Tag Archives: Investing

The Rule of Opposites

I am currently reading The Intelligent Investor by Benjamin Graham and I thought this concept deserved some attention.

The rule of opposites is basically this…

“The more enthusiastic investors become about the stock market in the long run, the more certain they are to be proved wrong in the short run”

Buy low, sell high is the best strategy for any type of arbitrage, but our emotions end up making us do the exact opposite of that strategy. We get excited when we see stocks going up so we buy them on the way up. Then we let fear rule when we see stocks going down so we start selling.

The smart investor will actually do the opposite. Start selling stocks as their prices rise, and buy stocks that have fallen in price. Simple theory, hard to practice.

The flip side is the same. When everyone is predicting an awful bear market you have to think twice. Bear markets simply mean stocks go on sale.

As Jason Zweig would put it, “Considering how calamitously wrong the “experts” were the last time they agreed on something, why on earth should the intelligent investor believe them now?” Being a contrarian is one of the best ways, if not the only way, to profit in the stock market.

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Warren Buffett – Speech at University of Florida

Three most important things needed for success…

1. Integrity
2. Intelligence
3. Energy

Of the three, the most important is Integrity, because you really don’t want to do business with someone who is intelligent, energetic, but lacking integrity.

87 minute video: Warren Buffett

Warren really just spews wisdom… (Hope you don’t mind the word picture) 😉

Some good points…

1. More money doesn’t do much. Warren lives much like we live even though he is much richer.
2. Take a job that you would take even if you were independently wealthy.
3. Warren likes businesses he can understand… which narrows it down about 90%
4. If you are right about WHAT, then you don’t have to focus too much on the WHEN.

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Simon Black – International Investor

I just wanted to take the time to mention a very intriguing new website I found.

It is called Sovereign Man and it is written by a guy named Simon Black who does a daily report from the field (currently Nigeria) about economics, investing, and international business.

I love the site, and I have subscribed to it.

It is a whole let better than reading the normal international business news sites like CNN.

It is a much more intimate look into what’s happening in the local economies of a bunch of different countries and it is well worth the read if you are doing any kind of international investing at all.

Check it out, it’s well worth the visit…


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