A World Of Hurt For Worldcom Bonds
Buying a bond only for its yield is like getting married only for the sex. If the thing that attracted you in the first place dries up, you'll find yourself asking, What else is there When the answer is Nothing spouses and bondholders alike end up with broken hearts. On May 9, 2001, WorldCom, Inc. sold the biggest offering of bonds in U.S. corporate history- 11.9 billion worth. Among the eager beavers attracted by the yields of up to 8.3 were the California Public Employees' Retirement System,...
Timing Is Nothing
In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy. From 1966 through late 2001, one study claimed, 1 held continuously in stocks would have grown to 11.71. But if you had gotten out of stocks right before the five worst days of each year, your original 1 would have grown to 987.12.1 Like most magical market ideas, this one is...
The First Shall Be Last
Why don't more winning funds stay winners The better a fund performs, the more obstacles its investors face Migrating managers. When a stock picker seems to have the Midas touch, everyone wants him-including rival fund companies. If you bought Transamerica Premier Equity Fund to cash in on the skills of Glen Bickerstaff, who gained 47.5 in 1997, you were quickly out of luck TCW snatched him away in mid-1998 to run its TCW Galileo Select Equities Fund, and the Transamerica fund lagged the market...
The Sure Thing That Wasnt
Many of those people got especially carried away on technology and Internet stocks, believing the high-tech hype that this industry would keep outgrowing every other for years to come, if not forever In mid-1999, after earning a 117.3 return in just the first five months of the year, Monument Internet Fund portfolio manager Alexander Cheung predicted that his fund would gain 50 a year over the next three to five years and an annual average of 35 over the next 20 years.5 5 Constance Loizos, Q...
Preface to the Fourth Edition by Warren E Buffett
I read the first edition of this book early in 1950, when I was nineteen. I thought then that it was by far the best book about investing ever written. I still think it is. To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework....