Trading rules

http://www.ritholtz.com/blog/2014/06/investingtrading-rules-aphorisms-books-summer-2014/

The Big Picture blog above has the most complete collection. The 10 rules by Bernard Baruch are almost a century old but still as relevant asever. They are timeless.

1. Don’t speculate unless you can make it a full-time job.

2. Beware of barbers, beauticians, waiters — of anyone — bringing gifts of “inside” information or “tips.”

3. Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth.

4. Don’t try to buy at the bottom and sell at the top. This can’t be done — except by liars.

5. Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.

6. Don’t buy too many different securities. Better have only a few investments which can be watched.

7. Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.

8. Study your tax position to know when you can sell to greatest advantage.

9. Always keep a good part of your capital in a cash reserve. Never invest all your funds.

10. Don’t try to be a jack of all investments. Stick to the field you know best.

Avoiding Stupidity is more important than Seeking Brilliance

http://www.farnamstreetblog.com/2014/06/avoiding-stupidity/

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Meet David Abrams, the bashful billionaire you’ve never heard of

http://www.theaustralian.com.au/business/wall-street-journal/meet-david-abrams-the-bashful-billionaire-youve-never-heard-of/story-fnay3ubk-1226941996631#

IN the Back Bay neighbourhood of Boston, one man is building a money-making machine that ­rivals some of the hedge fund industry’s biggest names.

Calls to his office go unreturned even from those eager to hand over eight-figure sums, potential investors say. One industry veteran referred to him as “a unicorn”, as few people have ever seen him.

The hedge fund manager, David Abrams, has personally become a billionaire, and earned billions more for his wealthy investors, over the past five years running what is effectively a one-man shop, according to company and investor documents viewed by The Wall Street Journal and people who have worked with him. His firm, Abrams Capital Management, manages nearly $US8 billion ($8.6bn) across three funds and is discussing raising money for a fourth fund that could help push its assets past $US10bn.

In an era of star investors who appear regularly on television and talk up their ideas at hyped confabs, Mr Abrams, 53, has never spoken at an event open to the public.

“He probably would have preferred you not find him,” said Roger Brown, president of Berklee College of Music, where Mr Abrams is a trustee.

Abrams Capital’s main funds have posted an average annualised return of about 15 per cent since its founding in 1999, nearly double the average for hedge funds tracked by HFR and triple the S&P 500 index, including dividends.

The firm invests in a relatively small number of beaten-down companies at any one time, mostly through stocks at present, though it has also dipped into some fixed-income deals in recent years, including the unwinding of bankrupt Enron. Among its recent stockholdings have been bookseller Barnes & Noble, retailer J.C. Penney and money-transfer firm Western Union.

Mr Abrams also is among the small group of investors that has taken a big bet on government-controlled mortgage companies Fannie Mae and Freddie Mac, ­wagering that the Obama administration’s plan to wind down and replace the entities will fail, according to investor documents.

The firm employs three analysts and a small back-office staff, but Mr Abrams approves all trades personally, according to people who have worked with him. Other firms of comparable assets can have hundreds of employees.

He also built his fortune with the equivalent of one hand tied behind his back: his firm uses no leverage, or borrowed money, and often sits on billions in cash. It currently holds about 40 per cent of its $US8bn under management in cash, investor updates show.

Mr Abrams got his start in 1988 at Baupost Group, also based in Boston. Run by Seth Klarman, Baupost is one of the world’s largest hedge fund firms, with $US27bn under management.

The two remain friends, and Mr Klarman’s personal foundation has put money into Abrams Capital’s funds. Mr Klarman described his protege as “smart as a whip”.

“He loves a good puzzle and a good treasure hunt,” Mr Klarman said.

People who have worked with him said the University of Pennsylvania graduate who majored in history is introverted and cerebral. The son of a stockbroker and psychotherapist and a father of two, he is an avid follower of jazz music and fan of the band Earth, Wind and Fire.

