Bull Market Quotes

Life is like the stock market. Some days you're up. Some days you're down. And some days you feel like something the bull left behind.

There is only one side of the market and it is not the bull side or the bear side, but the right side.

A bull market is like sex. It feels best just before it ends

the three stages of a bull market”: the first stage, when only a few unusually perceptive people believe things will get better, the second stage, when most investors realize that improvement is actually taking place, and the third stage, when everyone concludes things will get better forever.

The intelligent investor realizes that stocks become more risky, not less, as their prices rise—and less risky, not more, as their prices fall. The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs), you should welcome a bear market, since it puts stocks back on sale. 8

An elementary requirement for the intelligent investor is an ability to resist the blandishments of salesmen offering new common-stock issues during bull markets.

It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon.

They say you never grow poor taking profits. No, you don't. But neither do you grow rich taking a four-point profit in a bull market.

What makes anyone think that government officials are even trying to protect us? A government is not analogous to a hired security guard. Governments do not come into existence as social service organizations or as private firms seeking to please consumers in a competitive market. Instead, they are born in conquest and nourished by plunder. They are, in short, well-armed gangs intent on organized crime. Yes, rulers have sometimes come to recognize the prudence of protecting the herd they are milking and even of improving its ‘infrastructure’ until the day they decide to slaughter the young bulls, but the idea that government officials seek to promote my interests or yours is little more than propaganda—unless, of course, you happen to belong to the class of privileged tax eaters who give significant support to the government and therefore receive in return a share of the loot.

Invest like a bull, sit like a bear and watch like an eagle. (mantra for long term investing)

In particular, the virtues and ambitions called forth by war are unlikely to find expression in liberal democracies. There will be plenty of metaphorical wars—corporate lawyers specializing in hostile takeovers who will think of themselves as sharks or gunslingers, and bond traders who imagine, as in Tom Wolfe’s novel The Bonfire of the Vanities, that they are “masters of the universe.” (They will believe this, however, only in bull markets.) But as they sink into the soft leather of their BMWs, they will know somewhere in the back of their minds that there have been real gunslingers and masters in the world, who would feel contempt for the petty virtues required to become rich or famous in modern America. How long megalothymia will be satisfied with metaphorical wars and symbolic victories is an open question. One suspects that some people will not be satisfied until they prove themselves by that very act that constituted their humanness at the beginning of history: they will want to risk their lives in a violent battle, and thereby prove beyond any shadow of a doubt to themselves and to their fellows that they are free. They will deliberately seek discomfort and sacrifice, because the pain will be the only way they have of proving definitively that they can think well of themselves, that they remain human beings.

A bull market is very much like being in love. You don’t realise its value till it’s gone.

Don’t always trust what you see. In a bull market even a duck looks like a swan.

Another way to determine the direction of the general market is to focus on how the leading stocks are performing. If the stocks that have been leading the bull market start breaking down, that is a major sign the market has topped. Another important factor to watch is the Federal Reserve discount rate. Usually, after the Fed raises the rate two or three times, the market runs into trouble.

Short a bear market, go long in a bull market, either play, you do it on a hunch, harbor a whole lot of hope, then sit back and try not to bite your nails. Because no one knows anything for sure. Foresight is a hunch. Everyone is making it up as best they can, and life’s winners are those who smile at the truth of it and can cut a wake through a Sargasso of ego, guesswork, bullshit and chance.

Bull markets are born on pessimism, grow 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.

It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind

After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.

The worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few people as possible escape the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruinous fall. Even the man who waited for volume of trading to return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next 24 months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.

The trader's ideal entry point is after a stock consolidates in a new trading range and pulls back close to the moving average, then breaks out again above resistance.

Same in investing. Cash is an inefficient drag during bull markets and as valuable as oxygen during bear markets

Of 1,028 stock recommendations made by the typical brokerage firm during the first quarter of 2001 (the peak if the bull market), only 7 were "sell" recommendations.

In bull markets, resistance is often broken, and in bear markets support rarely holds.

Well, this is a bull market, you know

The fact that your brain becomes more risk seeking in bull markets and more conservative in bear markets means that you are neurologically predisposed to violate the first rule of investing, “buy low and sell high.” Our flawed brain leads us to subjectively experience low levels of risk when risk is actually quite high, a concept that Howard Marks refers to as the “perversity of risk.

ah yes I know them well who was the first person in the universe before there was anybody that made it all who ah that they dont know neither do I so there you are they might as well try to stop the sun from rising tomorrow the sun shines for you he said the day we were lying among the rhododendrons on Howth head in the grey tweed suit and his straw hat the day I got him to propose to me yes first I gave him the bit of seedcake out of my mouth and it was leapyear like now yes 16 years ago my God after that long kiss I near lost my breath yes he said I was a flower of the mountain yes so we are flowers all a womans body yes that was one true thing he said in his life and the sun shines for you today yes that was why I liked him because I saw he understood or felt what a woman is and I knew I could always get round him and I gave him all the pleasure I could leading him on till he asked me to say yes and I wouldnt answer first only looked out over the sea and the sky I was thinking of so many things he didnt know of Mulvey and Mr Stanhope and Hester and father and old captain Groves and the sailors playing all birds fly and I say stoop and washing up dishes they called it on the pier and the sentry in front of the governors house with the thing round his white helmet poor devil half roasted and the Spanish girls laughing in their shawls and their tall combs and the auctions in the morning the Greeks and the jews and the Arabs and the devil knows who else from all the ends of Europe and Duke street and the fowl market all clucking outside Larby Sharons and the poor donkeys slipping half asleep and the vague fellows in the cloaks asleep in the shade on the steps and the big wheels of the carts of the bulls and the old castle thousands of years old yes and those handsome Moors all in white and turbans like kings asking you to sit down in their little bit of a shop and Ronda with the old windows of the posadas glancing eyes a lattice hid for her lover to kiss the iron and the wineshops half open at night and the castanets and the night we missed the boat at Algeciras the watchman going about serene with his lamp and O that awful deepdown torrent O and the sea the sea crimson sometimes like fire and the glorious sunsets and the figtrees in the Alameda gardens yes and all the queer little streets and the pink and blue and yellow houses and the rosegardens and the jessamine and geraniums and cactuses and Gibraltar as a girl where I was a Flower of the mountain yes when I put the rose in my hair like the Andalusian girls used or shall I wear a red yes and how he kissed me under the Moorish wall and I thought well as well him as another and then I asked him with my eyes to ask again yes and then he asked me would I yes to say yes my mountain flower and first I put my arms around him yes and drew him down to me so he could feel my breasts all perfume yes and his heart was going like mad and yes I said yes I will Yes.

