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speedybure (< 20)

SPEEDY'S 10 INVEST COMMANDMENTS: # 1 , 2, & 3

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August 26, 2009 – Comments (4)

My Investing Commandments ( This is supposed to be a but funny so don't interpret it as gospel) 

  1) Though Shall Understand Real Macro-Economic Theory (Capital Theory) Followed By A Top Down Approach. I don't mean by industry as you should understand capital theory (which has served me very generously, granted I jumped off the investing boat when the Dow crossed 12k the first time and sold out of oil before $100- so I was kicking myself until Nov). Capital theory is essential to understand the inevitable consequences of government intervention in the market (i.e artificially low interest rates, massive deficit spending, spotting a bubble, etc). This serves several functions such as avoiding equities which derive their income from a currency that is being inflated and directing that capital toward an industry which will will increase faster than inflation i.e precious metals, oil and several other resources. If the world economy is "sound enough" then picking your industry(ies) will determine your investment fate. 

2) Though Shall Follow The Laws Of Supply & Demand.  it requires due diligence to find disconnects between the two. Here is one example: I got data from multiple sources on the worldwide  production and consumption figures for wheat/grains for the last decade. All of them had one thing in common: every 1-2 years the gap between the two narrowed. This is obviously very telling and I imagine this has to due with the emerging countries having an increased standard of living (less poverty in overpopulated China) as well as demanding higher quality food. I see this trend continuing as the rest of the Bric countries and future emering countries follow suit. This not only demonstrated a mis-pricing (which is seen again today after wheat got killed in 08) but provided a product whose price would outpace inflation. This is not held only to resource companies but industrials, consumer durables and others.  

3) Though Shall Give 110%. This means familiarizing yourself with the industry and the inner mechanics which influence the supply and demand. This is obviously very tedious and boring - but i'll tell you, you'll make far more money than taking financial pundits advice like Jim Cramer who is utterly pathetic. If your going to listen to commentary, listen to the best in class with a long track record of being accurate- referring to the likes of Jim Rogers, Marc Faber and those with the same mindset. Note: (They both subscribe to capital theory).  Following the aforementioned commandements are the most difficult of the ten but are the most crucial for success.  

 # 4-8 ---- Qualatative and Quanatative Requisites --Next Post

4 Comments – Post Your Own

#1) On August 26, 2009 at 11:15 PM, GeneralDemon (< 20) wrote:

Actually, I would gently remind you that Jim Cramer can be a very good foil - If you have developed a certain concept, sector pick or stock idea, and then you see that Cramer has pumped it - you can quickly discard that line of thought and try not to be so stupid in the future.

Disclaimer - I find Cramer an entertaining fellow who will cost you money.

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#2) On August 26, 2009 at 11:22 PM, speedybure (< 20) wrote:

hahah- agree

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#3) On August 27, 2009 at 7:04 AM, SnapDave (60.41) wrote:

Thanks for your blogs Speedy.  You are on my short list of reading.  

Since you indicated this will be continued, it should be 'thou' not 'though' as in 'thou shall'. 

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#4) On December 21, 2009 at 6:14 AM, LiveOakGrey (< 20) wrote:

Hey Speedy,

You were one of the first bloggers writing anything about evaluations for companies, especially PMs, that caught my attention as being worthy of studying.  I've been waiting for more of your commentaries and follow ups to this 10 Invest Commandments for four months now.  You gotta keep posting blogs!

People jumped all over you for a few comments that I agreed with, anyways, and you've disappeared.  It's a real loss to this community if you don't keep contributing.  Please finish these 10 commandments, and then come down off the mount, and give us another 10 more!

-Grey 

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