Like Mr Klarman, Mr Abrams is known to be patient to the extreme. He will sit on a static portfolio for months without making a move.

Investors in the firm, including institutions like Brandeis University, with an endowment of about $US700 million, sometimes get scant information. Mr Abrams’ most recent quarterly letter consists of just six paragraphs, one of which is a single sentence.

“He’s not going to waste a nano­second to impress you, or convince you, or argue with you,” said Mr Brown of Berklee. “He knows what he thinks and if you ask him, he’ll tell you. If you don’t, he might just sit there in silence.”

Mr Abrams probably collected more than $US400m last year on the back of a 23 per cent return for one of his main funds, according to Journal calculations based on his fees, performance and his personal investment in the firm. He doesn’t appear on lists of top-paid hedge fund managers because his performance figures are so closely guarded, but his estimated compensation last year would have put him ahead of David Einhorn, Daniel Och and even Mr Klarman, according to industry publication Institutional Investor’s Alpha.

A portion of his earnings came from a private equity-style vehicle, which doesn’t pay out gains until it is unwound, and a handful of firm executives may have shared a small slice of his payday. The hedge funds were up an additional 2 per cent in the first quarter, investor documents show.

As a side gig, in 2007 Mr Abrams was part of a group that bought a 20 per cent stake in the National Football League’s Oakland Raiders. Forbes estimates the team’s worth at $US825m, the NFL’s least valuable team. Before the purchase, he wasn’t a big football fan but views the team as a distressed investment, a source said.

Some good jokes

http://www.businessinsider.com/profound-jokes-2014-6

1. A young boy enters a barber shop and the barber whispers to his customer, "This is the dumbest kid in the world. Watch while I prove it to you."

The barber puts a dollar bill in one hand and two quarters in the other, then calls the boy over and asks, "Which do you want, son?" The boy takes the quarters and leaves.

"What did I tell you?" said the barber. "That kid never learns!"

Later, when the customer leaves, he sees the same young boy coming out of the ice cream parlor.

"Hey, son! May I ask you a question? Why did you take the quarters instead of the dollar bill?"

The boy licked his cone and replied: 

"Because the day I take the dollar the game is over!" —Vinaya Patil

2. A boy and a man sit on a couch together. The boy says to the man, "Yeah, well, I didn’t believe in reincarnation when I was your age either." —Akshat Anand

3. A man is flying in a hot-air balloon and realizes he is lost. He reduces height and spots a man below. He lowers the balloon farther and shouts, "Excuse me! Can you tell me where I am?"

The man below says: "Yes, you're in a hot-air balloon, hovering 30 feet above this field."

"You must be an engineer," says the balloonist. 

"I am," replies the man. "How did you know?"

"Well," says the balloonist, "everything you have told me is technically correct, but it's no use to anyone."

The man below says, "You must be in management."

"I am," replies the balloonist, "but how did you know?"

"Well," says the man, "you don't know where you are or where you're going, but  you expect me to be able to help. You're in the same position you were before we met, but now it's my fault." —Amori Adesque

4. A climber fell off a cliff, and, as he tumbled down, he caught hold of a small branch.

"Help! Is there anybody up there?" he shouted.

A majestic voice boomed through the gorge:

"I will help you, my son, but first you must have faith in me."

"Yes, yes, I trust you!" cried the man.

"Let go of the branch," boomed the voice.

There was a long pause, and the man shouted up again, "Is there anybody else up there?" —Ahmet Kasan

5. An MIT linguistics professor was lecturing his class the other day. "In English," he said, "a double negative forms a positive. However, in some languages, such as Russian, a double negative remains a negative. But there isn't a single language, not one, in which a double positive can express a negative."

A voice from the back of the room said, "Yeah, right." —Sai Kishore K

6. An American businessman was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the fisherman on the quality of his fish and asked how long it took to catch them. The fisherman replied that it only took a little while. The American then asked why didn't he stay out longer and catch more fish. The fisherman said he had enough to support his family's immediate needs.

