Buy Assets Quotes

Rule #1: You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is rule number one. It is the only rule. This may sound absurdly simple, but most people have no idea how profound this rule is. Most people struggle financially because they do not know the difference between an asset and a liability. “Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets, “ said rich dad.

I hate debt - except when I’m buying it at a premium and expecting to earn a profit on it.

Rule One. You must know the difference between an asset and a liability, and buy assets.

Even utopias need a tax clause. For example, we could start with a transactions tax to rein in the financial industry. Back in 1970, American stocks were still held for an average of five years; forty years later, it’s a mere five days.21 If we imposed a transactions tax – where you would have to pay a fee each time you buy or sell a stock – those high-frequency traders who contribute almost nothing of social value would no longer profit from split-second buying and selling of financial assets. In

The idea that “it takes money to make money” is the thinking of financially unsophisticated people. It does not mean that they’re not intelligent. They have simply not learned the science of money making money. Money is only an idea. If you want more money, simply change your thinking. Every self-made person started small with an idea, and then turned it into something big. The same applies to investing. It takes only a few dollars to start and grow it into something big. I meet so many people who spend their lives chasing the big deal, or trying to amass a lot of money to get into a big deal, but to me that is foolish. Too often I have seen unsophisticated investors put their large nest egg into one deal and lose most of it rapidly. They may have been good workers, but they were not good investors. Education and wisdom about money are important. Start early. Buy a book. Go to a seminar. Practice. Start small. I turned $5,000 cash into a one-million-dollar asset producing $5,000 a month cash flow in less than six years. But I started learning as a kid. I encourage you to learn, because it’s not that hard. In fact, it’s pretty easy once you get the hang of it. I think I have made my message clear. It’s what is in your head that determines what is in your hands. Money is only an idea. There is a great book called Think and Grow Rich. The title is not Work Hard and Grow Rich. Learn to have money work hard for you, and your life will be easier and happier. Today, don’t play it safe. Play it smart.

I have always believed that every day you choose to hold an asset, you are also choosing to buy it. Would I buy our buildings at the price Blackstone was quoting? Nope.

You must know the difference between an asset and a liability, and buy assets.

Buying something for less than its value. In my opinion, this is what it’s all about—the most dependable way to make money. Buying at a discount from intrinsic value and having the asset’s price move toward its value doesn’t require serendipity; it just requires that market participants wake up to reality. When the market’s functioning properly, value exerts a magnetic pull on price.

The motivation for taking on debt is to buy assets or claims rising in price. Over the past half-century the aim of financial investment has been less to earn profits on tangible capital investment than to generate “capital” gains (most of which take the form of debt-leveraged land prices, not industrial capital). Annual price gains for property, stocks and bonds far outstrip the reported real estate rents, corporate profits and disposable personal income after paying for essential non-discretionary spending, headed by FIRE [Finance, Insurance, Real Estate]-sector charges.

Our whole culture is based on the appetite for buying, on the idea of a mutually favorable exchange. Modern man's happiness consists in the thrill of looking at the shop windows, and in buying all that he can afford to buy, either for cash or on installments. He (or she) looks at people in a similar way. For the man an attractive girl—and for the woman an attractive man—are the prizes they are after. 'Attractive' usually means a nice package of qualities which are popular and sought after on the personality market. What specifically makes a person attractive depends on the fashion of the time, physically as well as mentally. During the twenties, a drinking and smoking girl, tough and sexy, was attractive; today the fashion demands more domesticity and coyness. At the end of the nineteenth and the beginning of this century, a man had to be aggressive and ambitious—today he has to be social and tolerant—in order to be an attractive 'package'. At any rate, the sense of falling in love develops usually only with regard to such human commodities as are within reach of one's own possibilities for exchange. I am out for a bargain; the object should be desirable from the standpoint of its social value, and at the same time should want me, considering my overt and hidden assets and potentialities. Two persons thus fall in love when they feel they have found the best object available on the market, considering the limitations of their own exchange values. Often, as in buying real estate, the hidden potentialities which can be developed play a considerable role in this bargain. In a culture in which the marketing orientation prevails, and in which material success is the outstanding value, there is little reason to be surprised that human love relations follow the same pattern of exchange which governs the commodity and the labor market.

There are essentially five things public corporations can do with a dollar earned: reinvest in the business, acquire other businesses or assets, pay down debt, pay dividends, and/or buy in shares. Deciding

He's not as bad as everyone makes out. He might buy venerable old companies and strip their assets, causing numerous layoffs and the odd corporate suicide or two, but that's business. Inside, he's a big teddy bear.

The rich get the assets, the poor get the debt, and then the poor have to pay their whole salary to the rich every year just to live in a house. The rich use that money to buy the rest of the assets from the middle class and then the problem gets worse every year. The middle class disappears, spending power disappears permanently from the economy, the rich becoming much fucking richer and the poor, well, I guess they just die.

If a business borrows to buy a machine, it’s a good thing, not a bad thing. During the past six years, America—its government, its families, the country as a whole—has been borrowing to sustain its consumption. Meanwhile, investment in fixed assets—the plants and equipment that help increase our wealth—has been declining.

In medieval Europe, aristocrats spent their money carelessly on extravagant luxuries, whereas peasants lived frugally, minding every penny. Today, the tables have turned. The rich take great care managing their assets and investments, while the less well-heeled go into debt buying cars and

Buying market share by hiring your competitors’ salespeople does nothing good for your reputation in the industry. Maybe you don’t care when you’re young and brash, but eventually you learn that reputation is a crucial business asset, worth much more over the long run than a few extra sales.

Start minding your own business. Keep your daytime job, but start buying real assets, not liabilities.

Always write down all the reasons of why you are buying an asset. Review the list periodically and only sell when the majority of reasons are not valid anymore.

Trading is buying and selling to exploit a change in the price. Investing is acquiring assets for economic reasons.

Each dollar in my asset column was a great employee, working hard to make more employees and buy the boss a new Porsche.

