One of my favorite books on investing is "The Book of Business Wisdom" edited by Peter Krass. On page 421, there is a chapter entitled "How to Make Money on Wall Street" by Henry Clews.
Some of the smartest investors of our time, in particular, Jim Rogers and Warren Buffett, seem to be following the advice of Henry Clews.
During the late nineteenth century, Clews saw firsthand, and understood how Wall Street worked. In his book, "How to Make Money on Wall Street", Clews revealed some shocking stories of political and economic manipulation.
The nuts and bolts lesson from Crews is that regardless of the investment, investor emotions often cause serious mistakes.
While it痴 easy to get rapped up in manias and hype's (I.E. - The NASDAQ in 2000, Real Estate, Dow 12,000?) the big money is made when there is blood in the streets and widespread pessimism.
Warren Buffett only buys bargains, and currently has billions in cash. Jim Rogers says, 的 wait until the money痴 lying in the corner and all I have to do is walk over and pick it up.�
As the Dow teeters with 12,000, there isn't any money "lying in the corner".
Here are some excerpts from Clews book "How to Make Money on Wall Street".
擢ew [traders] gain sufficient experience in Wall Street to command success until they reach that period in life in which they have one foot in the grave.�
"In times of panic, (these old veterans of Wall Street) these old fellows can be seen hobbling down on their canes to their brokers' offices."
While the market is in panic, these old men go down to the bank and withdraw the cash and 澱uy good stocks to the extent of their bank balances, which have been permitted to accumulate for just such an emergency.� After doing so, they return home and wait for panic to subside, and euphoria to return.
Once the market recovers, these old men go down to their brokers' offices, sell the stock they bought, and put the money back in the bank.
"I say to the young speculators, therefore, watch the ominous visits to the Street of these old men. They are as certain to be seen on the eve of a panic as spiders creeping stealthily and noiselessly from their cobwebs just before rain."
'Those who follow this method always succeed. There has hardly been a year within my recollection, going back nearly 30 years, when there have not been 2-3 squalls in the Street, when it was possible to purchase stocks below their intrinsic value".
Intrinsic Value ? Haven't we heard this term used by Warren Buffett?
