The Money Game [Adam Smith] on narledikupttemp.cf *FREE* shipping on qualifying offers. This is a modern classic. —Paul A. Samuelson, First American Nobel. “The best book there is about the stock market”—timeless investing basics by the host of the Emmy Award–winning show Adam Smith's Money World (The New. Praise. “This is a modern classic.” —Paul A. Samuelson, First American Nobel Prize Winner in Economics “The best book there is about the stock market and all .
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Smith, Adam - The Money Game. Vintage Books, 1st ed, [Behavioural Finance] Grade. Long before the term behavioural finance there. George J.W. Goodman/Adam Smith. Host and Editor-in-Chief. When Adam Smith's book The Money Game was published,. Nobel Prize-winner Paul Samuelson. Notes to the Excellent Book the Money Game by Adam Smith - Download as Word Doc .doc /.docx), PDF File .pdf), Text File .txt) or read online. Notes to the .
Here is a section I previously wrote on this and how knowing ones self relates to my life. They have a common theme of always being concerned. Marty calls it, always run scared. As I get older, I need to never lose sight of that. Anyone who knows me, understands that I am always concerned or contingency planning. I am like that in sports, entertainment and business. That is my make-up. I mention that because, as I was preparing for this conference, I realized, I do not want my constant concern to ever be numbed because of things usually working out.
Things have worked out because of my concern. Hence, I find it important to stay focused, unbiased, alert and open minded. I will always verify and exercise doubt. That is I. I know thyself. Of course, my family, friends and such often will get insulted, when they hear my often repeated phrase, Are you sure?
This means real donkey work, digging out notes, making comparisons, finding the tunnels, and in general unpainting the carefully painted picture. But most analysts do have to answer their own phones, sell stocks, attend meetings and still cover all the developments in their areas. So there are not many analysts who can do their job. I realize that if I was out selling and generating business, our firm would have higher current revenues. Yet, if I were to canvas for new clients with any frequency, my investment analysis skills would certainly suffer.
He discusses a "conglomerate. A conglomerate is a company that grows by acquiring other companies, and other companies can be in wildly different businesses. Conglomerate managers are supposed to be a new breed of brilliant wheeler-dealers, and the idea of the whole game is to take an ice-cream freezer company and merge it into a valve company and merge with a flour mill.
The valves and the flour and the ice cream never get together except on a balance sheet and an income statement, but Wall Street does look for growing earnings, and with the right accountant this whole process can make the earnings grow like crazy. Capitalism enters a new stage. That is so difficult. I trust him a great deal, I do my best to live by his words, and I think he is such a fantastic role model for me.
Yet, I am always reminded of the quotes I have heard Bruce Springsteen say. One being, "trust the art, not the artist. We know the alleged Stockholder's Equity, the cash balances, etc. We do not know the inner workings of the wholly owned companies.
We don't know the inventory turns of the retailers. We don't know the quality of earnings and cash flows of the manufacturers. I am often reminded of the Wizard behind the curtain in "The Wizard of Oz. During , I believe that potential Buffett replacement, Tony Nicely said referring to Wholly owned Berkshire subsidiary, Clayton Homes, "The company built , homes throughout the country in , Nicely said, with Tennessee ranking among the top 10 for sales.
I wonder and have never found out, how did Clayton produce more homes than the entire industry built. There are many possible responses to that question. One could be, that Nicely is from Geico and was either misquoted, or he himself erred in the quote. Another possibility is that Clayton is experiencing excess inventory. Anyway, that is just some of the thoughts that I have as I review Berkshire. As of this writing Berkshire remains one of our largest holdings.
I was immediately reminded of Berkshire when I read the paragraphs in the book. This entire summary is becoming longer than I originally expected, please feel free to take a Kool-Aid break. I loved the following section as Smith discusses a salesperson for the "Tadpole Fund.
If you are sitting behind the desk, you do not have to ask the salesman, "Well, what are you hawking today? If you really want to make the salesperson uneasy you keep making your big toe go in a square while he talks. But Harold Hill was undaunted. Hence, I remind myself to avoid blind faith, and to constantly invert.
Very Important section for me!!!! Because I spend a bit of time in the Library doing the same thing. I search to see if I could find similarities in today's environment of deemed prosperity and clues of how that could end.
Please try to read and remember the next sections of this paragraph. But nobody is listening. Those on margin had been sold out in and But from to , a real blight of the spirit took place. The Prudent Men, not on margin, believing in the Long-Term Growth of the American Economy, saw their unmargined holdings in the bluest of American blue chips drop by 80 to 90 percent.
I like the way he described the lack of logic in short term investing. So you download it and wait, and the story gets that they earn the one dollar and it goes to Thus earnings projections get marked up and down as the prices go up and down, just because Wall Streeters hate the insecurity of anarchy.
If the stock is going down, the earnings must be falling apart. If it is going up, the earnings must be better than we thought. Somebody must know something that we don't know. When you download a great bargain, you're doing it with sweaty palms, youre leaning against the crowd, engaging in contrary thinking, and you're pretty much alone. Here are a few examples: A. You do not need to be warm and fuzzy with investing.
John Templeton mentioned, "My job was being paid by wealthy families to help them choose stocks and bonds. I had good results in New York. But when I came here, I had better results. The secret, I think, is that in order to download stocks at a bargain price, you have to do the opposite of the crowd. When you're going to the same meetings with the other people in Manhattan, it's hard to be different.