The Anglo-Spanish penal system either struck visitors as refreshingly civilized or as stingingly rapacious. Sentences could be commuted or pardoned for large cash payments, or for the transfer of assets such as stock or annuities. Absent this, prison corporations happily extended moderate-interest sentence-mortgages to a sponsor, or even to parolees themselves. Visitors could buy different levels of access to the prison via a transparent list of escalating fees, which in the Congregate would have been called bribes. Some nations just did prisons better than others.

Drug-war forfeiture laws are frequently used to allow those with assets to buy their freedom, while drug users and small-time dealers with few assets to trade are subjected to lengthy prison terms.

The primary asset that comes with a small house is freedom. The world gets a lot bigger when you are living small because I can afford to do a lot more things in terms of cash and time. Now the whole world is my living room.

Lease assets. Be sure to institute the lease versus buy analysis that was covered in the last section. A lease may carry a relatively high implicit interest rate, but has the particular advantage of deferring the payment of cash to later periods.

Independent bookstore are a valuable asset to any city, town or village. They offer us the latest literary releases, a meeting point where authors share their work and meet new readers and fans. They offer us a rich ‘bookish’ environment in which to browse before we buy. I love to sip coffee and leaf through my new purchase. I can be sure that independent booksellers know their stock, they suggest new authors and broaden my reading. Along with public libraries they are key to our communities.

One of the reasons the rich get richer is that they buy more investments by taking advantage of the tax laws. In essence, the money that would have been paid in taxes is used to buy additional assets, which provide another deduction against income, which reduces the taxes due, legally.

In real estate I’m known as the Grave Dancer. That was the title of an article I wrote back in 1976, and the nickname stuck. Some might see buying and creating value from others’ mistakes as a form of exploitation, but I see it as giving neglected or devalued assets, in any industry, new life.

the standard private equity playbook: jawbone the unions, cut costs even at the price of damaging longer-term success, do a sale-leaseback of real property assets, take whatever public money you can get from communities eager to save their industries, and do an “add-on”—the Indiana Glass buy. And collect fees.

Glasenberg’s bet on buying assets a decade earlier now helped to deliver profits for Glencore that surpassed even Marc Rich’s golden years. In 2003, the company’s net income exceeded $1 billion for the first time, and the following year it was more than $2 billion, and in 2007 the trading house made $6.1 billion.38

The super-rich have so much that there is no way they can spend all of it on things they can use, so they recycle the rest into further rounds of speculation, buying up property, companies and financial assets that generate little or no productive investment, and merely siphon off more wealth that others have produced.

In medieval Europe, aristocrats spent their money carelessly on extravagant luxuries, whereas peasants lived frugally, minding every penny. Today, the tables have turned. The rich take great care managing their assets and investments, while the less well heeled go into debt buying cars and televisions they don’t really need.

In successful transformations, the president, division general manager, or department head plus another five, fifteen, or fifty people with a commitment to improved performance pull together as a team. This group rarely includes all of the most senior people because some of them just won’t buy in, at least at first. But in the most successful cases, the coalition is always powerful—in terms of formal titles, information and expertise, reputations and relationships, and the capacity for leadership. Individuals alone, no matter how competent or charismatic, never have all the assets needed to overcome tradition and inertia except in very small organizations. Weak committees are usually even less effective.

company and for similar companies in the same industry. • The percentage of institutional ownership. The lower the better. • Whether insiders are buying and whether the company itself is buying back its own shares. Both are positive signs. • The record of earnings growth to date and whether the earnings are sporadic or consistent. (The only category where earnings may not be important is in the asset play.) • Whether the company has a strong balance sheet or a weak balance sheet (debt-to-equity ratio) and how it’s rated for financial strength. • The cash position. With $16 in net cash, I know Ford is unlikely to drop below $16 a share. That’s the floor on the stock. SLOW GROWERS • Since you buy these for the dividends (why else would

There is today a division of labor between the elite and the masses. In medieval Europe aristocrats spent their money carelessly on extravagant luxuries whereas peasants lived frugally minding every penny. Today the tables have turned. The rich take great care managing their assets and investments, while the less well-heeled go into debt buying cars and televisions they don't really need.

As in previous eras, there is today a division of labour between the elite and the masses. In medieval Europe, aristocrats spent their money carelessly on extravagant luxuries, whereas peasants lived frugally, minding every penny. Today, the tables have turned. The rich take great care managing their assets and investments, while the less well heeled go into debt buying cars and televisions they don’t really need.

The best foundation for a successful investment—or a successful investment career—is value. You must have a good idea of what the thing you’re considering buying is worth. There are many components to this and many ways to look at it. To oversimplify, there’s cash on the books and the value of the tangible assets; the ability of the company or asset to generate cash; and the potential for these things to increase.

the so-called first-mover advantage is usually not an advantage. Industry pioneers often end up with arrows in their backs—while the horsemen, arriving later (Facebook after Myspace, Apple after the first PC builders, Google after the early search engines, Amazon after the first online retailers), get to feed off the carcasses of their predecessors by learning from their mistakes, buying their assets, and taking their customers.

There are no tarts in there, Charles. They were much too expensive, and Mr. Jenkins would not be reasonable. I told him I would buy a whole dozen, but he would not reduce the price by so much as a penny, so I refused to buy even one-on principle. Do you know,” she confided with a chuckle, “last week when he saw me coming into his shop he hid behind the flour sacks?” “He’s a coward!” Charles said, grinning, for it was a known fact among tradesmen and shopkeepers that Elizabeth Cameron pinched a shilling until it squeaked, and that when it came to bargaining for price-which it always did with her-they rarely came out the winner. Her intellect, not her beauty, was her greatest asset in these transactions, for she could not only add and multiply in her head, but she was so sweetly reasonable, and so inventive when she listed her reasons for expecting a better price, that she either wore out her opponents or confused them into agreeing with her

A. M. Fyodorov stopped by. He was very pleasant, though he kept complaining about his poverty. In reality he has lost his last asset—who will rent his summer cottage now? But then it is not his to rent out anymore since it is now the “property of the people.” He has worked his entire life and somehow managed to buy a truly valuable piece of land. Then he built a small house on it (and went into debt along the way)—but now it turns out that this home “belongs to the folk,” and that some “workers” will live there together with their families for the rest of their lives.

