Great Throughts Treasury

"Never forget: the secret of creating riches for oneself is to create them for others."

"Wherever we are and whatever we are doing, it is possible to learn something that can enrich our lives and the lives of others... No one's education is ever complete."

"Financial Chaos – probably in many nations in the next five years. The word chaos is chosen to express likelihood of reduced profit margin at the same time as acceleration in cost of living. Increasingly often, people ask my opinion on what is likely to happen financially. I am now thinking that the dangers are more numerous and larger than ever before in my lifetime. Quite likely, in the early months of 2005, the peak of prosperity is behind us. In the past century, protection could be obtained by keeping your net worth in cash or government bonds. Now, the surplus capacities are so great that most currencies and bonds are likely to continue losing their purchasing power. Mortgages and other forms of debts are over tenfold greater now than ever before 1970, which can cause manifold increases in bankruptcy auctions. Surplus capacity, which leads to intense competition, has already shown devastating effects on companies who operate airlines and is now beginning to show in companies in ocean shipping and other activities. Also, the present surpluses of cash and liquid assets have pushed yields on bonds and mortgages almost to zero when adjusted for higher cost of living. Clearly, major corrections are likely in the next few years. Most of the methods of universities and other schools which require residence have become hopelessly obsolete. Probably over half of the universities in the world will disappear quickly over the next thirty years. Obsolescence is likely to have a devastating effect in a wide variety of human activities, especially in those where advancement is hindered by labor unions or other bureaucracies or by government regulations. Increasing freedom of competition is likely to cause most established institutions to disappear with the next fifty years, especially in nations where there are limits on free competition. Accelerating competition is likely to cause profit margins to continue to decrease and even become negative in various industries. Over tenfold more persons hopelessly indebted leads to multiplying bankruptcies not only for them but for many businesses that extend credit without collateral. Voters are likely to enact rescue subsidies, which transfer the debts to governments, such as Fannie May and Freddie Mac. Research and discoveries and efficiency are likely to continue to accelerate. Probably, as quickly as fifty years, as much as ninety percent of education will be done by electronics. Now, with almost one hundred independent nations on earth and rapid advancements in communication, the top one percent of people are likely to progress more rapidly than the others. Such top one percent may consist of those who are multi-millionaires and also, those who are innovators and also, those with top intellectual abilities. Comparisons show that prosperity flows toward those nations having most freedom of competition. Especially, electronic computers are likely to become helpful in all human activities including even persons who have not yet learned to read. Hopefully, many of you can help us to find published journals and websites and electronic search engines to help us benefit from accelerating research and discoveries. Not yet have I found any better method to prosper during the future financial chaos, which is likely to last many years, than to keep your net worth in shares of those corporations that have proven to have the widest profit margins and the most rapidly increasing profits. Earning power is likely to continue to be valuable, especially if diversified among many nations."

"16 Rules for Investment Success - Invest — don’t trade or speculate. “The stock market is not a casino, but if you move in and out of stocks every time they move a point or two…the market will be your casino.” Remain flexible and open-minded about types of investment. “There are times to buy blue chip stocks, cyclical stocks, corporate bonds, U.S. Treasury instruments, and so on. And there are times to sit on cash…The fact is there is no one kind of investment that is always best.” Buy low. “It is extremely difficult to go against the crowd — to buy when everyone else is selling or has sold, to buy when things look darkest…[but] chances are if you buy what everyone is buying you will do so only after it is already overpriced.” When buying stocks, search for bargains among quality stocks. “Determining quality in a stock is like reviewing a restaurant. You don’t expect it to be 100% perfect, but before it gets three or four stars you want it to be superior.” Diversify. “In stocks and bonds, as in much else, there is safety in numbers.” Do your homework or hire wise experts to help you. “People will tell you: Investigate before you invest. Listen to them. Study companies to learn what makes them successful.” Don’t panic. “The time to sell is before the crash, not after.” Learn from your mistakes. “The only way to avoid mistakes is not to invest — which is the biggest mistake of all…The big difference between those who are successful and those who are not is that successful people learn from their mistakes and the mistakes of others.” An investor who has all the answers doesn’t even understand all the questions. “A cocksure approach to investing will lead, probably sooner than later, to disappointment if not outright disaster. Even if we can identify an unchanging handful of investing principles, we cannot apply these rules to an unchanging universe of investments—or an unchanging economic and political environment. Everything is in a constant state of change, and the wise investor recognizes that success is a process of continually seeking answers to new questions.” Do not be fearful or negative too often. “Even in the dark ’70s, many professional money managers — and many individual investors too — made money in stocks, especially those of smaller companies. There will, of course, be corrections, perhaps even crashes. But, over time, our studies indicate stocks do go up…and up…and up.”"