David had been photographing endangered species in the Hawaiian rainforest and elsewhere for years, and his collections of photographs and Suzie's tarot cards seemed somehow related. Because species disappear when their habitat does, he photographed them against the nowhere of a black backdrop (which sometimes meant propping up a black velvet cloth in the most unlikely places and discouraging climates), and so each creature, each plant, stood as though for a formal portrait alone against the darkness. The photographs looked like cards too, card from the deck of the world in which each creature describes a history, a way of being in the world, a set of possibilities, a deck from which cards are being thrown away, one after another. Plants and animals are a language, even in our reduced, domesticated English, where children grow like weeds or come out smelling like roses, the market is made up of bulls and bears, politics of hawks and doves. Like cards, flora and fauna could be read again and again, not only alone but in combination, in the endlessly shifting combinations of a nature that tells its own stories and colors ours, a nature we are losing without even knowing the extent of that loss.

The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs), you should welcome a bear market, since it puts stocks back on sale.

In the 1960's, some old-timers on Wall Street-the men who remembered the trauma of the 1929 Crash and the Great Depression-gave me a warning: "When we fade from this business, something will be lost. That is the memory of 1929." Because of that personal recollection, they said, they acted with more caution, than they otherwise might. Collectively, their generation provided an in-built brake on the wildest form of speculation, an insurance policy against financial excess and consequent catastrophe. Their memories provided a practical form of long-term dependence in the financial markets. Is it any wonder that in 1987 when most of those men were gone and their wisdom forgotten, the market encountered its first crash in nearly sixty years? Or that, two decades later, we would see the biggest bull market, and the worst bear market, in generations? Yet standard financial theory holds that, in modeling markets, all that matters is today's news and the expectations of tomorrow's news.

To build wealth it didn’t matter when you bought U.S. stocks, just that you bought them and kept buying them. It didn’t matter if valuations were high or low. It didn’t matter if you were in a bull market or a bear market. All that mattered was that you kept buying.

My father will sit down and give you theories to explain why he does this or that," the son of the billionaire investor George Soros has said. "But I remember seeing it as a kid, and thinking, At least half of this is bull. I mean, you know the reason he changes his position on the market or whatever is because his back starts killing him. He literally goes into a spasm, and it's this early warning sign.

When every tree can suddenly speak as a nymph, when a god in the shape of a bull can drag away maidens, when even the goddess Athena herself is suddenly seen in the company of Peisastratus driving through the market place of Athens with a beautiful team of horses - and this is what the honest Athenian believed - then, as in a dream, anything is possible at each moment, and all of nature swarms around man as it were nothing but a masquerade of the gods, who were merely amusing themselves by deceiving men in all these shapes.

If your bull case to buy a stock is “a sharp price drop” or "price is going to the moon”, you don’t have a bull case.

A bull doesn’t go wrong in predicting an upswing in a falling market. He goes wrong when he predicts a down swing in a rising market.

Two of the things to look out for are that operational cash flows should match or be close to profit levels, and current assets should exceed current liabilities.

Never let the fear of striking out get in your way. Babe Ruth

But the questions not asked screamed out the loudest. Nobody brought up inflated tech valuations or risk management. Nobody seemed concerned about the tenuous economics of ridesharing. SoftBank’s $4.4 billion WeWork deal was the largest slug of capital ever committed to a start-up, but nobody asked what WeWork had to do with technology. Because nobody asks tough questions in a bull market.

In the aggregate, real wealth was made, not by the crooks, but by long-term investors, who overlooked the cacophony of the stock market and instead focused on the fundamentals of businesses, and that of India.

Perhaps it is only when we realize and celebrate the intrinsic value of every human life that celebrity - true celebrity - shines most brightly. On our deathbeds, none of us will speak of the jobs we’ve held or the stuff we’ve acquired in our lifetimes; here bull markets and Nielsen ratings are irrelevant. A life-threatening illness jettisons pretension in no time flat. Death is the great equalizer. Death dares us to define what really matters.

if you were staffing an investment bank, management professor Kuhnen told me, you’d want to hire not only reward-sensitive types, who are likely to profit from bull markets, but also those who remain emotionally more neutral. You’d want to make sure that important corporate decisions reflect the input of both kinds of people, not just one type. And you’d want to know that individuals on all points of the reward-sensitivity spectrum understand their own emotional preferences and can temper them to match market conditions.

Seattle. I’ve never seen a city so overrun with runaways, drug addicts, and bums. Pike Place Market: they’re everywhere. Pioneer Square: teeming with them. The flagship Nordstrom: have to step over them on your way in. The first Starbucks: one of them hogging the milk counter because he’s sprinkling free cinnamon on his head. Oh, and they all have pit bulls, many of them wearing handwritten signs with witticisms such as I BET YOU A DOLLAR YOU’LL READ THIS SIGN. Why does every beggar have a pit bull? Really, you don’t know? It’s because they’re badasses, and don’t you forget it. I was downtown early one morning and I noticed the streets were full of people pulling wheelie suitcases. And I thought, Wow, here’s a city full of go-getters. Then I realized, no, these are all homeless bums who have spent the night in doorways and are packing up before they get kicked out. Seattle is the only city where you step in shit and you pray, Please God, let this be dog shit. Anytime you express consternation as to how the U.S. city with more millionaires per capita than any other would allow itself to be overtaken by bums, the same reply always comes back. “Seattle is a compassionate city.” A guy named the Tuba Man, a beloved institution who’d play his tuba at Mariners games, was brutally murdered by a street gang near the Gates Foundation. The response? Not to crack down on gangs or anything. That wouldn’t be compassionate. Instead, the people in the neighborhood redoubled their efforts to “get to the root of gang violence.” They arranged a “Race for the Root,” to raise money for this dunderheaded effort. Of course, the “Race for the Root” was a triathlon, because God forbid you should ask one of these athletic do-gooders to partake in only one sport per Sunday.

the split-strike conversion strategy. Option traders often referred to it as a “collar” or “bull spread.” Basically, it involved buying a basket of stocks, in Madoff’s case 30 to 35 blue-chip stocks that correlated very closely to the Standard & Poor’s (S&P) 100-stock index, and then protecting the stocks with put options. By bracketing an investment with puts and calls, you limit your potential profit if the market rises sharply; but in return you’ve protected yourself against devastating losses should the market drop. The calls created a ceiling on his gains when the market went up; the puts provided a floor to cut his losses when the market went down.

But the average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think. It is too much bother to have to count the money that he picks up from the ground.

