Please note!! There are three additional drop-down pages here. I recommend them all to you.
The first are reviews of what we believe to be the greatest investment classics ever written. We have purposely selected books that were published more than 3 generations ago to demonstrate that there is nothing new under the sun!
The second consists of quotes and aphorisms about investing. They aren’t necessarily written solely about investing but their wisdom certainly applies in this arena!
The third drop-down contains some public-domain photos and cartoons. Many of these, too, are older — which only proves the point that investing wisdom is timeless.
Here are two short articles to serve as your lead-in to the books, aphorisms, witty sayings and photos and cartoons in the drop-down box…
What is Our Current Market Forecast?
“It will fluctuate.”
Our answer is not intended to be glib or flippant. It is, in fact,
what the steely-eyed gentlemen in the photograph, J.P
Morgan, replied when asked the dull-witted question as to
what the stock market would do that week.
He gave the only honest answer a man can give. J.P. Morgan
didn’t know what the market would do the next day. Neither do
I. Neither does anyone else. Yet there is an entire sub-industry
of people buying expensive TV ads and bombarding you via e-
mail and your mailbox, “So-and- So’s Startling Prediction for
Tomorrow’s Market! Buy Our Service Today!!!”
Seriously now — if they really knew what the market was
going to do or what stock would return 1000% or more, why
wouldn’t they just buy it and retire rich rather than trying to sell
you their predictions / guesses? Yet every day otherwise-
intelligent people line up and scramble to get to the front of the
line to buy this hooey!
Forget the shrill and the charlatan. Instead, build a portfolio,
balance your assets across asset classes, stock it with quality
funds and firms from around the world, and be willing to sell
when the time is right. Concern yourself with asset allocation
and secular timing before you even move on to stock selection.
So, rather than give a Market Forecast for tomorrow, we offer
instead our our services in creating for you a Market Philosophy
for a Lifetime. — J L Shaefer
To achieve Certain Wealth in Uncertain Times ®….
Anyone can make money when the market is going up. The
key is — don’t give it back when the market declines. To do this,
we have concluded it is essential to identify contracyclical
sectors, look beyond US borders, and delve into long/short
mutual funds and ETFs, convertible securities, high-yielding
stores of value, rising rate funds, and so on, in order to not only
"not give it back" but in fact to try to make money in good
times and bad — in certain times and uncertain times.
A client recently asked how I could write favorably about a
company, then be willing to sell it four months or a year or ten
years later. The answer is simple: stock selection is the least
important, but potentially the most dangerous, investing
decision. Let me explain…
There are certain companies that are well-managed, well-
capitalized, treat their employees right, and are growing their
sales and their earnings while increasing their market share. I
like those kind of companies!
If the market conditions are favorable, and the companies are
in a sector whose stocks I believe will do well over the coming
six months to infinity, that company's stock might even be
appealing. Very often I really like a company, but wouldn't
touch their stock because it is overpriced. But if the stock has
experienced a decline in share price because of what I consider
a temporary and/or overblown phenomenon (like missing some
analyst's earnings guess by a penny) it may represent great
value. That's when I want to buy it!
So if I like the company and I like the stock, why am I then
willing to sell just a few months or years later? Well, if the same
market factors are in place (the bull is still intact) and the sector
is still attractive, I'll hold and hold and hold.
But, remember, stock selection is only one part of the investing
decision. If the market looks infirm or terminal, I want out.
Even the greatest company whose stock is cheap won't
completely resist a secular decline. And if the sector turns cool
then I will use trailing stops. These stops may mean that I
abandon the entire sector and wait for prices to plummet
The bottom line? I am faithful to a methodology and a
discipline. I may get excited with a great company's vision and
execution. But I never, ever, fall in love with a piece of paper
(the stock) that is just minuscule ownership in a particular
company. Great companies are always being born or reborn.
Sometimes their stock prices are attractive. Sometimes they are
not. But the market and the sector have more to do with the
price appreciation you and I will enjoy than even the best-
Most people waste an investing lifetime saying, "just tell me
which stocks will go up." This leads them to fall for the
charlatans out there who give the marks what they ask for.
Successful investing is more complex on the buy side and far
more complex on the sell side. If it were easy, anyone could do
it. Most fail. For me, with my particular discipline, if any of the
key factors of market direction, sector, or share value change, it
can trigger a decision.
Please don’t seek shortcuts when viewing the Investor's Edge
portfolios, either! I was told by a subscriber recently that he
didn't need an investment adviser. His sure-fire way to do well
was just to buy everything in our model portfolios with a # next
to it, meaning that I or someone else at Stanford Wealth
Management owns the stock. I was aghast.
Don't buy just those I hold! Like you, I have money to invest
some months and I'm out of Schlitz other months. If I just
bought 2,000 XYZ for $50,000 it doesn't matter how highly I
regard some stock I uncover in the next couple weeks, I am out
of money until I sell something or until I earn more money. I
can't buy everything I analyze and conclude is an appropriate
investment for the market we're then in. Since it is quite
certain that I will never be burdened by the demands of
inherited wealth, what comes in to my bank account comes
solely from my work and the capital gains I enjoy from my
As I've matured (OK, "gotten older") more and more of the
increase in my net worth comes from intelligent investing
rather than business income. My lifestyle and future improve
primarily by what I buy and sell. My suggestions to you come
from the research I do to keep the wolf from the door. I can't
afford to chase some hot stock — this is my nest egg. That's
why I invest in a methodical, coherent, and disciplined
That's also, as I answered my client's question, why I am able to
select, but also to abandon, the pieces of paper that represent
my ownership in great companies: if the company hits a
serious speed bump, or the market looks weak,
or the sector looks tired, or the stock becomes
overpriced, it is time to move along.
One final thought on stock selection and retention (the "keep it
or not" decision): diversify across industry, sector, and region.
If you are going to use the kind of disciplined approach I use,
you must buy more than just one of the stocks I recommend.
Just as you should not say, "just tell me what stocks will go up,"
don’t even think "this is the one (or two or three)that have to
What I write about a particular industry may strike a responsive
chord with you, but that doesn’t mean you should buy only my
recommended stocks in only that industry. These portfolios are
a gestalt. You may not mirror the entire portfolio, but at least
select a cross-section of sectors and companies! If you do, I
believe you will slowly and surely gain “Certain Wealth in
— J L Shaefer
Copyright Stanford Wealth Management