Posterity can pay for its ancestors’ lives because posterity can be richer through innovation. If somebody somewhere takes out a mortgage, which he will repay in three decades’ time, to invest in a business that invents a gadget that saves his customers time, then that money, brought forward from the future, will enrich both him and those customers to the point where the loan can be repaid to posterity. That is growth. If, on the other hand, somebody takes out a loan just to support his luxury lifestyle, or to speculate on asset markets by buying a second home, then posterity will be the loser.

Nominal assets are subject to a substantial inflation risk: if you invest 10,000 euros in a checking or savings account or a nonindexed government or corporate bond, that investment is still worth 10,000 euros ten years later, even if consumer prices have doubled in the meantime. In that case, we say that the real value of the investment has fallen by half: you can buy only half as much in goods and services as you could have bought with the initial investment, so that your return after ten years is −50 percent, which may or may not have been compensated by the interest you earned in the interim.

How can we square the consumerist ethic with the capitalist ethic of the business person, according to which profits should not be wasted, and should instead be reinvested in production? It’s simple. As in previous eras, there is today a division of labour between the elite and the masses. In medieval Europe, aristocrats spent their money carelessly on extravagant luxuries, whereas peasants lived frugally, minding every penny. Today, the tables have turned. The rich take great care managing their assets and investments, while the less well-heeled go into debt buying cars and televisions they don’t really need.

How can we square the consumerist ethic with the capitalist ethic of the business person, according to which profits should not be wasted, and should instead be reinvested in production? It’s simple. As in previous eras, there is today a division of labour between the elite and the masses. In medieval Europe, aristocrats spent their money carelessly on extravagant luxuries, whereas peasants lived frugally, minding every penny. Today, the tables have turned. The rich take great care managing their assets and investments, while the less well heeled go into debt buying cars and televisions they don’t really need.

Asset elephantiasis. When a fund earns high returns, investors notice—often pouring in hundreds of millions of dollars in a matter of weeks. That leaves the fund manager with few choices—all of them bad. He can keep that money safe for a rainy day, but then the low returns on cash will crimp the fund’s results if stocks keep going up. He can put the new money into the stocks he already owns—which have probably gone up since he first bought them and will become dangerously overvalued if he pumps in millions of dollars more. Or he can buy new stocks he didn’t like well enough to own already—but he will have to research them from s

1. No cold calling. Ever. You should attempt to sell only to warm leads. 2. Before you try to sell anything, you must know how much you’re willing to pay to get a new customer. 3. A prospect who “finds” you first is more likely to buy from you than if you find him. 4. You will dramatically enhance your credibility as a salesperson by authoring, speaking, and publishing quality information. 5. Generate leads with information about solving problems, not information about the product itself. 6. You can attain the best negotiating position with customers only when your marketing generates “deal flow” that exceeds your capacity. 7. The most valuable asset you can own is a well-maintained customer database, because people who’ve already bought from you are way easier to sell to than strangers.

The fragmentation of the neoliberal self begins when the agent is brought face to face with the realization that she is not just an employee or student, but also simultaneously a product to be sold, a walking advertisement, a manager of her résumé, a biographer of her rationales, and an entrepreneur of her possibilities. She has to somehow manage to be simultaneously subject, object, and spectator. She is perforce not learning about who she really is, but rather, provisionally buying the person she must soon become. She is all at once the business, the raw material, the product, the clientele, and the customer of her own life. She is a jumble of assets to be invested, nurtured, managed, and developed; but equally an offsetting inventory of liabilities to be pruned, outsourced, shorted, hedged against, and minimized. She is both headline star and enraptured audience of her own performance.

The flowering of the consumerist ethic is manifested most clearly in the food market. Traditional agricultural societies lived in the awful shade of starvation. In the affluent world of today one of the leading health problems is obesity, which strikes the poor who stuff themselves with hamburgers and pizzas even more severely than the rich who eat organic salads and fruit smoothies. Each year the US population spends more money on diets than the amount needed to feed all the hungry people in the rest of the world. Obesity is a double victory for consumerism. Instead of eating little, which will lead to economic contraction, people eat too much and then buy diet products – contributing to economic growth twice over. In medieval Europe, aristocrats spent their money carelessly on extravagant luxuries, whereas peasants lived frugally, minding every penny. Today, the tables have turned. The rich take great care managing their assets and investments, while the less well heeled go into debt buying cars and televisions they don’t really need.

In the immediate postbubble period, the wealth effect of asset price movements has a bigger impact on economic growth rates than monetary policy does. People tend to underestimate the size of this effect. In the early stages of a bubble bursting, when stock prices fall and earnings have not yet declined, people mistakenly judge the decline to be a buying opportunity and find stocks cheap in relation to both past earnings and expected earnings, failing to account for the amount of decline in earnings that is likely to result from what’s to come. But the reversal is self-reinforcing. As wealth falls first and incomes fall later, creditworthiness worsens, which constricts lending activity, which hurts spending and lowers investment rates while also making it less appealing to borrow to buy financial assets. This in turn worsens the fundamentals of the asset (e.g., the weaker economic activity leads corporate earnings to chronically disappoint), leading people to sell and driving down prices further. This has an accelerating downward impact on asset prices, income, and wealth.