These new taxes and the nationalization of finance meant the U.S. government would soon be dealing with a healthy budget surplus. Universal health care, free public education through college, a living wage, guaranteed full employment, a year of mandatory national service, all these were not only made law but funded. They were only the most prominent of many good ideas to be proposed, and please feel free to add your own favorites, as certainly everyone else did in this moment of we-the-peopleism. And as all this political enthusiasm and success caused a sharp rise in consumer confidence indexes, now a major influence on all market behavior, ironically enough, bull markets appeared all over the planet. This was intensely reassuring to a certain crowd, and given everything else that was happening, it was a group definitely in need of reassurance. That making people secure and prosperous would be a good thing for the economy was a really pleasant surprise to them. Who knew?

If you live in New York City, for example, chances are you will not be going outside for a leisurely stroll down Fifth Avenue in shorts and a T-shirt and flip-flops in the month of February. Why is that? Because, if you’ve lived there for a while and experienced the local seasons, you’ve already identified that in February it will be pretty darn cold. To appropriately adapt, you will want to wear a heavy winter coat and maybe gloves and a scarf and earmuffs. It’s the same with the markets. You need to have “lived there for a while” and experienced a variety of market cycles so you know what “to wear,” or rather how to adapt, so that you are financially comfortable. Instead of knowing to wear a winter coat in February, you will know that in a choppy, sideways, bracketed market you need to adapt your system and rules so that you do not get whipsawed and stopped out a lot. Or you may need to recognize a bull market changing to a bear market so that you can exit your position in a timely fashion to lock in profits.

Nearly all the bull markets had a number of well-defined characteristics in common, such as (1) a historically high price level, (2) high price/earnings ratios, (3) low dividend yields as against bond yields, (4) much speculation on margin, and (5) many offerings of new common-stock issues of poor quality. Thus to the student of stock-market history it appeared that the intelligent investor should have been able to identify the recurrent bear and bull markets, to buy in the former and sell in the latter, and to do so for the most part at reasonably short intervals of time. Various methods were developed for determining buying and selling levels of the general market, based on either value factors or percentage movements of prices or both. But we must point out that even prior to the unprecedented bull market that began in 1949, there were sufficient variations in the successive market cycles to complicate and sometimes frustrate the desirable process of buying low and selling high. The most notable of these departures, of course, was the great bull market of the late 1920s, which threw all calculations badly out

Seattle. I’ve never seen a city so overrun with runaways, drug addicts, and bums. Pike Place Market: they’re everywhere. Pioneer Square: teeming with them. The flagship Nordstrom: have to step over them on your way in. The first Starbucks: one of them hogging the milk counter because he’s sprinkling free cinnamon on his head. Oh, and they all have pit bulls, many of them wearing handwritten signs with witticisms such as I BET YOU A DOLLAR YOU’LL READ THIS SIGN. Why does every beggar have a pit bull? Really, you don’t know? It’s because they’re badasses, and don’t you forget it.

IRA funds became a form of play money for the middle class... Because the pool of capital that made up an IRA could not be withdrawn for twenty or thirty years, many people viewed their IRAs as containing money they could experiment with. They could use an IRA to buy their first stock or their first mutual fund. They could put in in a money market fund first, and then, as they got bolder - and the bull market became more irresistible - shift some of it into something a little riskier. IRAs gave people a way to try on the stock and bond markets for size, to see how they felt, and to become slowly comfortable with the idea of investing. The knowledge that the money couldn't easily be withdrawn acted as a psychological safety net, allowing investors to feel as though they could take a chance or two. If they made a mistake, they reasoned, there was still time to recoup - several decades, perhaps.Over time, many people came to believe that it as imperative to maximize the returns they were getting on their IRA account, even at the risk of taking a loss. How else would they ever have enough to retire on? This, surely, is the classic definition of investment capital.

It was a Game called Yes and No, where Scrooge’s nephew had to think of something, and the rest must find out what; he only answering to their questions yes or no, as the case was. The brisk fire of questioning to which he was exposed, elicited from him that he was thinking of an animal, a live animal, rather a disagreeable animal, a savage animal, an animal that growled and grunted sometimes, and talked sometimes, and lived in London, and walked about the streets, and wasn’t made a show of, and wasn’t led by anybody, and didn’t live in a menagerie, and was never killed in a market, and was not a horse, or an ass, or a cow, or a bull, or a tiger, or a dog, or a pig, or a cat, or a bear. At every fresh question that was put to him, this nephew burst into a fresh roar of laughter; and was so inexpressibly tickled, that he was obliged to get up off the sofa and stamp. At last the plump sister, falling into a similar state, cried out: “I have found it out! I know what it is, Fred! I know what it is!” “What is it?” cried Fred. “It’s your Uncle Scro-o-o-o-oge!” Which it certainly was. Admiration was the universal sentiment, though some objected that the reply to “Is it a bear?” ought to have been “Yes;” inasmuch as an answer in the negative was sufficient to have diverted their thoughts from Mr. Scrooge, supposing they had ever had any tendency that way.

All the recent marketing successes have been PR successes, not advertising successes. To name a few: Starbucks, The Body Shop, Amazon.com, Yahoo!, eBay, Palm, Google, Linus, PlayStation, Harry Potter, Botox, Red Bull, Microsoft, Intel, and BlackBerry. A closer look at the history of most major brands shows this to be true. As a matter of fact, an astonishing number of well-known brands have been built with virtually no advertising at all. Anita Roddick built The Body Shop into a worldwide brand without any advertising. Instead she traveled the world looking for ingredients for her natural cosmetics, a quest that resulted in endless publicity. Until recently Starbucks didn’t spend a hill of beans on advertising either. In its first ten years, the company spent less that $10 million (total) on advertising in the United States, a trivial amount for a brand that delivers annual sales of $1.3 billion today. Wal-Mart became the world’s largest retailer, ringing up sales approaching $200 billion, with little advertising. Sam’s Club, a Wal-Mart sibling, averages $56 million per store with almost no advertising. In the pharmaceutical field, Viagra, Prozac, and Vioxx became worldwide brands with almost no advertising. In the toy field, Beanie Babies, Tickle Me Elmo, and Pokémon became highly successful brands with almost no advertising. In the high-technology field, Oracle, Cisco, and SAP became multibillion-dollar companies (and multibillion-dollar brands) with almost no advertising.

