Few words about investment

Two Laws on Bullish and Bearish Economists

Remember the First Law of Economics: For every economist, there is an equal and opposite economist--so for every bullish economist, there is a bearish one. The Second Law of Economics: They are both likely to be wrong.

The 3 Most Timeless Investment Principles (1 of 3)

Always Invest with a Margin of Safety: Margin of safety is the principle of buying a security at a significant discount to its intrinsic value, which is thought to not only provide high-return opportunities, but also to minimize the downside risk of an investment. In simple terms, Graham's goal was to buy assets worth $1 for $0.50. He did this very, very well. To Graham, these business assets may have been valuable because of their stable earning power or simply because of their liquid cash value. It wasn't uncommon, for example, for Graham to invest in stocks where the liquid assets on the balance sheet (net of all debt) were worth more than the total market cap of the company (also known as "net nets" to Graham followers). This means that Graham was effectively buying businesses for nothing. While he had a number of other strategies, this was the typical investment strategy for Graham. This concept is very important for investors to note, as value investing can provide substantial profits once the market inevitably re-evaluates the stock and ups its price to fair value. It also provides protection on the downside if things don't work out as planned and the business falters. The safety net of buying an underlying business for much less than it is worth was the central theme of Graham's success. When chosen carefully, Graham found that a further decline in these undervalued stocks occurred infrequently. While many of Graham's students succeeded using their own strategies, they all shared the main idea of the "margin of safety."

Investing Principles Utilized by Peter Lynch

 Peter's Investing Principles:

1. When the operas outnumber the football games three to zero, you know there is something wrong with your life.

2. Gentlemen who prefer bonds don't know what they are missing.

3. Never invest in any idea you can't illustrate with a crayon.

4. You can't see the future through a rear view mirror.

5.There's no point paying Yo-Yo Ma to play a radio.

6. As long as you're picking a fund, you might as well pick a good one.

7. The extravagance of any corporate office is directly proportional to management's reluctance to reward the shareholders.

8. When yields on long-term government bonds exceed the dividend yield of the S&P 500 by 6 percent or more, sell your stocks and buy bonds.

9.Not all common stocks are equally common.

10.Never look back when you're driving on the autobahn.

11. Never bet on a comeback while they're playing "Taps".

12. The best stock to buy may be the one you already own.

13. A sure cure for taking a stock for granted is a big drop in the price.

14. If you like the store, chances are you'll love the stock.

15. When insiders are buying, it's a good sign -- unless they happen to be New England bankers.

16. In business, competition is never as healthy as total domination.

17. All else being equal, invest in the company with the fewest color photographs in the annual report.

18. When even the analysts are bored, it's time to start buying.

19. Unless you're a short seller or a poet looking for a wealthy spouse, it never pays to be pessimistic.

20. Corporations, like people, change their names for one of two reasons: either they've gotten married, or they've been involved in some fiasco that they hope the public will forget.

21. Whatever the queen is selling, buy it. (when the government privatizes a company, buy it).