Shareholders have a residual claim on a firm’s assets and earnings, meaning they get what’s left after all other claimants—employees and their pension funds, suppliers, tax-collecting governments, debt holders, and preferred shareholders (if any exist)—are paid. The value of their shares, therefore, is the discounted value of all future cash flows minus those payments. Since the future is unknowable, potential shareholders must estimate what that cash flow will be; their collective expectations about the future determine the stock price. Any shareholders who expect that the discounted value of future equity earnings of the company will be less than the current price will sell their stock. Any potential shareholders who expect that the discounted future value will exceed the current price will buy stock. This means that shareholder value has almost nothing to do with the present. Indeed, present earnings tend to be a small fraction of the value of common shares. Over the past decade, the average yearly price-earnings multiple for the S&P 500 has been 22x, meaning that current earnings represent less than 5 percent of stock prices.

But most investors do capitulate eventually. They simply run out of the resolve needed to hold out. Once the asset has doubled or tripled in price on the way up — or halved on the way down — many people feel so stupid and wrong, and are so envious of those who’ve profited from the fad or side-stepped the decline, that they lose the will to resist further. My favorite quote on this subject is from Charles Kindleberger: “There is nothing as disturbing to one’s well-being and judgment as to see a friend get rich” (Manias, Panics, and Crashes: A History of Financial Crises, 1989). Market participants are pained by the money that others have made and they’ve missed out on, and they’re afraid the trend (and the pain) will continue further. They conclude that joining the herd will stop the pain, so they surrender. Eventually they buy the asset well into its rise or sell after it has fallen a great deal. In other words, after failing to do the right thing in stage one, they compound the error by taking that action in stage three, when it has become the wrong thing to do. That’s capitulation. It’s a highly destructive aspect of investor behavior during cycles, and a great example of psychology-induced error at its worst.

A few years ago my friend Jon Brooks supplied this great illustration of skewed interpretation at work. Here’s how investors react to events when they’re feeling good about life (which usually means the market has been rising): Strong data: economy strengthening—stocks rally Weak data: Fed likely to ease—stocks rally Data as expected: low volatility—stocks rally Banks make $4 billion: business conditions favorable—stocks rally Banks lose $4 billion: bad news out of the way—stocks rally Oil spikes: growing global economy contributing to demand—stocks rally Oil drops: more purchasing power for the consumer—stocks rally Dollar plunges: great for exporters—stocks rally Dollar strengthens: great for companies that buy from abroad—stocks rally Inflation spikes: will cause assets to appreciate—stocks rally Inflation drops: improves quality of earnings—stocks rally Of course, the same behavior also applies in the opposite direction. When psychology is negative and markets have been falling for a while, everything is capable of being interpreted negatively. Strong economic data is seen as likely to make the Fed withdraw stimulus by raising interest rates, and weak data is taken to mean companies will have trouble meeting earnings forecasts. In other words, it’s not the data or events; it’s the interpretation. And that fluctuates with swings in psychology.

Buffett declared the best inflation hedge is a company with a wonderful product that requires little capital to grow. As a test, he invited each of us to look at our own earning ability. In inflation, your compensation can go up without any additional investment. As a business example, Buffett noted that when See’s Candy was purchased in 1971, it had the revenues of $25 million and sold 16 million pounds of candy annually with $9 million in tangible assets. Today, See’s sells $300 million of candy with $40 million of tangible assets. Berkshire needed to invest only $31 million to generate a more than 10-fold increase in revenues. In aggregate, Buffett noted that Berkshire has earned $1.5 billion in profits at See’s over the years. See’s inventory turns fast, has no receivables and has little fixed investment – a perfect inflation hedge. Buffett allowed that if you have tons of receivables and inventory, that’s a lousy business in inflation. The railroad and MidAmerican Energy both have these undesirable characteristics, but that is offset by their utility to the economy and subsequent allowable returns. Buffett rued that there simply aren’t enough “See’s Candys” to buy. Buffett added that being an investor has made him a better businessman and that being a businessman has made him a better investor.(125) Munger noted that they didn’t always know this inflation-business element, which shows how continuous learning is so important.

Statisticians say that stocks with healthy dividends slightly outperform the market averages, especially on a risk-adjusted basis. On average, high-yielding stocks have lower price/earnings ratios and skew toward relatively stable industries. Stripping out these factors, generous dividends alone don’t seem to help performance. So, if you need or like income, I’d say go for it. Invest in a company that pays high dividends. Just be sure that you are favoring stocks with low P/Es in stable industries. For good measure, look for earnings in excess of dividends, ample free cash flow, and stable proportions of debt and equity. Also look for companies in which the number of shares outstanding isn’t rising rapidly. To put a finer point on income stocks to skip, reverse those criteria. I wouldn’t buy a stock for its dividend if the payout wasn’t well covered by earnings and free cash flow. Real estate investment trusts, master limited partnerships, and royalty trusts often trade on their yield rather than their asset value. In some of those cases, analysts disagree about the economic meaning of depreciation and depletion—in particular, whether those items are akin to earnings or not. Without looking at the specific situation, I couldn’t judge whether the per share asset base was shrinking over time or whether generally accepted accounting principles accounting was too conservative. If I see a high-yielder with swiftly rising share counts and debt levels, I assume the worst.

To understand how commodity money emerges, we return in more detail to the easy money trap we first introduced in Chapter 1, and begin by differentiating between a good's market demand (demand for consuming or holding the good for its own sake) and its monetary demand (demand for a good as a medium of exchange and store of value). Any time a person chooses a good as a store of value, she is effectively increasing the demand for it beyond the regular market demand, which will cause its price to rise. For example, market demand for copper in its various industrial uses is around 20 million tons per year, at a price of around $5,000 per ton, and a total market valued around $100 billion. Imagine a billionaire deciding he would like to store $10 billion of his wealth in copper. As his bankers run around trying to buy 10% of annual global copper production, they would inevitably cause the price of copper to increase. Initially, this sounds like a vindication of the billionaire's monetary strategy: the asset he decided to buy has already appreciated before he has even completed his purchase. Surely, he reasons, this appreciation will cause more people to buy more copper as a store of value, bringing the price up even more. But even if more people join him in monetizing copper, our hypothetical copper-obsessed billionaire is in trouble. The rising price makes copper a lucrative business for workers and capital across the world. The quantity of copper under the earth is beyond our ability to even measure, let alone extract through mining, so practically speaking, the only binding restraint on how much copper can be produced is how much labor and capital is dedicated to the job.