the investor would need more than a mere falling off in both earnings and price to give him a sound basis for purchase. He should require an indication of at least reasonable stability of earnings over the past decade or more—i.e., no year of earnings deficit—plus sufficient size and financial strength to meet possible setbacks in the future. The ideal combination here is thus that of a large and prominent company selling both well below its past average price and its past average price/earnings multiplier. This would no doubt have ruled out most of the profitable opportunities in companies such as Chrysler, since their low-price years are generally accompanied by high price/earnings ratios. But let us assure the reader now—and no doubt we shall do it again—that there is a world of difference between “hindsight profits” and “real-money profits.” We doubt seriously whether the Chrysler type of roller coaster is a suitable medium for operations by our enterprising investor. We have mentioned protracted neglect or unpopularity as a second cause of price declines to unduly low levels. A current case of this kind would appear to be National Presto Industries. In the bull market of 1968 it sold at a high of 45, which was only 8 times the $5.61 earnings for that year. The per-share profits increased in both 1969 and 1970, but the price declined to only 21 in 1970. This was less than 4 times the (record) earnings in that year and less than its net-current-asset value. In March 1972 it was selling at 34, still only 5½ times the last reported earnings, and at about its enlarged net-current-asset value.

The tyro knows nothing, and everybody, including himself, knows it. But the next, or second, grade thinks he knows a great deal and makes others feel that way too. He is the experienced sucker, who has studied not the market itself but a few remarks about the market made by a still higher grade of suckers. The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner. It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on an average, as compared with a single season of from three to thirty weeks, which is the usual Wall Street life of a first offender. It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game. He knows all the don'ts that ever fell from the oracular lips of the old stagers excepting the principal one, which is: Don't be a sucker! This semisucker is the type that thinks he has cut his wisdom teeth because he loves to buy on declines. He waits for them. He measures his bargains by the number of points it has sold off from the top. In big bull markets the plain unadulterated sucker, utterly ignorant of rules and precedents, buys blindly because he hopes blindly. He makes most of the money until one of the healthy reactions takes it away from him at one fell swoop. But the Careful Mike sucker does what I did when I thought I was playing the game intelligently according to the intelligence of others. I knew I needed to change my bucket-shop methods and I thought I was solving my problem with any change, particularly one that assayed high gold values according to the experienced traders among the customers.

WHY DIVERSIFY? During the bull market of the 1990s, one of the most common criticisms of diversification was that it lowers your potential for high returns. After all, if you could identify the next Microsoft, wouldn’t it make sense for you to put all your eggs into that one basket? Well, sure. As the humorist Will Rogers once said, “Don’t gamble. Take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.” However, as Rogers knew, 20/20 foresight is not a gift granted to most investors. No matter how confident we feel, there’s no way to find out whether a stock will go up until after we buy it. Therefore, the stock you think is “the next Microsoft” may well turn out to be the next MicroStrategy instead. (That former market star went from $3,130 per share in March 2000 to $15.10 at year-end 2002, an apocalyptic loss of 99.5%).1 Keeping your money spread across many stocks and industries is the only reliable insurance against the risk of being wrong. But diversification doesn’t just minimize your odds of being wrong. It also maximizes your chances of being right. Over long periods of time, a handful of stocks turn into “superstocks” that go up 10,000% or more. Money Magazine identified the 30 best-performing stocks over the 30 years ending in 2002—and, even with 20/20 hindsight, the list is startlingly unpredictable. Rather than lots of technology or health-care stocks, it includes Southwest Airlines, Worthington Steel, Dollar General discount stores, and snuff-tobacco maker UST Inc.2 If you think you would have been willing to bet big on any of those stocks back in 1972, you are kidding yourself. Think of it this way: In the huge market haystack, only a few needles ever go on to generate truly gigantic gains. The more of the haystack you own, the higher the odds go that you will end up finding at least one of those needles. By owning the entire haystack (ideally through an index fund that tracks the total U.S. stock market) you can be sure to find every needle, thus capturing the returns of all the superstocks. Especially if you are a defensive investor, why look for the needles when you can own the whole haystack?

BARGAIN-ISSUE PATTERN IN SECONDARY COMPANIES. We have defined a secondary company as one that is not a leader in a fairly important industry. Thus it is usually one of the smaller concerns in its field, but it may equally well be the chief unit in an unimportant line. By way of exception, any company that has established itself as a growth stock is not ordinarily considered “secondary.” In the great bull market of the 1920s relatively little distinction was drawn between industry leaders and other listed issues, provided the latter were of respectable size. The public felt that a middle-sized company was strong enough to weather storms and that it had a better chance for really spectacular expansion than one that was already of major dimensions. The depression years 1931–32, however, had a particularly devastating impact on the companies below the first rank either in size or in inherent stability. As a result of that experience investors have since developed a pronounced preference for industry leaders and a corresponding lack of interest most of the time in the ordinary company of secondary importance. This has meant that the latter group have usually sold at much lower prices in relation to earnings and assets than have the former. It has meant further that in many instances the price has fallen so low as to establish the issue in the bargain class. When investors rejected the stocks of secondary companies, even though these sold at relatively low prices, they were expressing a belief or fear that such companies faced a dismal future. In fact, at least subconsciously, they calculated that any price was too high for them because they were heading for extinction—just as in 1929 the companion theory for the “blue chips” was that no price was too high for them because their future possibilities were limitless. Both of these views were exaggerations and were productive of serious investment errors. Actually, the typical middle-sized listed company is a large one when compared with the average privately owned business. There is no sound reason why such companies should not continue indefinitely in operation, undergoing the vicissitudes characteristic of our economy but earning on the whole a fair return on their invested capital.

When the result of the lawsuit was made known (and rumour flew much quicker than the telegraph which has supplanted it), the whole town was filled with rejoicings. [Horses were put into carriages for the sole purpose of being taken out. Empty barouches and landaus were trundled up and down the High Street incessantly. Addresses were read from the Bull. Replies were made from the Stag. The town was illuminated. Gold caskets were securely sealed in glass cases. Coins were well and duly laid under stones. Hospitals were founded. Rat and Sparrow clubs were inaugurated. Turkish women by the dozen were burnt in effigy in the market place, together with scores of peasant boys with the label ‘I am a base Pretender’, lolling from their mouths. The Queen’s cream-coloured ponies were soon seen trotting up the avenue with a command to Orlando to dine and sleep at the Castle, that very same night. Her table, as on a previous occasion, was snowed under with invitations from the Countess of R., Lady Q., Lady Palmerston, the Marchioness of P., Mrs. W.E. Gladstone, and others, beseeching the pleasure of her company, reminding her of ancient alliances between their family and her own, etc.] — all of which is properly enclosed in square brackets, as above, for the good reason that a parenthesis it was without any importance in Orlando’s life. She skipped it, to get on with the text

