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									                    Good Bussiness Writings

Common stocks and uncommon
profits and other writings
Philip A. Fisher

What to buy

The fifteen points to look for in a common stock

      • Point 1: Does the company have products or services with sufficient market potential to
          make possible a sizeable increase in sales for at least several years?
      •   Point 2: Does the management have a determination to continue to develop products or
          processes that will still further increase total sales potentials when the growth potentials of
          currently attractive products line have largely been exploited?
      •   Point 3: How effective are the company’s research and development efforts in relation to its
      •   Point 4: Does the company have an above-average sales organization?
      •   Point 5: Does the company have a worthwhile profit margin?
      •   Point 6: What is the company doing to maintain or improve profit margin?
      •   Point 7: Does the company have outstanding labor and personal relations?
      •   Point 8: Does the company have outstanding executive relations / executive climate?
      •   Point 9: Does the company have depth to its management? / Does the top management
          welcome and evaluate suggestions from personnel even it those suggestions carry with
          them adverse criticism of current management practices?
      •   Point 10: How good are the company’s cost analysis and accounting controls?
      •   Point 11: Are there other aspects of the business, somewhat peculiar to the industry
          involved, which will give the investor important clues as to how outstanding the company
          may be in relation to its competition?
      •   Point 12: Does the company have a short-range or a long-range outlook in regard to profits?
      •   Point 13: In the foreseeable future will the growth of the company require sufficient equity
          financing so that the larger number of shares then outstanding will largely cancel the existing
          stockholders’’ benefits from this anticipated growth?
      •   Point 14: Does the management talk freely to investors about its affairs when things are
          going well but “calm up” when troubles and disappointments occur?
      •   Point 15: Does the company have a management of unquestionable integrity?

Ten don’ts for Investors

    •   Point 1: Don’t buy into promotional companies!
    •   Point 2: Don’t ignore a good stock just because it is traded “over the counter”!
    •   Point 3: Don’t buy a stock just because you like the “tone” of its annual report!
    •   Point 4: Don’t assume that the high price at which a stock may be selling in relation to
        earnings is necessarily an indication that further growth in those earnings has largely been
        already discounted in the price!
    •   Point 5: Don’t quibble over eights and quarters!
    •   Point 6: Don’t overstress diversification”
    •   Point 7: Don’t be afraid of buying on the war scare!
    •   Point 8: Don’t be influenced by what doesn’t matter!
    •   Point 9: Don’t fail to consider time as well as price in buying a true growth stock!
    •   Point 10: Don’t follow the crowd!

The four dimension of a conservative investment

First dimension: Superiority in production, marketing, research and financial

    •   Low –cost production
    •   Strong marketing organization
    •   Outstanding research and technical effort
    •   Financial skill

Second dimension: The people factor

    • The company must recognize that the world in which it is operating is changing in an ever-
        increasing rate.
    • There must always be a conscious and continuous effort, based on fact, not propaganda, to
        have employees at every level, from the most newly hired blue-color or white-color worker to
        he highest level of management, feel that their company is a good place to work.
    • Management must be willing to submit itself to the disciplines required for sound growth.

Third dimension: Investment characteristics of some businesses / within the
nature of the business itself

    • What can the particular company do that other would not be able to do about as well?

Fourth dimension: Price of a conservative investment

    • Every significant price move of any individual common stock in relation to the stocks as a
        whole occurs because of changed appraisal of that stock by the financial community.

     • The conservative investor must be aware of the nature of the current financial-community
         appraisal of any industry in which he is interested.

Conclusion: An investment philosophy

    1. Buy into companies that have disciplined plans for achieving dramatic long-range growth in
         profits and that have inherent qualities making it difficult for newcomers to share in that
    2.   Focus on buying these companies when they are out of favor… either because of general
         market condition or because the financial community at the moment has misconceptions of
         its true worth, the stock is selling at prices well under what it will be when its true merit is
         better understood.
    3.   Hold the stock until either
                a. there has been a fundamental change in its nature, or
                b. it has grown to a point where it no longer will be growing faster than the economy
                    as a whole.
    4.   For those primary seeking major appreciation of their capital, de-emphasize the importance
         of dividends.
    5.   Making some mistakes is as much an inherent cost of investing for major gains as making
         some bad loans in inevitable in even the best run and most profitable lending institution. The
         important thing is to recognize them as soon as possible, to understand their causes, and to
         learn how to keep from repeating the mistakes.
    6.   There are a relatively small number of truly outstanding companies. Their share frequently
         can’t be bought at attractive prices. Therefore, when favorable prices exist, full advantage
         should be taken of the situation.
    7.   A basic ingredient of outstanding common stock management is the ability neither to accept
         blindly whatever may be the dominated opinion in the financial community at the moment nor
         to reject the prevailing view just to be contrary for the sake of being contrary. Rather it is to
         have more knowledge and to apply better judgment, in thorough evaluation of specific
         situations, and the moral courage to act “in opposition to the crowd” when you judgment tells
         you your are right.
    8.   In handling common stocks, as in most other fields of human activity, success greatly
         depends on a combination of hard work, intelligence, and honesty.