History favors the bold. Compensation favors the meek. As a Fortune 500 company CEO, you’re better off taking the path often traveled and staying the course. Big companies may have more assets to innovate with, but they rarely take big risks or innovate at the cost of cannibalizing a current business. Neither would they chance alienating suppliers or investors. They play not to lose, and shareholders reward them for it—until those shareholders walk and buy Amazon stock. Most boards ask management: “How can we build the greatest advantage for the least amount of capital/investment?” Amazon reverses the question: “What can we do that gives us an advantage that’s hugely expensive, and that no one else can afford?” Why? Because Amazon has access to capital with lower return expectations than peers. Reducing shipping times from two days to one day? That will require billions. Amazon will have to build smart warehouses near cities, where real estate and labor are expensive. By any conventional measure, it would be a huge investment for a marginal return. But for Amazon, it’s all kinds of perfect. Why? Because Macy’s, Sears, and Walmart can’t afford to spend billions getting the delivery times of their relatively small online businesses down from two days to one. Consumers love it, and competitors stand flaccid on the sidelines. In 2015, Amazon spent $7 billion on shipping fees, a net shipping loss of $5 billion, and overall profits of $2.4 billion. Crazy, no? No. Amazon is going underwater with the world’s largest oxygen tank, forcing other retailers to follow it, match its prices, and deal with changed customer delivery expectations. The difference is other retailers have just the air in their lungs and are drowning. Amazon will surface and have the ocean of retail largely to itself.

Consider the following fact. Sweden accounts for approximately 1 percent of the world economy. A rational investor in the United States or Japan would invest about 1 percent of his assets in Swedish stocks. Can it make sense for Swedish investors to invest 48 times more? No. [T]his reflects the well-known tendency of investors to buy stocks from their home country, something that economists refer to as the home bias.

In most markets, savvy investors can take a contrarian position when prices depart too much from fundamental value. In the housing market (as well as in the market to take firms private), few opportunities exist for investors to take a short position—that is, sell houses they do not have so as to make a killing when prices fall. This typically means that the optimist, who buy housing, tend to have undue influence.14 So house prices, and more generally, asset prices, can rise excessively, and their reacquaintance with reality can be brutal indeed.

Cedar Capital Group Tokyo: Owning vs Renting Heavy Equipment You have some projects underway. It is either you gear up and buy your own equipment, extend your company’s capabilities and add them these equipment to your business’ asset or you just need to rent a unit and cut the cost. How do you decide when to buy and rent the equipment anyway? We have learned a lot of pros and cons of renting and buying. It is important to evaluate your company’s current situation and capabilities including your financial plans to carefully consider which method you will use in acquiring the equipment. Here is a review of the things which you should bear in mind before deciding when to buy and when to rent equipment: 1. Budget The budget is one of the most important factors in any start of the business. Do you have enough capital to buy a new equipment? If so, will it be practical to use that money to buy or is it more rational to rent and save the cost? You should not look only on the first few months of operation but foresee the future need of the equipment to be used. Although buying may be a larger one-time financial outlay, the cost of renting can add up quickly, and over a long period of time can end up costing you more – especially if the equipment isn’t being used for the entire rental period. And don’t forget: when you own, you can see a return on your investment when you sell. 2. Duration of Project Time frame is important to know how long you will need the equipment. It is more practical to rent the machine if you are only using it for a short period of time. Renting also makes more sense if you are using the equipment for only a specific task. The risk, of course, is the increasing cost of rental when the equipment is not used the entire time. Fortunately, many rental companies in Singapore, Tokyo, Japan and Seoul South Korea only require payment for the actual time the machine is being used. On the other hand, if you are working on a long project and would be using the machine frequently, it is more advisable to buy your own equipment. The complaints on damage on the parts of the equipment can still be charged on you if you are renting it. It becomes worse if you wear the machine out so it would be better if you purchase your own.

One of the big mistakes I see investors make is to pile all of the real estate assets they own into one corporate basket.

Imagine a bank with $1 trillion in mortgage assets and $25 billion in capital, a 40:1 leverage ratio. To get it to a much safer 20:1 leverage ratio, the government could buy $500 billion of its assets, which would drain most of TARP on one institution. Or it could inject $25 billion in additional capital, achieving the same ratio with one-twentieth of the cash.

Dave Packard in 1939 in a garage. Over the years, HP grew to be become a multinational information technology company, with revenues and assets of well over $100 billion. HP has often grown in recent years by acquiring other companies. Just as an individual is making an investment when he or she buys shares of stock, a corporation is making a much larger investment when it buys an entire company. And, just as reliable financial information is critical to individuals when making investment decisions, it is equally important when one company is considering

Hewlett-Packard (HP) was founded by Bill Hewlett and Dave Packard in 1939 in a garage. Over the years, HP grew to be become a multinational information technology company, with revenues and assets of well over $100 billion. HP has often grown in recent years by acquiring other companies. Just as an individual is making an investment when he or she buys shares of stock, a corporation is

McClendon and Ward had an opportunity to make a fortune. They crafted a strategy to buy the best natural gas assets in the country as quickly as possible. They felt compelled to act quickly, before others caught on that prices were headed higher. They suspected they could use newfangled horizontal drilling techniques to help locate gas. Around

the last stage of a bear market "is caused by distress selling of sound securities, regardless of their value, by those who must find a cash market for at least a portion of their assets." The market player who avoids being invested near the top of bull markets-where he can really get hurt in a panic crash-and plays the short side in bear markets can be in the position to take advantage of such distress selling. You might miss the last 10 or even 20% of the gains to be made near bull market tops (while making T-bill yields), but you'll definitely still have your capital when the time comes to buy value with tremendous upside potential and almost no downside risk. In my view, the way to build wealth is to preserve capital, make consistent profits, and wait patiently for the right opportunity to make extraordinary gains.