When the result of the lawsuit was made known (and rumour flew much quicker than the telegraph which has supplanted it), the whole town was filled with rejoicings. [Horses were put into carriages for the sole purpose of being taken out. Empty barouches and landaus were trundled up and down the High Street incessantly. Addresses were read from the Bull. Replies were made from the Stag. The town was illuminated. Gold caskets were securely sealed in glass cases. Coins were well and duly laid under stones. Hospitals were founded. Rat and Sparrow clubs were inaugurated. Turkish women by the dozen were burnt in effigy in the market place, together with scores of peasant boys with the label ‘I am a base Pretender’, lolling from their mouths. The Queen’s cream-coloured ponies were soon seen trotting up the avenue with a command to Orlando to dine and sleep at the Castle, that very same night. Her table, as on a previous occasion, was snowed under with invitations from the Countess of R., Lady Q., Lady Palmerston, the Marchioness of P., Mrs. W.E. Gladstone, and others, beseeching the pleasure of her company, reminding her of ancient alliances between their family and her own, etc.] — all of which is properly enclosed in square brackets, as above, for the good reason that a parenthesis it was without any importance in Orlando’s life. She skipped it, to get on with the text.

When the result of the lawsuit was made known (and rumour flew much quicker than the telegraph which has supplanted it), the whole town was filled with rejoicings. [Horses were put into carriages for the sole purpose of being taken out. Empty barouches and landaus were trundled up and down the High Street incessantly. Addresses were read from the Bull. Replies were made from the Stag. The town was illuminated. Gold caskets were securely sealed in glass cases. Coins were well and duly laid under stones. Hospitals were founded. Rat and Sparrow clubs were inaugurated. Turkish women by the dozen were burnt in effigy in the market place, together with scores of peasant boys with the label ‘I am a base Pretender’, lolling from their mouths. The Queen’s cream-coloured ponies were soon seen trotting up the avenue with a command to Orlando to dine and sleep at the Castle, that very same night. Her table, as on a previous occasion, was snowed under with invitations from the Countess of R., Lady Q., Lady Palmerston, the Marchioness of P., Mrs. W.E. Gladstone, and others, beseeching the pleasure of her company, reminding her of ancient alliances between their family and her own, etc.] — all of which is properly enclosed in square brackets, as above, for the good reason that a parenthesis it was without any importance in Orlando’s life. She skipped it, to get on with the text.

As I saw it, there was a 75 percent chance the Fed’s efforts would fall short and the economy would move into failure; a 20 percent chance it would initially succeed at stimulating the economy but still ultimately fail; and a 5 percent chance it would provide enough stimulus to save the economy but trigger hyperinflation. To hedge against the worst possibilities, I bought gold and T-bill futures as a spread against eurodollars, which was a limited-risk way of betting on credit problems increasing. I was dead wrong. After a delay, the economy responded to the Fed’s efforts, rebounding in a noninflationary way. In other words, inflation fell while growth accelerated. The stock market began a big bull run, and over the next eighteen years the U.S. economy enjoyed the greatest noninflationary growth period in its history. How was that possible? Eventually, I figured it out. As money poured out of these borrower countries and into the U.S., it changed everything. It drove the dollar up, which produced deflationary pressures in the U.S., which allowed the Fed to ease interest rates without raising inflation. This fueled a boom. The banks were protected both because the Federal Reserve loaned them cash and the creditors’ committees and international financial restructuring organizations such as the International Monetary Fund (IMF) and the Bank for International Settlements arranged things so that the debtor nations could pay their debt service from new loans. That way everyone could pretend everything was fine and write down those loans over many years. My experience over this period was like a series of blows to the head with a baseball bat. Being so wrong—and especially so publicly wrong—was incredibly humbling and cost me just about everything I had built at Bridgewater. I saw that I had been an arrogant jerk who was totally confident in a totally incorrect view. So there I was after eight years in business, with nothing to show for it. Though I’d been right much more than I’d been wrong, I was all the way back to square one.

I discovered something else, and that is that suckers differ among themselves according to the degree of experience. The tyro knows nothing, and everybody, including himself, knows it. But the next, or second, grade thinks he knows a great deal and makes others feel that way too. He is the experienced sucker, who has studied not the market itself but a few remarks about the market made by a still higher grade of suckers. The second-grade sucker knows how to keep from losing his money in some of the ways that get the raw beginner. It is this semisucker rather than the 100 per cent article who is the real all-the-year-round support of the commission houses. He lasts about three and a half years on an average, as compared with a single season of from three to thirty weeks, which is the usual Wall Street life of a first offender. It is naturally the semisucker who is always quoting the famous trading aphorisms and the various rules of the game. He knows all the don'ts that ever fell from the oracular lips of the old stagers excepting the principal one, which is: Don't be a sucker! This semisucker is the type that thinks he has cut his wisdom teeth because he loves to buy on declines. He waits for them. He measures his bargains by the number of points it has sold off from the top. In big bull markets the plain unadulterated sucker, utterly ignorant of rules and precedents, buys blindly because he hopes blindly. He makes most of the money until one of the healthy reactions takes it away from him at one fell swoop. But the Careful Mike sucker does what I did when I thought I was playing the game intelligently according to the intelligence of others. I knew I needed to change my bucket-shop methods and I thought I was solving my problem with any change, particularly one that assayed high gold values according to the experienced traders among the customers.

When playing a bear market, the same rules hold: You want to diversify your risks, especially knowing that collapses move even faster than rallies. You need to decide how much safe cash or near cash you want to hold to sleep at night and to handle financial emergencies, like the loss of your job or your house. Then decide how much to put into longer-term high-quality bonds, like those 30-year Treasuries and AAA corporates, but I think it’s still premature to make this move at the time of this writing, in August 2017. Then decide how much you want to put into a dollar bull fund or the ETF UUP, which tracks the U.S. dollar versus its six major trading partners. If you’re willing to risk part of your wealth, you can also bet on financial assets going down—from stocks to gold. Stocks are the one type of financial asset that goes down in either a deflationary crisis, like the 1930s, or an inflationary one, like the 1970s. So shorting stocks is the best way to prosper in the downturn, either way. But don’t leverage this bet. The markets are simply too volatile. You can short the stock market with no leverage by simply buying an ETF (exchange-traded fund) like the ProShares Short S&P 500 (NYSEArca: SH). It’s an inverse fund on the S&P 500, so if the index goes down 50 percent, you make 50 percent. The ProShares Ultrashort (NYSEArca: QID) is double short the NASDAQ 100, which is likely to get hit the worst. If you make this play, just do a half share, to avoid that two-times leverage (hold the other half in cash or short-term bonds). Direxion Daily Small Cap Bear 3X ETF (NYSEArca: TZA) is triple short the Russell 2000, which is also likely to lead on the way down. So buy only a one-third share of this one, to remain without leverage. (That means the money you allocate here should be one-third in TZA and two-thirds in cash, to offset the leverage.) And unlike the gold bugs, I see gold collapsing. It’s an inflation hedge, not a deflation hedge. If gold rallies back as high as $1,425—on my predicted bear-market rally—then it could easily drop to around $700 within a year. Your last decision is whether to risk some of your funds betting on gold’s downside, for the greatest potential returns. You can buy DB Gold Double Short ETN (NYSEArca: DZZ)—double short gold—at a half share, to offset the leverage, or just simply short GLD, the ETF that follows gold. There you have it. How to handle the coming crash.

