3. Think conceptually about the world.
4. Don’t buy stocks at high multiples.
“I don’t buy them because, by the time they reach a high multiple, it’s probably about time for it to come to an end. Wall Street and politicians are the last to catch on to anything.”
5. Be selective in your investing and look for one good idea.
“The most important trick for getting rich on Wall Street is not to lose money. There are many guys who do well for two years and then get creamed. Wait until you have a winner and are sure. In the meantime, keep your money in treasury bills. Professional money managers feel that they have to do something all the time and are the worst at following this advice.”
“Even if you only have one play every ten years, you’re going to do a lot better than most people.”
6. Every investment should be considered a commodity that will be affected by supply and demand changes. It’s just a question of when.
“Everything has its own supply and demand cycle, which may be a twenty-, thirty-, or fifty-year cycle, and everything is basically a commodity in the end.”
7. Every investor should lose some money, because it teaches you about yourself.
“What I object to the current government intervention in so-called ‘solving the crisis,’ they haven’t solved anything. They’ve just postponed it.”
The original “Dr. Doom,” Faber has been at the forefront of the Austrian economic school. Faber’s Doom, Gloom and Boom report has been the bible for millions of contrarian investors worldwide.
As the London Times wrote: “One does not go to see Marc Faber, Hong Kong’s iconoclastic share pundit, in the expectation of good news. But after listening to him, no investor could claim he had not been warned. For Faber says the things nobody wants to hear…”
Nobody but his clients, that is…
In 1987 he warned his clients to cash out before Black Monday in Wall Street; he made them handsome profits by calling the burst in the Japanese bubble in 1990.
He also predicted the collapse of U.S. gaming stoc
ks in 1993 and the Asia-Pacific financial crisis of 1997.
Rules to Invest By:
(from Gloom, Boom and Doom)
1. There is no investment rule that always works.
“If there was one single rule that always worked, everybody would in time follow it, and therefore, everybody would be rich.
But the only constant in history is the shape of the wealth pyramid, with few rich people at the top and many poor at the bottom. Thus, even the best rules do change from time to time.”
2. Stocks always go up in the long term?
“This is a myth. Far more companies have failed than succeeded. Far more countries’ stock markets went to zero than markets, which have survived…
Just think of Russia in 1918, all the Eastern European stock markets after 1945, Shanghai after 1949, and Egypt in 1954.”
3. Real estate always goes up in the long term?
“While it is true that real estate has a tendency to appreciate in the long run, partly because of population growth, there is a problem with ownership and property rights. Real estate in London was a good investment over the last 1,000 years, but not for America’s Red Indians, Mexico’s Aztecs, Peru’s Incas, and people living in countries that became communists in the 20th century. All these people lost their real estate and usually their lives along with it.”
4. Buy low and sell high.
“The problem with this rule is that we never know exactly what is low and what is high. Frequently what is low will go even lower, and what is high will continue to rise.”
5. Buy a basket of high quality stocks and hold!
“Another highly-dangerous rule! Today’s leaders may not be tomorrow’s leaders. Don’t forget that Xer
x, Polaroid, Memorex, Digital Equipment, Burroughs, and Control Data were the leaders in 1973… Where are they today? Either out of business — or their stocks are far lower than they were in 1973!”
6. Buy when there is blood on the street.
“It is true that very often, bad news provide an interesting entry point — at least as a trading opportunity — into a market. However, a better long-term strategy may be to buy on bad news that has been preceded by a long string of bad news. When then the market no longer declines, there is a chance that the very worst has been fully discounted.”
7. Don’t trust anyone!
“Everybody is out to sell you something. Corporate executives either lie knowingly — or because they don’t know the true state of their business and the entire investment community makes money on you buying or selling something.”
8. The best investments are frequently the ones you did not make!
“To make a really good investment (which will in time appreciate by 100 times or more) is like finding a needle in a haystack. Most “hot tips” and “must-buy” or “great opportunities” turn out to be disasters.
Thus, only make investment decisions you have carefully analyzed and thought about in terms of risk and potential reward.”
“If you live in a small town you may know the local real estate market, but little about Cisco, Yahoo and Oracle. Stick with your investments in assets about which you may have a knowledge edge.”
10. Invest in Yourself!
“Today’s society is obsessed with money. But the best investments for you may be in your own education, in the quality of the time you spend with the ones you love, on your own job, and on books, which will open new ideas to you and let you see things from many different perspectives.”
Your Investment Library Will Decide Your Investment Success
Available at http://www.amazon.com
Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today’s stock market [Paperback]
Jack A. Bass (Author)