An Introduction to CFD Trading Increase, commit, and individuals trying to trade systems and their cash in different areas are usually trying to find new strategies. Like several good buyer, you won’t be joining the group, instead you had want in order to change lives begin or to create one. Stocks trading is really 80s within the sensation that perhaps young kids today understand how it operates, and have the ability to survive without any formal education. If you should be looking for a new company shift, you should provide a try to this new venture. First what’s a CFD? CFD stands for contract for difference. It’s thought as a small business contract an entrepreneur and by an expense business. If the contract expires, both parties can trade notes concerning the differences between the original and final price indices of particular monetary things like shares of items and futures. This is exactly what CFD Trading is focused on. The one edge that traders have within this economic contract is the fact that they get to purchase these factors at lower costs despite the fact that it includes nonvoting stocks where the trader can’t vote on all aspects of the company as opposed to what stockholders are blessed to do. Another thing is the fact that a CFD does not hold taxes on files even if these aspects are acquired in large amounts. In simple terms, it’s a in which a derivative asset is founded on an underlying asset’s cost between two entities that transactions the differences. These parties will need to pay the differences required to eachother. The way in which CFD Trading works is that among the entities gives the difference before contract ends included to the other. Just about like what occurs in spreadbetting, the trader continues the opposite end-of the deal with investment institution or CFD service, where the trader anticipates which cost will increase and having three selections to take whether to buy, to slide or to sell the component required. Another similarity with spreadbetting is the fact that you can find no tax tasks since CFD’s don’t involve buying of assets to become settled. It just requires the activity of the fee. Since the investor is just needed to spot a minor amount on these things, that are also called edges, the earnings and in addition losses will soon be on the basis of the money set in. In other words, a CFD is good for the entrepreneur since it gives him the chance of owning main assets without so much problem. Does It Work A good example of that is to ingest a share worth $20 and the entrepreneur buys 100 of these. He will be cost $2,000 by this exchange. Employing a stockbroker will demand the entrepreneur to shell 50% of this amount out. That is $1,000. A meager initial cashout is needed which amounts as much as only $100, should you evaluate that to an expenditure finished with a CFD representative. However, allow it to be regarded that whenever an investor enters a deal of difference, the cost place usually begins in a loss. Which damage is definitely equal to the spread. Which means the spread is at $8 along with if you come into a deal, the underlying resource must generate $8 merely to break even. Let us say if the actual resource reaches a quote cost of $ 20, then the CFD price will be a few cents less than that since the dealer will have to escape at that point. So as opposed to increasing your money to $40, he will must settle for several dollars. Nevertheless not really a terrible package to get a purchase with less trouble.

Imagine that you knew Greece was still Greece and Italy was still Italy and that the prices quoted in the markets represented the bond-buying activities of banks pushing down yields rather than an estimate of the risk of the bond itself. Why would you buy such securities if the yield did not reflect the risk? You might realize that if you bought enough of them—if you became really big—and those assets lost value, you would become a danger to your national banking system and would have to be bailed out by your sovereign. If you were not bailed out, given your exposures, cross-border linkages to other banks, and high leverage, you would pose a systemic risk to the whole European financial sector. As such, the more risk that you took onto your books, especially in the form of periphery sovereign debt, the more likely it was that your risk would be covered by the ECB, your national government, or both. This would be a moral hazard trade on a continental scale. The euro may have been a political project that provided the economic incentive for this kind of trade to take place. But it was private-sector actors who quite deliberately and voluntarily jumped at the opportunity.

A brand is… A promise. The way we differentiate this from that. Whatever the customer believes about a company. A feeling created. The tangible representation of personal or company values. A set of expectations met. The way a person or company communicates what they do and why they do it. Trust built between a customer and a business. A company asset. Your word. A set of unique benefits. Reasons to buy, or buy into, something. A story we tell ourselves. Communication with and without words. A symbol of belonging. Signals sent. A waymarker. The experience a customer has. A complete field guide to a business. The impression that’s left at the last interaction.

The wealthy buy assets, experiences, and time . . . not things. As mentioned earlier, time is money, but money is also time. The more you save, the more future freedom you’ll have.

if you consistently practice the techniques recommended in this book, you will automatically side-step most of the emotional investment traps. Pay off your credit card and high-interest debts and stay out of debt. Formulate a simple, sound, asset allocation plan and stick to it. Systematically save and invest a part of each paycheck in accordance with the asset allocation plan. The earlier you start, the richer you become. Invest most or all of your money in index funds. Keep your costs of investing and taxes low. Don’t try to time the market. Tune out the noise, rebalance your portfolio when necessary, and stick with your plan. By doing those things, you will intelligently manage risk. You will buy low, sell high, and have the power of compounding working in your favor. You will slowly but systematically build wealth and a nest egg for a comfortable retirement. With a little luck, you will have more money than you dreamed you would ever have. These time-tested techniques have worked for millions of other people and they can work for you, too.

Rebalancing may also improve your returns, since asset classes have had a tendency to revert to the mean (RTM) over time. By rebalancing, you’re selling a portion of your winning asset classes before they revert to the mean (drop in price) and you’re buying more of your underperforming asset classes when their prices are lower, before they revert to the mean (increase in value). So, you’re selling high and buying low. If you believe in RTM, rebalancing could increase your returns. Jack Bogle believes in RTM, and we do, too.

The worry is that Uncle Sam could lose access to affordable financing if China refuses to keep buying Treasuries. There are a number of problems with this thinking. For one thing, China can’t avoid holding dollar assets without wiping out its trade surplus with the United States. That’s not something China wants to do, since shrinking its exports to the US would tend to slow its economic growth. Assuming it wants to keep its trade surplus intact, it’s going to end up holding dollar assets. As financial commentator and former investment banker Edward Harrison put it, “the only question for China is which dollar assets [green dollars or yellow dollars] it will buy, not whether it will go on a US dollar strike.

