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Wednesday, September 25, 2013

Beware of the IPO

During frothy periods in the stock market, crappy companies go public in mass and get greeted with a sharp increase in share price, only to see the the same share sell for pennies in the long run.

We are in that period now.


Chapter 6 of the Intelligent Investor

...in the 1965 edition by citing “A Horrible Example,” namely, the sale of stock of Aetna Maintenance Co. at $9 in November 1961. In typical fashion the shares promptly advanced to $15; the next year they fell to 2 3/8, and in 1964 to 7/8....
 and...
It is by no means difficult to provide even more harrowing examples taken from the more recent version of “the same old story,” which covered the years 1967–1970. Nothing could be more pat to our purpose than the case of AAA Enterprises, which happens to be the first company then listed in Standard & Poor’s Stock Guide. The shares were sold to the public at $14 in 1968, promptly advanced to 28, but in early 1971 were quoted at a dismal 25¢. 

Tuesday, September 17, 2013

My favorite Buffett video: Florida University, hour and a half long

I inevitably watch this video once a year -- it is the poor man's annual shareholder meeting.


Enjoy