The American then asked, "But what do you do with the rest of your time?"

The fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos. I have a full and busy life, señor."

The American scoffed. "I am a Wharton MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat you could buy several boats. Eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then L.A., and eventually New York City, where you will run your expanding enterprise."

The fisherman asked, "But how long will this all take?"

To which the American replied, "Fifteen or 20 years."

"But what then?"

The American laughed and said, "That's the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich. You would make millions."

"Millions? Then what?"

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your friends." —Andrew Udell

7. A masochist asks a sadist, "Please hurt me."

"No," replies the sadist. —Arnon Mishkin 

8. "Make me one with everything," says the Buddhist to the tofu hot dog vendor.

Then, after getting his tofu hot dog, the Buddhist hands the vendor a $20 bill.

The vendor takes the money and begins helping the next customer.

The Buddhist looks puzzled and asks the vendor, "Where is my change?"

The vendor replies, "Change comes from within." —Liam Gorman 

9. I'll stop at nothing to avoid using negative numbers. —Ren Walker

10. An engineer dies and reports to the pearly gates. St. Peter checks his dossier and says, "Ah, you're an engineer — you're assigned to hell."

So the engineer reports to the gates of hell and is let in. Pretty soon, the engineer gets dissatisfied with the level of accommodations and starts designing and building improvements.

After a while, they’ve got air-conditioning and flush toilets, escalators, elevators and so on ... and the engineer is a pretty popular guy.

One day, God calls Satan on the telephone.

"So, how's it going down there in hell?" God says.

"Hey, things are going great. We've got air-conditioning and flush toilets and escalators. There's no telling what our engineer is going to come up with next!" Satan says.

"What? You've got an engineer? That's a mistake — he should have never gotten down there. Send him back immediately!" God says.

"No way! I like having an engineer on the staff — I'm keeping him!" Satan says.

"Send him back up here or I'll sue!" God says.

Satan laughs uproariously and answers:

"Yeah, right. And just where are you going to get a lawyer?" —Sagar Shukla

11. A crow was sitting on a tree, doing nothing all day. A rabbit asked him, "Can I also sit like you and do nothing all day long?" The crow answered, "Sure, why not." So the rabbit sat on the ground below the crow and rested.

A fox jumped on the rabbit and ate it.

Moral of the story: To be sitting and doing nothing, you must be sitting very high up. —Saurav Maheshwary

12. A taxi passenger tapped the driver on the shoulder to ask him a question. 

The driver screamed, lost control of the car, nearly hit a bus, went up on the footpath, and stopped inches from a shop window. 

For a second, everything was quiet in the cab. Then the driver said, "Look, mate, don't ever do that again. You scared the living daylights out of me!"

The passenger apologized and said, "I didn't realize that a little tap would scare you so much." 

The driver replied, "Sorry, it's not really your fault. Today is my first day as a cab driver — I've been driving a funeral van for the last 25 years." —Salil Gupta

13. A guy said to God, "God, is it true that to you a billion years is like a second?"

God said yes.

The guy said, "God, is it true that to you a billion dollars is like a penny?"

God said yes.

The guy said, "God, can I have a penny?"

God said, "Sure, just a second." —Mark DeBolt

14. Two young salmon are swimming along one day. As they do, they are passed by a wiser, older fish coming the other way.

The wiser fish greets the two as he passes, saying, "Morning, boys! How's the water?"

The other two continue to swim in silence for a little while, until the first one turns to the other and asks, "What the hell is water?" —Craig Weiland

15. Pessimist: Oh, this can't get any worse! 

Optimist: Yes, it can! —Bharat Jakati

16. How many Freudian analysts does it take to change a light bulb? 

Two. One to change it, and the other to hold the penis.

LADDER. I MEANT LADDER. —Jade Roche 

Read more: http://www.businessinsider.com/profound-jokes-2014-6#ixzz33yui97ZB