It’s easier to stimulate asset prices than it is to stimulate an economy.

Nobody had good answers to the problems of how we would decide which assets to buy

This systemic risk problem is what drew Blythe Masters, one of the key figures behind blockchain innovation on Wall Street, into digital ledger technology; she joined Digital Asset Holdings, a blockchain service provider for the financial system’s back-office processing tasks, as CEO in 2014. Masters is best known for one of the most contentious financial innovations of our time, the credit default swap (CDS), a financial derivative contract in which one institution agrees to pay another if a particular bond or loan goes into default. At the age of just twenty-five, and as part of a crack team at J.P. Morgan, she conceived of CDSs as a way for investors to buy insurance against the risk they bear on their balance sheets—and thus to unlock capital hitherto tied up against that risk—as well as for other investors, the banks, and other institutions that issue the CDS to place a bet on the underlying asset without actually owning it.

As the head of International Match, Ivar debited that amount from the company’s cash and replaced it with a credit to Continental Investment Corporation in the same amount. Suddenly, International Match’s primary asset was an IOU from Continental instead of cash. Then, without the Americans seeming to care or even notice, Ivar wired $12,244,792 – all of the remaining proceeds from the International Match gold debenture issue, one of the largest American securities issues in years – to Continental’s account in Vaduz. Ivar was no Charles Ponzi. He wasn’t going to abscond with the money. He just wanted the flexibility to use the funds as he pleased, and to buy time if things didn’t go as planned. In a bad year, he could fudge the numbers and pay dividends out of Continental’s assets. In a good year, he could understate earnings and save for a rainy day by hiding the extra income at Continental.

This is an asset I can leverage with good debt, the property covers all operational expenses, improvements, insurance, taxes, and debt while I patiently wait for the rents to increase and the value of the property then appreciates at which point we sell or refinance and own the property with no money invested. I never deviate from this criteria. I invest my surplus cash into income-producing machines, in great locations, where the rent is less than the cost of home ownership, and I am buying at or below replacement cost. When I do invest, I buy very large deals, typically 200 to 1,000 units at a time, in markets with decades of projected job growth, and market demographics more likely to rent than own.

Earth would have gone broke centuries before the Stryx opened the planet if companies hadn’t been able to count as assets the money they were owed by customers buying on credit.

One Toyota executive stated the sentiment well, “Team members are the only appreciating asset we have. Everything else starts depreciating from the moment we buy it.

Time is our most irreplaceable asset—we cannot buy more of it. We can only strive to waste as little as possible.

A moral inversion is a form of political arbitrage. Nietzsche criticized it when Christianity did it, but also had to admit it worked.78 Why did it work? One view is that “afflict the comfortable and comfort the afflicted” is essentially the same concept as buy low/sell high. You’re supporting something when it’s low and shorting it when it’s high. The mood of the words is very different, of course. The political arbitrage of supporting those with low status and attacking those with high status is typically framed as a moral imperative, while the financial arbitrage of buying assets with low value and selling assets of high value is usually portrayed as a dispassionate mechanism for gaining financial capital. But recall that people do sometimes make moral arguments for buying low and selling high (“it helps markets become more efficient”). So you might invert the mood of the words on the other side too, and think of “afflicting the comfortable and comforting the afflicted” as a dispassionate mechanism for gaining political capital.

If a company did not own a majority of a subsidiary’s shares, it didn’t make sense to “consolidate” that subsidiary by reporting all of its assets and liabilities. Berning treated International Match’s minority stakes in other companies as investments in special purpose entities, which could be excluded from International Match’s financial statements. Why would International Match consolidate the debts of a minority investment? If it bought some shares of RCA, would it need to include RCA’s debts as well? No, Berning said. Such debts were deemed to be off the balance sheet. Durant was conflicted about the new preferred issue they were planning. Ivar’s financial statements were sloppy and incomplete. Yet investors nevertheless clamored to buy securities of International Match.

The markets’ extreme highs are created when avid buyers are in control, pushing prices to levels that may never be seen again. The lows are created when panicky sellers predominate, willing to part with assets at prices that often turn out to have been grossly inadequate. “Buy low; sell high” is the time-honored dictum, but investors who are swept up in market cycles too often do just the opposite. The proper response lies in contrarian behavior: buy when they hate ’em, and sell when they love ’em.

The absolute best buying opportunities come when asset holders are forced to sell, and in those crises they were present in large numbers.

What is it that makes something the superior investment we look for? As I mentioned in chapter 4, it’s largely a matter of price. Our goal isn’t to find good assets, but good buys. Thus, it’s not what you buy; it’s what you pay for it. A high-quality asset can constitute a good or bad buy, and a low-quality asset can constitute a good or bad buy.

John Myers, who spent thirty-seven years at GE, ran its pension fund for years, and sat on the GE Capital board, explained to me the keys to the success of GE Capital: GE’s AAA credit rating, allowing it to borrow money very cheaply. “Banks weren’t even rated AAA at that time,” he said. “We borrowed money cheaper than anyone could.” GE could also use GE Capital to reduce the taxes GE would otherwise pay on earnings from its very profitable industrial businesses. Here’s how that worked: If, say, an airline bought a new jet, it would have an asset that would depreciate over time, and the airline could use the depreciation to reduce its taxable income. But, at that time anyway, most airlines didn’t make much money, if any, so the value of the depreciation deductions was of little use to them. But to GE, the depreciation—the tax deductions—would be very valuable as a way to reduce GE’s pretax income and therefore to pay less in taxes. With that logic, GE Capital would buy the jets, lease them to the airlines at commercially attractive rates, and then use the depreciation on the jets to reduce the pretax income at GE.

A lot of companies acquire others without much sensitivity toward what they’re really buying. They think they’re getting physical assets or manufacturing assets or intellectual property (in some industries, that’s more true than others). But usually what they’re really acquiring is people. In a creative business, that’s where the value lies.

