Imagine if you could somehow find stocks to buy that would 100x your money. Sounds unlikely, but possible. Even if this is somewhat idealistic, taking a long-term approach and finding companies that will be around generations later is a good mindset and strategy to have in investing.

Chapter 1 – ask and it shall be given to you

-5 Arabs and Allah with one wish each. Progressively greedier until the last one wished to be Allah and ended with nothing

-In investing, those who ask for little get little. Those who ask much get much. Those who ask for too much get nothing.

-you’ll never go broke taking a profit is a dumb saying made by Wall Street. Fortunes are made by buying right and holding tight

-Four criteria to find 100 baggers;

1; small in market cap

2; relatively unknown. Popular growth stocks you already end up paying a significant premium for expected growth. In that sense over the counter stocks are even better, people even less touch these stocks

-3; unique innovative product that is faster, better, cheaper

-4; strong, progressive, constantly researching management

Mr. Garrett bought $133,000 worth of Xerox shares between 1955 and 1959, so four years period of the same company at $1 per share average. In 1971, it’s worth $125 per share.

-only revisit the past to learn from experience

-Remain invested in your most prosperous stocks as long as the associated companies continue to experience earnings growth.

-other people are self-interested; what they tell you is trying to benefit them, not you. Thus align with those who has interests that are the same as mine. Who is talking matters more than what is said

Chapter 2 – Sinbad’s Valley of Diamonds

-when the market is bad is the time to buy

-far more money is made in good stock selection than market timing

Chapter 3

-few investors, private or professional, seek the big game. Most look for little short-term profits

-essentially, every sale is a confession of error

-sell only if you are wrong

-selling too soon is such a costly mistake

-100x in 25 years is 20% per year. After 20 years, it’s only 40x, remaining 60x is in the last five years

-better to get in at a somewhat higher price than to not get in at all. Just because it doesn’t meet your exact price doesn’t mean you shouldn’t buy it. Do not cheap out on a few cents

-swing trading is not the way to enduring fortunes

-focus on buying 100 baggers and if you find them, buy them, at a cheap or fair price, regardless of what the market is doing

Chapter 4 – Lemmings follow the crowd

-to make the most money in the shortest time, buy a good stock that nobody likes

-good companies have good potential earning power, assets that can provide long term durable earnings

-the great opportunities in the coming decade cannot be tracked only by standard numerical analysis; to make the real money, they require vision

-Investment errors: putting a great deal into study only to invest a tiny amount

-taking profits is a huge mistake

Chapter 5 – foresight vs tenacity

-it is more important to be right than it is to be quick. Even if you buy an investment well off its low, if a good investment, you will still make a lot of money

-Fortunes are made from buying and holding on

Chapter 6 – we’d die for dear old globe and Rutgers

-If someone can make the correct initial purchase, subsequent trading or switching is unlikely to yield results comparable to those achieved by merely holding on.

-even if your timing is off or you don’t buy quite right, holding on long term is still the answer. E.g. Amazon dropped from $113 to $6, now $3000.

-hang on to shares through thick and thin

-wealth is amassed by never selling anything

Chapter 7 – the tree does not grow to the sky

-the only way to make a higher rate of return than average is to buy when the value or growth is not apparent to most people at the time of buying

-Time favors the growth stock buyer as long as the growth trajectory and expectation of growth continue. If it doesn’t, then disaster awaits. Prefer to grow faster in the future

-Even for those who buy right, as Cinderella did, fine carriages turn to pumpkins if one stays too long. If the growth story changes for the negative, then it is time to sell. If the growth story is still present, only then should you hold on. So, evaluate the whole growth story and see is the business improving or declining. So, buy right and hold on, but do not forget about your stocks.

-Rules are not a substitute to thinking, they are an aid to thinking

-1; in human relations as in nature, there seems to be a low against limitless growth. Beyond a certain point, people won’t tolerate more, whether in relationships, church, state, etc.

-To win in the stock market, one must think at least one move ahead of others

Chapter 8 – how to argue and win

-stock trades occur from diametrically opposite opinions about the same security

-1; never mind opinions. Find the reason and assumptions for them

-2; no one knows what the future holds

-3; risk is the essential element to investment capital gain

-Information is not the be all end all of investing, the analysis is

-the fact without the truth is always false. Always connect

Chapter 9 – Figuring the odds

-PV of future cashflows

-a dollar of income is the Same everywhere. So, if you pay for a higher valuation, that company has to grow at a higher clip. Otherwise, it is insane to do so

-if someone is paying high valuations, they are paying for what is hoped for in the future. If it is met that isn’t good enough. Have to over exceed to be good. Don’t buy when expensive, fair price is better.