Ever heard of collateralized debt obligations? Mortgage-backed securities? Non-bank asset-backed commercial paper? What about income trusts? Or even mutual funds?

The intelligent investor dreads a bull market, since it makes stocks more costly to buy.

It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.

They say you never grow poor taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market.

The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs), you should welcome a bear market, since it puts stocks back on sale.

We would even make the point one step further: a great product without marketing can’t hold a candle to a good one with great marketing. Does Starbucks really have the best coffee? Is Red Bull really the best energy drink? Is Apple really the best at innovation? Now think about the brands you know and love. Food, leisure, automotive, sports, business technology, whatever. Are they amazing products that you admire and use? How did you learn about them? What drew you to them? Build a great product and share your vision of what it can be with the world. Then use marketing to create a connection between your customer (and audiences) and your organization so that people can find, interact with, and buy your amazing product.

Jenna, you are halfway to freedom from Wayne. A few more months and you can hand him back to us, and not have to deal with him anymore. If you launch this business with him, you are locked in, day in and day out, for a minimum of four or five years. And really, can you imagine him really helping at these events? I just see him knocking over ice sculptures, and tipping over cakes, and generally being a bull in the china shop everywhere he goes. A bull on steroids. With an inner ear imbalance. On roller skates." "Enough, lawdouche, she gets it." "I know. But again, Wayne is pretty clear that his area here would be identifying and helping land clients, and consulting on thematic details and event brainstorming, and keeping up with all industry aspects of the target market." "You mean going to movies, reading comics, and playing video games." "Yep, something like that." "You can't really be thinking you are going to do this." "I can be thinking that. And I'm pretty sure that the only opinion I asked you for on this was legal ramifications and financial obligations. I don't really care about your personal opinions." "Well, that hurts my feelings, because I still care about you on a personal level, and I think this is a huge mistake for you personally." I wait for my heart to race, for the sweats to start, for my colon to twist itself into a pretzel. And when none of that happens, I look at Brian. "I think, that being the case, that perhaps you ought to speak to your partners about who might be the best attorney to work with me moving forward." "You're firing me? Because I care about you?" "I'm firing you because I need an attorney who is less personally interested in the decisions I make. I'm a big girl, and I have a dad. And clearly, this is no longer a good fit. I'll appreciate a call from the other partners by the end of the week with a plan that I can review." "Seriously, I feel like you've completely lost your mind!" "Careful, Brian. At the moment, I'm asking you be removed from my account. However uncomfortable that may be for you with your partners, I assume you would rather that, than having to explain why I'm leaving the firm entirely. And I will be advising Wayne to shift to the same person I am with, obviously, for convenience." His chiseled jaw snaps shut, and while I can see a dozen retorts on the tip of his tongue, he doesn't speak. "Thank you. I'll review this further, and will discuss my decision with my new attorney. You'll get formal word from Wayne on his choice soon, I'm sure.

Everybody knew that the way to do that was to take profits and buy back your stocks on reactions. And that is precisely what I did, or rather what I tried to do; for I often took profits and waited for a reaction that never came. And I saw my stock go kiting up ten points more and I sitting there with my four-point profit safe in my conservative pocket. They say you never grow poor taking profits. No, you don't. But neither do you grow rich taking a four-point profit in a bull market.

The key to this matrix is the symmetry or asymmetry of the performance. Investors who lack skill simply earn the return of the market and the dictates of their style. Without skill, aggressive investors move a lot in both directions, and defensive investors move little in either direction. These investors contribute nothing beyond their choice of style. Each does well when his or her style is in favor but poorly when it isn’t. On the other hand, the performance of investors who add value is asymmetrical. The percentage of the market’s gain they capture is higher than the percentage of loss they suffer. Aggressive investors with skill do well in bull markets but don’t give it all back in corresponding bear markets, while defensive investors with skill lose relatively little in bear markets but participate reasonably in bull markets. Everything in investing is a two-edged sword and operates symmetrically, with the exception of superior skill. Only skill can be counted on to add more in propitious environments than it costs in hostile ones. This is the investment asymmetry we seek. Superior skill is the prerequisite for it. Here’s how I describe Oaktree’s performance aspirations: In good years in the market, it’s good enough to be average. Everyone makes money in the good years, and I have yet to hear anyone explain convincingly why it’s important to beat the market when the market does well. No, in the good years average is good enough. There is a time, however, when we consider it essential to beat the market, and that’s in the bad years. Our clients don’t expect to bear the full brunt of market losses when they occur, and neither do we. Thus, it’s our goal to do as well as the market when it does well and better than the market when it does poorly. At first blush that may sound like a modest goal, but it’s really quite ambitious. In order to stay up with the market when it does well, a portfolio has to incorporate good measures of beta and correlation with the market. But if we’re aided by beta and correlation on the way up, shouldn’t they be expected to hurt us on the way down? If we’re consistently able to decline less when the market declines and also participate fully when the market rises, this can be attributable to only one thing: alpha, or skill. That’s an example of value-added investing, and if demonstrated over a period of decades, it has to come from investment skill. Asymmetry—better performance on the upside than on the downside relative to what your style alone would produce—should be every investor’s goal.

Sonnet for Elegua In pursuit of an ending, I quickened my pace. I had no questions, not my own, to recover in. The only certainty: the evening under the oil palm when you gave me my dry feet. From then on, dreams as warm as atoms. The exiled boy, always desperate to be heard, appeared mostly as crickets and hinges. Three summers ago, he mutilated a pigeon by hurling it against the wall of a market. It made sounds like the latch rattle of an icebox and the stain never came out, even when we used aguardiente. I've left my outline in worse places. Lately, by the window, where I count the women with thicker, blacker hair, study the way it tightens around their shoulders like bulls ascending. What occupies me is also running. It never tires, but rather, repositions itself. I should like to reposition myself, please. All of me this time.