I know what it’s like to be taken over by another company,” I told him. “Even in the best of circumstances, the merger process is delicate. You can’t just force assimilation. And you definitely can’t with a company like yours.” I said that even if it isn’t purposeful, the buyer often destroys the culture of the company it’s buying, and that destroys value. A lot of companies acquire others without much sensitivity regarding what they’re really buying. They think they’re getting physical assets or manufacturing assets or intellectual property (in some industries, that’s more true than in others). In most cases, what they’re really acquiring is people. In a creative business, that’s where the value truly lies.

DES, or diethylstilbestrol, is a man-made estrogen that was first synthesized in 1938. Soon afterward, a professor of poultry husbandry at the University of California discovered that if you inject DES into male chickens, it chemically castrates them. Instant capons. The males develop female characteristics—plump breasts and succulent meats—desirable assets for one’s dinner. After that, subcutaneous DES implants became pretty much de rigueur in the poultry industry, at least until 1959, when the FDA banned them. Apparently, someone discovered that dogs and males from low-income families in the South were developing signs of feminization after eating cheap chicken parts and wastes from processing plants, which is exactly what happened to Mr. Purcell. The U.S. Department of Agriculture was forced to buy about ten million dollars’ worth of contaminated chicken to get it off the market. But by then DES was also being widely used in beef production, and oddly enough, the FDA did nothing to stop that. Here is a brief recap:

Never buy a depreciating asset. If it drives, flies, floats, or fucks... lease it.

In the Declaration of Independence, freedom comes right after equality. For Reagan and the narrative of Free America, it meant freedom from government and bureaucrats. It meant the freedom to run a business without regulation, to pay workers whatever wage the market would bear, to break a union, to pass all your wealth on to your children, to buy out an ailing company with debt and strip it for assets, to own seven houses—or to go homeless. But a freedom that gets rid of all obstructions is impoverished, and it degrades people. Real freedom is closer to the opposite of breaking loose. It means growing up, and acquiring the ability to participate fully in political and economic life. The obstructions that block this ability are the ones that need to be removed. Some are external: institutions and social conditions. Others are embedded in your character and get in the way of governing yourself, thinking for yourself, and even knowing what is true. These obstructions crush the individuality that freedom lovers cherish, making them conformist, submissive, a group of people all shouting the same thing—easy marks for a demagogue.

Buying or building assets that deliver cash flow is putting your money to work for you. High-paying jobs mean two things: you’re working for money and the taxes you pay will probably increase. I’ve learned to put my money to work for me and enjoy the tax benefits of generating income that doesn’t come from a paycheck.

Researchers and research organizations who aim to 'change the way people think or do' must have the freedom, not only to be contrarian, bot also the be wrong. Contrariness sometimes leads to failure, but from failure comes learning, and from learning very often comes implausible utility, the useful and surprising. Contrariness is not the only thing required of researchers to achieve implausible utility, however. The second thing that is required is informedness. Conventional wisdom and existing paradigms 'work' - that is why we adopt them in the first place and that is why we resist so strongly their overthrow. If a researcher is going to take seriously observations and ideas that go against conventional wisdom, the researcher had better have good reasons for doing so - and the discipline to develop those good reasons. These reasons we call informedness - 'inside' knowledge or capabilities the researcher possess that the researcher's peers don't yet have. This inside knowledge makes the researcher think the researcher is right and conventional wisdom is wrong. The researcher is an 'informed contrarian,' going against conventional wisdom but in an informed way to reduce the tremendous risk associated with going against that very wisdom. Like a financial arbitrageur who uses greater informedness about the true value of an asset to buy those assets currently undervalued by conventional wisdom, informed contrarian researchers are research arbitrageurs who use their greater informedness about the value of a research observation or idea to take seriously those ideas currently undervalued by conventional wisdom.

Gold, paintings, or bitcoin are all examples of buying a bigger-idiot type of asset. You can be lucky and find a bigger idiot most of the time, but if you consistently play the same game, once in a while you will be the biggest idiot. You will find yourself holding the bag all the way down to market bottoms.

Prudent investing is all about buying the right assets at the right price.

Most of the assets can be a good investment if you buy at the right price.

The number one reason people lose money in investing is because they buy assets without giving any thought whatsoever to the fair value.

The most important thing is to invest. The second most important thing is to buy well.

Recalling his research, Helicopter Ben was focused on a system-wide credit crunch, not the failure of individual firms. That frame gave him an idea. He would buy the toxic-sludge assets from the banks, taking them off their balance sheet. Then, the banks could use those fresh, clean dollars to lend—pumping capital into the system. Between 2008 and 2015, the Fed’s balance sheet soared from $900 billion of mostly high-quality Treasury notes to $4.5 trillion of largely risky assets. And it worked. The financial crisis was painful, but the system did not collapse. Bernanke’s framing, imbued with causal understanding, allowed him to see the economy in a way that others did not. Even amid market uncertainty, the system can be understood by human reason, predicted with human foresight, and controlled by human hand.

Wilbur Ross, the new commerce secretary, had extensive investments in China, and one of his companies was partnered with a state-owned Chinese corporation (under pressure, Ross appears to have divested in 2019).42 While in China in 2017 he talked up a partnership between Goldman Sachs and the state-owned investment fund China Investment Corp, to provide up to $5 billion to buy into US manufacturers, including sensitive assets.43 (Readers might consult this book’s index to grasp the outsized role Goldman Sachs plays in Beijing’s influence operations.) Trump’s director of the National Economic Council, Gary Cohn, had been president of Goldman Sachs, which was heavily involved with Chinese banks, giving Cohn a personal stake in their success. Among his financial interests in China before his appointment was a multimillion-dollar stake in a huge Party-controlled bank, the Industrial and Commercial Bank of China, which he helped to buy assets in the US.

Out of all the assets that money can buy, time is not one of them.