you are actually getting 11 issues) and I am reading a article about a talk that Jeremy Grantham gave (just Google him and you can do background) and Mr. Grantham quotes John Maynard Keynes as saying in part that (I will take the quotes bit by bit for my own purposes of clarity and point making)

"it makes a vast difference to an investment market whether or not the [long term value managers] predominate in the influence over the game players."

As a new investor I asked myself why it makes a difference. And then I remembered what Buffett had to say in his most recent letter to shareholders (find it here http://www.berkshirehathaway.com/ the investment market doe snot want long term game players because the market makes money only when there are buys and sells...

Think about what would happen if everyone would buy and hold for at least a year? It is in the markets interest to get people to embrace short term trading regardless of whether it is better or not...It is the action they need..

Grantham goes on: "Investment based on genuine long-term expectation is so difficult as to be scarcely practicable. He who attempts it must surely lead much more laborious days and run greater risks than he who tries to guess better than the crowd how the crowd will behave...Moreover life is not long enough; human nature desires quick results. There is a peculiars zest in making money quickly..."

To me it makes sense...If you are going to make one investment and hold it for 10 years you are going to work REAL hard before you pull that trigger...because you only got one life to get it right.... on the other hand...For short term traders there is always tomorrow....

it reminds me of when I was a kid and I would read all these WWII and Vietnam true life army stories about the best shots or snipers in the service. They were always these backwoods kids who grew up poor and having to hunt form a young age to put food on their mamma's table for their younger siblings...And they were so poor... The story goes...That they would be able to afford very few bullets for their weapon...Essentially they had one shot a day to bring down their prey...Shoot and hit the family eats..miss and you go hungry..miss enough you die...

well such a situation brought out extraordinary focus and concentration in unique human beings... and I think that is what Keynes as quoted is saying that for those of us who want to invest for the long term...Because we are committed in most cases to a 2-5 year time line for holding our stocks...We need to get it right the first time because are lives are not infinite...And in the short term we have to trust are decision making process enough to have faith that are purchase which looks bad today and maybe for the next 6 months will turn out okay in several years. Thats why it is harder to be long term than short term.

Now the next part really got my attention:

"it is the long-term investor, he who promotes the public interest, who will in practice come in for the most criticism, wherever investment funds are managed by committees or boards or banks. For it is in the essence of his behavior that he should be eccentric, unconventional and rash in the eyes of average opinion. If he is successful, that will confirm the general belief in his rashness; and if in the short run he is unsuccessful, which is very likely, he will not receive much mercy."

So Keynes says this... what 60-70 years ago...

Now this blog is not to promote the ideas of Buffett to the exclusion of other ideas...But because he is known as the greatest of long term investors...lets look at what is being said today about Buffett... read the following:

from Shai at grahamian value http://www.businessedge.ca/index.cfm/edtn/3.cfm

I found this on my own http://moneycentral.msn.com/content/P145831.asp

so here is a guy 70 years ago talking about how the investment community will always have something to say about a long term investor... the first to discount his success and the first to triumph on the perceived faluire ....why?

Because the market, those who write about, and everyone else has a vested interest in you and me trading more often...cuz the more you trade the more you pay your broker...or your newsource for more information...etc...

now again I am not saying that there are not a lot of people who make a lot of money trading in the short term...and for a lot of people that works for them and great more power to them...And that even Buffett has done so from time to time... but i dont knock them so why do they knock my style..

for me I am just saying that it seems that all the "noise" that is put has more of an interest in seeing people churn their account than they do watching them sit and do nothing...

So that’s my thought for the day....when every one says you should go one way...they maybe right...

But at least stop and think...why??.

And if the reason is not good enough for you...

don’t be afraid to stay put and let the crowd move on...

because our mom's were pretty smart when they would tell us "if Jimmy jumps off a bridge are you gonna do it too?" in response to us answering "i dunno, cuz Jimmy did it" when she wanted to know why we did something stupid...

so why are you gonna buy a stock just because everyone else is?

so your mom's advice when your a kid still holds...have a reason for everything you do...and if you can't trust your mom for advice who are you gonna trust....????

Thanks for reading...

More later


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