For then, if another bull market comes along, he will take the big rise not as a danger signal of an inevitable fall, not as a chance to cash in on his handsome profits, but rather as a vindication of the inflation hypothesis and as a reason to keep on buying common stocks no matter how high the market level nor how low the dividend return. That way lies sorrow.

The problem was that even if individual fund managers thought differently, when taken as a group they became the market. They would align with the performance of the Sensex. In fact, the bigger the fund, the closer it was to imitating the Sensex or the Nifty 50.

Unfortunately, the Bull that gilded Renaissance New York did little for most Americans. Eighties Wall Street was about institutional money released by deregulation, mergers and acquisitions, and, most of all, the debt that made it all possible. As John Kenneth Galbraith points out, financial euphoria always starts with new ways to borrow money; this time it was triggered by the Savings & Loan crisis. Volcker’s rocketing interest rates had forced S&Ls to offer double digits to new depositors while only getting back single digits on the old thirty-year mortgages on their books. S&Ls were going under, and getting a mortgage was nearly impossible, so in March 1980, with the banking system and the housing market on the brink, Carter had signed a law to allow them to issue credit cards, invest in commercial real estate, and offer checking accounts in order to stay in business. Reagan then took it a step further with a change that encouraged S&Ls to sell their mortgages in search of higher returns, freeing up a $1 trillion that needed to be invested in something. Which takes us back to Salomon Brothers, where in 1978 one Lew Ranieri had repackaged an old investment product the government had clamped down on during the Depression: A group of home mortgages all backed by government insurance would be bundled together, then sliced into bonds, thus converting the debt some people owed on their homes into an asset for others. Ranieri had been a bit ahead of the curve then—the same high interest rates that killed the S&Ls also made his bonds unattractive—but now deregulation let Salomon buy up the S&Ls’ mortgages at a deep discount, bundle them into bonds, and sell them back to the S&Ls who believed they’d diversified into the bond market when in fact they’d just bought ground meat made out of their own steaks. In June 1983, Salomon Brothers and Freddie Mac together issued the first collateralized mortgage obligation bonds (CMOs), which bundled up debt and cut it into tranches based on the amount of risk: you could choose between ground chuck and ground sirloin. It would be years before technology would allow doing this on a huge scale, but the immediate impact was that all kinds of debt, not just mortgages, were bundled, cut into bonds, and sold: credit card debt, car loans, you name it. Between 1983 and 1988, some $60 billion of CMOs were sold; GM’s financing arm became more profitable than its cars. America began to make debt instead of things. The

Hence, after this foreshortened discussion of the major considerations, we once again enunciate the same basic compromise policy for defensive investors—namely that at all times they have a significant part of their funds in bond-type holdings and a significant part also in equities. It is still true that they may choose between maintaining a simple 50–50 division between the two components or a ratio, dependent on their judgment, varying between a minimum of 25% and a maximum of 75% of either. We shall give our more detailed view of these alternative policies in a later chapter. Since at present the overall return envisaged from common stocks is nearly the same as that from bonds, the presently expectable return (including growth of stock values) for the investor would change little regardless of how he divides his fund between the two components. As calculated above, the aggregate return from both parts should be about 7.8% before taxes or 5.5% on a tax-free (or estimated tax-paid) basis. A return of this order is appreciably higher than that realized by the typical conservative investor over most of the long-term past. It may not seem attractive in relation to the 14%, or so, return shown by common stocks during the 20 years of the predominantly bull market after 1949. But it should be remembered that between 1949 and 1969 the price of the DJIA had advanced more than fivefold while its earnings and dividends had about doubled. Hence the greater part of the impressive market record for that period was based on a change in investors’ and speculators’ attitudes rather than in underlying corporate values. To that extent it might well be called a “bootstrap operation.” In

sooner or later, all bull markets must end badly.

Cash is an inefficient drag during bull markets and as valuable as oxygen during bear markets. Leverage is the most efficient way to maximize your balance sheet and the easiest way to lose everything. Concentration is the best way to maximize returns but diversification is the best way to increase the odds of owning a company capable of delivering returns. If you're honest with yourself, you'll see a little inefficiency is the best spot to be in. Same with analysis. You'll see it's better to be approximately right than to be precisely wrong.

Same in investing. Cash is an inefficient drag during bull markets and as valuable as oxygen during bear markets. Leverage is the most efficient way to maximize your balance sheet and the easiest way to lose everything. Concentration is the best way to maximize returns, but diversification is the best way to increase the odds of owning

The right way to use the MACD histogram is: 1. Trade in the direction of the slope of the histogram. If the slope is positive, trade from the long side; if it is negative, trade from the short side. 2. Sell longs or trade from the short side when the histogram is above the zero line and the slope heads downward. This indicates that the bulls have lost steam and a reversal is in the making. 3. Cover shorts or trade from the long side when the histogram is below zero and the slope turns upward. This indicates that the bears are out of gas and the bulls are taking back the reins. 4. Go long with bullish divergence between lower prices and a higher histogram. 5. Go short with bearish divergence between higher prices and a lower histogram.

To calculate the market capitalization of a company, multiply the current market price of a stock by the number of outstanding shares. The number of outstanding shares refers to the number of shares that have been sold to the public.

First, the dividend return is relatively high. Second, the reinvested earnings are substantial in relation to the price paid and will ultimately affect the price. In a five-to seven-year period these advantages can bulk quite large in a well-selected list. Third, a bull market is ordinarily most generous to low-priced issues; thus it tends to raise the typical bargain issue to at least a reasonable level. Fourth, even during relatively featureless market periods a continuous process of price adjustment goes on, under which secondary issues that were undervalued may rise at least to the normal level for their type of security. Fifth, the specific factors that in many cases made for a disappointing record of earnings may be corrected by the advent of new conditions, or the adoption of new policies, or by a change in management.

its trend. And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine—that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.

The bulls and bears wage desperate battles in the stock market,” the Times-Record observed, “but it is the shorn lambs who usually take the punishment.

Once a bull market gets under way, and once you reach the point where everybody has made money no matter what system he or she followed, a crowd is attracted into the game that is responding not to interest rates and profits but simply to the fact that it seems a mistake to be out of stocks. In effect, these people superimpose an I-can’t-miss-the-party factor on top of the fundamental factors that drive the market. Like Pavlov’s dog, these “investors” learn that when the bell rings—in this case, the one that opens the New York Stock Exchange at 9:30 A.M.—they get fed. Through this daily reinforcement, they become convinced that there is a God and that He wants them to get rich.