When you chase after money, does it just show that you are greedy? Is it a dehumanization of human nature? Why collect something so useless? Money is condensed wealth. The stock market is thrilling because you need to save up and work hard before you participate.
Seasoned investors never really spend the money that they make. However, they are still compelled to continue. What is it that makes them continue to play? Some people are in because it sounds cool. To some, when the stock goes up, they get nervous. Even though your portfolio might be up, you might still kick yourself because you missed out on others. There is always another stock going up more than the one you bought. Some people are weird enough to tell the broker that they only wanted to make a specific sum of money and not more.
There are people who hate brokers for making so much commissions. They feel brokers like to lie. They feel brokers are touting for more business. Some just want the broker to talk to and to provide information on the stock for them. They just want to be part of what is going on. If the stock went up, he should have bought more, so he was stupid there, and if it went down, that proved he was stupid there. Why are we not growing rich? Markets mean different things to different people.
Greed and fear are the most common emotions. Obviously, no one wants to download at the top. Prices get pushed up even though the fundamentals do not support them. Some people expect their money to double in a few years. The trick is to have a firm identity which is not influenced by people speculating. One has to avoid anxiety situations.
Do not be emotionally attached to any stock. The key is to start out with no preconceived notions. Every day is a new day. The end object of investment should be serenity. Will you feel serene after earning a million? Or will you want more? Will you compare yourself with more successful people? People in society are usually measured by how much they can earn.
A lot of people define themselves by how much money they make. The stock market is a zero sum game, there will be winners and losers. The trouble is that people who get burnt do not learn and want to continue playing. You are ahead because you can change your mind and your actions without regard to what you did or thought yesterday. You have to go for the quantum jumps. Why are we on Wall Street? To make money. As outside investors, it is not possible to make outrageous amounts of money.
The ones making a lot of money are the inside stockholders of a company. These are the people who started a company and then IPO. The possibilities of different businesses which can go IPO are endless. Smith Admits His Biases. How do you correct your biases? The problem is that nothing works all the time. Sometimes, inaction is the better option. Inaction is also considered action. Some people try to anticipate business cycles to make money.
However, this will not make you very rich. Some people anticipate swing in interest rates.
You can also download the turnarounds, rotten companies which have sold off unprofitable segments and have new management. The examples involved require some knowledge. However, be wary of companies where earnings shot up way too quickly. However, the problem is that past performance is no indication for future performance. Companies with earnings growth consistently must have something unique about it.
They must have a competitive advantage. This thing must not be easily replicated or copied. The rate of growth of earnings matter too. A great product can be ruined by bad management. Another tip is to concentrate on a few holdings and do not diversify too much.
How to find great stocks? The company should be adaptable to change and stay innovative. You can get ideas from smart people. That is one of the rules. You can use the scuttlebutt technique, which is to talk to a lot of people associated with the business. Find your own stocks and your own coloured stocks. If playing the Stock Market game has been fun, it may be difficult to stop playing, even when that button of yours is burning your finger.
Repeated shocks will give you anxiety, and anxiety is the enemy of identity, and without identity there is no serenity. Almost every firm has a research department. It is important to know what everyone else is doing. Everyone has limited time available.
Charting is looking for trends and repetitions. Charts can very well prove to the traps as well. A chart can reflect volume and price range. Can charts indicate the future? The assumption is that what happens yesterday will happen again tomorrow. Can the footprints of price movements really predict the future? Is the market fully efficient? Charting seeks to find order in something that happens. Random walk means there is no order. Random walk theory was proposed by academics.
He is Eugene Fama. You might as well select stocks by throwing darts. It assumes that the market is completely efficient. It also assumes that stocks have an intrinsic value.
The actions of investors should cause actual price to wander randomly around its intrinsic value. However, in reality, the actual price might not be equal intrinsic value. The analysts all try to make the market more efficient. The analysts also feel that their analysis is useful.
The fact is that the market is reasonably efficient. The chartists can certainly be a force in the market. Can intuition be programmed? Chartists are happy that now everything can be programmed. Computers and Computers. Railroad Bill is a computer. Computers revolutionized investments.
Computers can screen too. The good thing was that it could perform many calculations simultaneously. Analysts pore through all these data and try to pick out trends. The computer can pick out stocks which are behaving out of pattern. Computers now do the downloading and selling themselves.
With the prevalence of computers, do individual investors still stand a chance?
This result is kind of disturbing for the individual investor. But What do the Numbers Mean? Earnings must be assessed using proper accounting standards.
There are certain items which must or must not be included. It allows for comparisons between different companies too. Useful lives might be applied differently between different companies. Some companies use declining balances. There are different accounting policies that can be adopted and all these are permitted. Earnings management is often practiced.
Accounting firms can get sued if they present inaccurate figures. Free-form companies are those which acquire others. Some management like to juice up the accounting or practice creative accounting. Wall Street loves constantly growing and stable earnings. Why are the little people always wrong?
Find out what the average investor is doing. Once you know, just do the opposite. They are not little people. Will do the opposite theory work? Some people trade on inside information. There are those who like to participate in the market because they feel it makes them intelligent. These are the powerful people with enough information and money to move prices. Now, there is a lot of regulation.
Is it even possible? There are many institutions, like mutual funds, pension funds and insurance companies.