"22 Investment Maxims [paraphrased] - 1. For all long-term investors, theres is only one objective— “maximum total return after taxes.” 2. Achieving a good record takes much study and work, and is a lot harder than most people think. Many people doubt that this is even possible on a consistent basis. I’m on the fence on this one. I see proof that it can be done but realize that most people won’t be able to do it. 3. It is impossible to produce a superior performance unless you do something different from the majority. 4. The time of maximum pessimism is th ebest time to buy, and the time of maximum optimism is the best time to sell. Sounds like something Warren Buffett would say. 5. To put “Maxim 4″ in somewhat different terms, in the stock market the only way to get a bargain is to buy what most investors are selling. 6. To buy when others are despondently selling and to sell wehn others are greedily buying requires the greatest fortitude, even while offering the greatest reward. This is so true. 7. Bear markets have always been temporary. Share prices turn upward from one to twelve months before the bottom of the business cycle. Bull markets are temporary too. 8. If a particular industry or type of security becomes popular with investors, that popularity will always prove temporary and, when lost, won’t return for many years. Interesting. The NASDAQ Composite Index comes to mind. 9. In the long run, the stock market indexes fluctuate around the long-term upward trend of earnings per share. 10. In free-enterprise nations, the earnings on stock market indexes fluctuate around the replacement book value of the share of the index. 11. If you buy the same securities as other people, you will have the same results as other people. 12. The time to buy a stock is when the short-term owners have finished their selling, and the time to sell a stock is often when short-term owners have finished their buying. Not quite sure how you’re supposed to know when this is. 13. Share prices fluctuate much more widely than values. Therefore, index funds will never produce the best total return performance. I always thought that this was true because the goal of the index is to capture the market’s return, minus fees. 14. Too many investors focus on “outlook” and “trends.” Therefore, more profit is made by focusing on value. 15. If you search worldwide, you will find more bargains and better bargains than by studying only one nation. Also, you gain the safety of diversification. Unless of course the nation you are studying is heavily dependent on exports to another country that is in trouble. 16. The fluctuation of share prices is roughly proportional to the square-root of the price. 17. The time to sell an asset is when you have found a much better bargain to replace it. 18. When any method for selecting stocks becomes popular, then switch to unpopular methods. As has been suggested in “Maxim 3,” too many investors can spoil any share-selection method or any market-timing formula. 19. Never adopt permanently any type of asset or any selection method. Try to stay flexible, open-minded and sekptical. Long-term top results are achieved only by changing from popular to unpopular the types of securities you favor and your methods of selection. 20. The skill factor in slection is largest for the common-stock part of your investments. 21. The best performance is produced by a person, not a committee. Interesting that he would say this. 22. If you begin with prayer, you can think more clearly and make fewer stupid mistakes."

"A doctor today would never prescribe the treatments my grandfather used in the Confederate Army, but a minister says pretty much the same thing today that a minister would have said back then."

"A flower is a miracle, but it does not have the sight or speech to describe us. And our own ability is no greater than that flower when we try to describe God. His infinity covers not only one planet, but the entire solar system and 100 billion suns. That doesn't mean he is limited in his ability to be part of you."

"An attitude of gratitude creates blessings... Help yourself by helping others. You have the most powerful weapons on earth... love and prayer."

"An investor who has all the answers doesn’t even understand the questions."

"Anybody who had come up with a new concept would have been under suspicion for being out of step with the tradition or out of step with the teachings of the church."

"Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell."

"Diversification should be the cornerstone of your investment program. If you have your wealth in one company, unexpected troubles may cause a serious loss; but if you own the stocks of 12 companies in different industries, the one which turns out badly will probably be offset by some other which turns out better than expected."

"Before this century is over, the Dow Jones Industrial Average will probably be over one million versus around 10,000 now. So for the long-term, the outlook is tremendously bullish if you buy stocks blindly to keep for a century."

"Diversify your investments"

"Experience teaches us that one of the most common errors in selecting stocks for purchase, or for sale, is the tendency to emphasize only the most obvious factor; namely the temporary outlook for sales and profits of the company."

"Half of all scientific discoveries ever made were made in the 20th century. Creation is accelerating, and even the acceleration appears to be accelerating."