Never sell a dull market.” I believe that this was intended for bull markets, for it appears just as dangerous to “buy a dull market”—during a bear market.

Our job is to systematically sift price data to find trends and act on them and not let the latest news flashes sway our market opinions.46

These classic Donchian trading rules were first published over 
75 years ago: General Guides Beware of acting immediately on

The longer the bull market lasts the more severely investors will be affected with amnesia; after five years or so, many people no longer believe that bear markets are possible. p.190

The longer the bull market lasts the more severely investors will be affected with amnesia; after five years or so, many people no longer believe that bear markets are possible.

Yes, I know that Goldilocks got away with eating Papa Bear’s porridge, sitting in his big chair, and napping on his bed. But bears are not bulls. Don’t confuse your animals. Just because they get them mixed up in the stock market doesn’t mean you should get them mixed up in the office. Bears live in the woods, and sometimes go after honey. Bulls live on the farm, and sometimes go after pushy people. Bears can squeeze strangers hard in a spirit of fun, but they mean no harm. They’re playful. Bulls can destroy trespassers and china shops in blind fury, on purpose. They’re dangerous. End of zoology lesson.

Bull markets can obscure mathematical laws, but they cannot repeal them.

Bulls don't read. Bears read financial history. As markets fall to bits, the bears dust off the Dutch tulip mania of 1637, the Banque Royale of 1719-20, the railway speculation of the 1840s, the great crash of 1929.

So steers are boy cows?” “That’s right.” “What makes you decide who gets to have a really good life and who gets to be a burger?” “Various factors. I’ve been working on genetically improving the herd.” “So a new bull with favorable characteristics would get to stay a bull.” He nodded. “Sounds interesting,” she said, because it really was. Who knew that ranchers worried about genetics? “You’re probably not going for things like eye color,” she said without thinking. Zane didn’t even roll his eyes. “Not really.” “I didn’t think so.” “I work with several universities. We have breeding experiments. I also sell to other ranchers.” “Your bulls?” There was that seat squirm again. “No.” Not bulls? “Cows?” “Sperm.” Phoebe blinked. “From the bulls?” He nodded. “You sell bull sperm?” He nodded again. Wow. There really were infinite ways to make a living. So how exactly did one get the sperm from the bull? She shook her head. Not something she wanted to know, she decided. Although she was intrigued by the question of what sort of marketing campaign would be most effective. Still, some subjects were better left unexplored, and this was definitely one of them. She tried to think of something else to say. Anything, really. But how did one top bull sperm as a conversational gambit? Maybe it was better if one didn’t try.

Small float, a bull market and a good story are an explosive combination of catalysts. When thousands of institutions compete to own a small number of stocks, we could see gigantic moves in short periods of time.

Paul Mulvaney made the point: “One thing to bear in mind is that we have made no changes to our trend following strategy since 2005. So in a way we take the ancient Spartan view that everything that needed to be said about long-term trend following has already been said.” He continued: “In recent years our research has focused on execution algorithms—but those are of minor importance versus the strategic trend following philosophy.” Here is Mulvaney’s philosophy in performance data format:

In a bull market, everyone becomes an expert! In a bear market, everyone becomes wise!

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And, as inflation has fallen, so bonds have rallied in what has been one of the great bond bull markets of modern history. Even more remarkably, despite the spectacular Argentine default – not to mention Russia’s in 1998 – the spreads on emerging market bonds have trended steadily downwards, reaching lows in early 2007 that had not been seen since before the First World War, implying an almost unshakeable confidence in the economic future. Rumours of the death of Mr Bond have clearly proved to be exaggerated. Inflation has come down partly because many of the items we buy, from clothes to computers, have got cheaper as a result of technological innovation and the relocation of production to low-wage economies in Asia. It has also been reduced because of a worldwide transformation in monetary policy, which began with the monetarist-inspired increases in short-term rates implemented by the Bank of England and the Federal Reserve in the late 1970s and early 1980s, and continued with the spread of central bank independence and explicit targets in the 1990s. Just as importantly, as the Argentine case shows, some of the structural drivers of inflation have also weakened. Trade unions have become less powerful. Loss-making state industries have been privatized. But, perhaps most importantly of all, the social constituency with an interest in positive real returns on bonds has grown. In the developed world a rising share of wealth is held in the form of private pension funds and other savings institutions that are required, or at least expected, to hold a high proportion of their assets in the form of government bonds and other fixed income securities. In 2007 a survey of pension funds in eleven major economies revealed that bonds accounted for more than a quarter of their assets, substantially lower than in past decades, but still a substantial share.71 With every passing year, the proportion of the population living off the income from such funds goes up, as the share of retirees increases.

They would need a logo for the app, something that instantly enticed users to download and use Picaboo. Reggie and Evan sat together and created the logo over the course of a few hours, going back and forth on ways to symbolize the disappearing nature of the app. They settled on a friendly ghost who was smiling and sticking out its tongue. Evan drew the ghost in Adobe InDesign while Reggie tossed in ideas. Reggie named the ghost Ghostface Chillah, after the Wu-Tang Clan rapper Ghostface Killah. Evan studied the hundred most popular apps in the app store and noticed that none had yellow logos. To make Picaboo stand out, he put the Ghostface Chillah logo on a bright yellow background. Reggie slapped the logo on Facebook and Twitter pages he made for the app. While Evan worked hard on the design and vision for the product and Bobby coded, Reggie contributed less. Plenty of successful Silicon Valley founders do not write code; but they play other roles, relentless hustling in the early days of their companies, dominating nontechnical jobs like marketing and user growth. Reggie simply wasn’t doing that. Having recently turned twenty-one, he wanted to enjoy the Los Angeles nightlife, and he stayed out into the wee hours of the morning. While Evan and Bobby lived the plot of Silicon Valley, Reggie was more Entourage. Evan had always remembered and valued what Clarence Carter had told him when he worked at Red Bull, “When everyone is tired and the night is over, who stays and helps out? Because those are your true friends. Those are the hard workers, the people that believe that working hard is the right thing to do.” His co-founders felt Reggie was not pulling his weight, and it was beginning to cause resentment.

as inflation has fallen, so bonds have rallied in what has been one of the great bond bull markets of modern history. Even more remarkably, despite the spectacular Argentine default - not to mention Russia’s in 1998 - the spreads on emerging market bonds have trended steadily downwards, reaching lows in early 2007 that had not been seen since before the First World War, implying an almost unshakeable confidence in the economic future.

The smaller the group, the bigger the bull's-eye.