-You can only hold on if you bought right

-in the stock market money tends to move from stupid to intelligent hands

-comparison of P/E ratios on a relative basis

Chapter 10 – the quality of earnings is strained

-the business of the stock market is to try and cash in on the future now

-P/E can be manipulated: companies can use debt and/or equity financing. A company with R&D is skewed to have a negative P/E but R&D is easily controlled

-Search the web for professional articles about the company, especially for negatives or fraudulent behaviour

-the best safeguard against sleight of hand bookkeeping is to have nothing to do with it, or with the men who practise it

Chapter 11 – manipulation despite the SEC

-human nature is one of the few constants in an ever-changing world

-the public rarely sees value until it is demonstrated to them, at a very high price

-people buy stocks that have advanced and sell stocks that have declined

Chapter 12 – keep your eyes open on those random walks

-technical analysis aids, fundamentals

Chapter 13 – experience sometimes a poor teacher

-many people shoot where the rabbit used to be

-bought southern railways at $8 a share at 50% margin, then it dropped to $2.50 and young Thomas Phelps was wiped out. After that, he let his memory be stronger yang his reasoning and risked too little always and sold too soon

-Swing trading makes pennies, buying and holding makes fortunes

-also used some leverage to pick huge winners

Chapter 14 – why computers won’t run the world

-constitutions are written by man and thus can be changed. Implicit social contracts run the world. What something is worth is what one is willing to pay for it

-A game cannot exist if winners get all the marbles, or if winners get none of the marbles

Chapter 15 – profits in ethics

-psychological, statistical, ethical. Those most ethical will do the best

-stay away from unethical men, companies, ventures that are based on defrauding rather than helping customers

-people who are fraudulent people usually want “something for nothing”

-the fish rots at the head; people like and hire themselves, so if someone is fraudulent, and fired, the people below likely also are. Therefore, you want to permanently stay away from bad people and bad companies

-even companies suspected of fraud by reputable sources should be avoided, as you are just getting the tip of the iceberg

-the best practise against fraudulent people is to run at the first hint of sharp practise. There are hundreds of thousands of stocks out there, no need to take that unnecessary risk

-the ones with the most knowledge, talent and skills wins

-the one who tries to save his life shall lose it; the one who tried to lose his life will save it

-bet on companies who are trying to better humanity, not just to make money

Chapter 16 – the almighty ego vs the almighty dollar

-Egonomics; doing things to benefit ego, regardless of consequences. Everything done is selfish.

-avoid; companies spending more on renovations than sales and profit margins, companies with increasing spending, particularly in capital expenditure, yet low returns on capital

-Monuments rarely pay dividends

-A young business dies 9 out of 10 times in the first six years. So, buy a business past the first 6 years as that greatly reduces the speculative risk

-avoid complacency, arrogance, close-mindedness as you grow older, especially if you have accomplished something. Pride is the last human emotion to die

-business cannot grow old; you are either growing, or dying

-Ego leads to one unwilling to accept other ideas other than their own. Another is to reiterate the errors of others

-Avoid big egos

Chapter 17- no inflation-control pill

-value of money comes from one or more of these factors:

1; inherent value

2; taxes

3; fiat

-money has value from the demand and supply of it. More supply leads to higher demand and thus higher prices

-inflation is the cruelest tax, as it is a hidden tax

-the value of fiat currency has never increased over the long term in history

-simply put, inflation makes stocks rise

-inflation is most bullish for stocks at the beginning, from the initial extra money. However, after a while, the effects erode and is a hamper on companies that lack pricing power, and would have to be reduced

-interest is the price of time. If we want something now, we have to pay for it later

-it is just a bad a mistake to not borrow profitably as it is to borrow unprofitably

-do not sell shares to finance daily living costs unless FIRE is achieved

-debt can lead you to ruins or riches

-rules, formulas, programs are not a substitute for thought

-those who practise instant gratification, due to interest, actually gratify less over a long period of time, as compared to delayed gratification

-interest rates mirror inflation

Chapter 18 – picking the right one

Chapter 19 – where to find the big winners

-better, faster, cheaper, innovative

-most of us want the same material things in life. To get more than average, we must do more or do better than average. If we can’t do either, then we will be average

Chapter 20 – getting away from it all

-going foreign if worse is a waste of time

Chapter 21 – it’s not too late

-Buy when there is blood in the street, even if it is your own blood

Chapter 22 – cheer for the young generation

-if a company must consistently spend large amounts of money to stay competitive, it is in trouble

-if a company starts with low return on capital and low valuations, it has the opportunity for twin engine of growth; improved earnings and valuation metrics

-100 baggers initially are not trading at high price earnings or price sales ratios. In fact, they are typically low

Chapter 23 – how to avoid missing the boat next time

-we are brainwashed to look for useless information that doesn’t aid in 100 baggers. We’ve been tricked to take small profits

-due to taxes, unprofitable to swing trade vs just buy and hold

-don’t buy a stock hoping for reform

-buying long term avoids pitfalls of underestimating other people, the greater fool theory

-time is on your side when: revenues are growing, profits are growing, high ROIC

-the arithmetic is inescapable. To turn $10,000 into one million through swing trading capital gains, one must double money on 8 successive trades without ever getting it wrong. Capital gain is far too punishing tax wise. If you pick a riser, rather than trying to time highs and lows and pay tax (which reduce your capital available to invest), just buy and hold

-there is a difference between courage of conviction and plain stubbornness

-in investing, being right too soon is just as painful as being wrong

-in a free society, life is a series of trades

-people do not think enough

-people with big egos would rather lose money with their own ideas than make money on others’ ideas

-look for earnings power: high ROIC, high margins, sales growth as opposed to only earnings

-In the stock market, run fast then stand still to run fast

Disclaimer

This is not Financial Advice. This article is meant only for educational and perhaps entertainment purposes.