"Diversify. In stocks and bonds, as in much else, there is safety in numbers."

"Happiness comes from spiritual wealth, not material wealth... Happiness comes from giving, not getting. If we try hard to bring happiness to others, we cannot stop it from coming to us also. To get joy, we must give it, and to keep joy, we must scatter it."

"Faith does not imply a closed, but an open mind. Quite the opposite of blindness, faith appreciates the vast spiritual realities that materialist overlook by getting trapped in the purely physical."

"For those properly prepared in advance, a bear market in stocks is not a calamity but an opportunity."

"Focus on value because most investors focus on outlooks and trends."

"High ethics and religious principles form the basis for success and happiness in every area of life"

"Happiness pursued eludes, happiness given returns."

"How about no income tax at all on people over 65? People would continue working, remain healthier, not be an economic and social drain on society. Then the elderly would also have more disposable income to help charitable activities."

"Humility about how little I know has encouraged me to listen more carefully and more wisely."

"I have no quarrel with what I learned in the Presbyterian church — I am still an enthusiastic Christian. But why shouldn't I try to learn more? Why shouldn't I go to Hindu services? Why shouldn't I go to Muslim services? If you are not egotistical, you will welcome the opportunity to learn more."

"I believe all religions are becoming obsolete, clinging to ancient concepts."

"I focus on spiritual wealth now, and I'm busier, more enthusiastic, and more joyful than I have ever been."

"I served for 42 years on the board of trustees of the largest Presbyterian seminary, Princeton Theological Seminary, and we had brilliant people — teachers and students both—but they did not come up with many new concepts. They weren't invited to come up with new concepts. Anybody who had come up with a new concept would have been under suspicion for being out of step with the tradition or out of step with the teachings of the church."

"I never ask if the market is going to go up or down, because I don’t know, and besides it doesn’t matter. I search nation after nation for stocks, asking: Where is the one that is lowest priced in relation to what I believe it’s worth?"

"I thought, I'm only going to be on this planet once, and only for a short time. What can I do with my life that will lead to permanent benefits?"

"If governments encourage people to become more spiritual there will be a reduction in healthcare costs."

"If you are diversified among different forms of wealth, nations, and industries, you’ll be safe in the long-run."

"I wouldn't call it radical I would call it enthusiasm for progress."

"If we become increasingly humble about how little we know, we may be more eager to search."

"If you are not egotistical, you will welcome the opportunity to learn more."

"It's self-centered to think that human beings, as limited as we are, can describe divinity."

"Just over a century ago, an unknown embittered atheist in London wrote a book called Das Kapital. The ideas in that book caused about half the population of the world to become enslaved under soul-crushing dictators."

"If you buy all the stocks selling at or below two times earnings, you will lose money on half of them because instead of making profits they will actually lose money, but you will only lose a dollar or so a share at most. Then others will be mediocre performers. But the remaining big winners will go up and produce fabulous results and also ensure a good overall result."

"Invest at the point of maximum pessimism."

"In my 45-year career as an investment counselor, humility did show me the need for worldwide diversification to reduce risk. That career did help me to become more and more humble because statistics showed that when I advised a client to buy one stock to replace another, about one-third of the time the client would have done better to ignore my advice. In other endeavors, humility about how little I know has encouraged me to listen more carefully and more wisely."

"If you begin with prayer, you will think more clearly and make fewer mistakes."

"If you want to have a better performance than the crowd, you must do things differently from the crowd."

"It seems to be common sense that if you are going to search for these unusually good bargains you wouldn’t just search in Canada. If you search just in Canada you will find some, or if you search just in the United States you will find some. But why not search everywhere? That’s what we’ve been doing for forty years. We search anywhere in the world."

"I'm really convinced that our descendants a century or two from now will look back at us with the same pity that we have toward the people in the field of science two centuries ago."

"It is nice to be important, but it's more important to be nice."

"Let's worship Divinity, but understand the divinity we worship is beyond our comprehension."

"Nations that have lost free enterprise have, without exception, eventually lost also freedom of religion and freedom of speech. Property rights are essential for human rights. Under socialisn, each man is a cog in a machine; but under peoples' capitalism, he is a free agent. A man's soul can develop best if it is free; and share ownership helps to make a man free."

"Making people get over the concept that they've got the total proof. To get them to feel, 'Gee, I want to learn more. I want to hear anybody who can tell me something in addition to ways I already know about God or my spiritual principles."

"Only one thing is more important than learning from experience, and that is not learning from experience."