Source: Common stocks and uncommon profits and other writings, by Philip A. Fisher
     • http://www.amazon.com/Common-Uncommon-Profits-Writings-ebook/dp/B000VI52O0


The Halo Effect and other business
     • The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers, by Phil
     • Why is it so hard to understand high performance?
     • Why is it so hard to determine the factors that lead to a high performance?
     • Why is it that even clever minds that earnestly want to uncover the secrets of success don’t
         find solid answers – even when they gather huge amounts of data about hundreds of
         companies over many years?

Delusion one: Halo Effect

The tendency to look at a company’s overall performance and make attributions about its culture,
leadership, values, and more. In fact many things we commonly claim drive company performance
are simply attributions based o prior performance.

In the context of their times business articles offer reasonable explanation of events. But look at them
over the cause of a few years, and we will have to question whether the reporters got the story right –
or if their descriptions were colored by the story they wanted to tell. Facts were assembled and
shaped to tell the story of the moment, whether it was about great performance or collapsing
performance or about rebirth and recovery.
There are a few kinds of Halo Effects:

One refers to the tendency to make conclusions about specific traits on the basis of a general
impression. It’s difficult for most people to independently measure separate features; there is a
common tendency to blend them together… to create and maintain a coherent and consistent
picture, to reduce cognitive dissonance.
A second is heuristic (experience-based techniques that help in problem solving, learning and
discovery like the "rules of thumb", educated guesses, intuitive judgments or simply common sense):
We tend to grasp information that is relevant, tangible, and appears to be objective, and then
make attributions about other features that are more vague or ambiguous - hard to access

     • People: XXX is tall and had a good posture, so he is also intelligent, polish his shoes well
         and play the harmonica.
     • Job interview: XXX studied in Harvard, so he is a born leader, all his answers will be well
         thought and he is charismatic and innovative.
     • Branding: This product is from XXX, so it state of the art, the best in its class and a must
     • This company XXX is successful, so its stock price will rise forever, and its leader has a clear
         vision, excellent communication skills, impressive self confidence, is very authentic, and has

         a great charm, its people are highly motivated and there is a great spirit that drives the

Delusion two: The delusion of correlation and causality

Two things may be correlated, but we may not know which one causes which.
Does employee satisfaction lead to high performance? The evidence suggests it’s mainly the other
way around – company success has a stronger impact on employee satisfaction.

Delusion three: The delusion of single explanations

Many studies show that a particular factor – strong company culture or customer focus or great
leadership – leads to improved performance. But since many of these factors are highly correlated,
the effect of each other one is usually less than suggested.
Researchers often belong to one department or another. If you’re a professor of marketing, you care a
lot about market orientation and customer focus, and there’s a natural tendency to want to
demonstrate the… significant… importance of your specialty… and readers, too, prefer clear stories.

Delusion four: The delusion of connecting the winning dots

If we pick a number of successful companies and search for what they have in common, we will never
isolate the reason for their success, because we have no way of comparing them with less successful

Delusion five: The delusion of rigorous research

If the data aren’t of good quality, it doesn’t matter how much we have gathered or how sophisticated
our research methods appear to be.
We can do our best to select samples of high performers and low performers, but if the data are
colored by the Halo Effect (e.g. business articles, books, company documents), we’ll never know what
drives high or low performance – instead we will merely find out how high and low performers are

Delusion six: The delusion of lasting success

Almost all high performing companies regress over time. The promise of a blueprint for lasting
success is attractive but not realistic.
Does that mean that all company performance is just a matter of luck? Not at all. Success is not
random, but it is fleeting… as described by Joseph Schumpeter, the basic force at work in capitalism
is that of competition through innovation – whether of new products, or new services, or new ways of
doing business… The dominant pattern is not stability or endurance, but the “perennial gale of
creative destruction”… it’s entirely normal and very predictable that companies fall back after
outstanding performance… In a free market system, high profits tend to decline thanks to what one
economist called “the erosive forces of imitation, competition, and expropriation”. Competitive
advantage is hard to sustain.

Delusion seven: The delusion of absolute performance

Company performance is relative, not absolute. A company can improve and fall further behind it
rivals at the same time.
In a competitive market economy, the performance of one company is always affected by the
performance of other companies. The delusion of absolute performance is hugely important because
it suggest that companies can achieve high performance by following a simple formula, regardless of
the actions of competitors.

Delusion eight: The delusion of the wrong end of the stick

It may be true that successful companies often pursued a highly focused strategy, but that doesn’t
mean highly focused strategies often lead to success.
Even if the top ten bettors all pursue a high focus on strategy, it does not follow that they, on average,
outperform not highly strategy focused companies - because some strategy focused companies may
have done very well but many more may have gone home broke.

Delusion nine: The delusion of organizational physics

The emphasis on certainty, on clear causal relations rather than contingency and uncertainty,
illuminates one final delusion: Company performance doesn’t obey immutable laws of nature and
can’t be predicted with the accuracy of sciences – despite our desire for certainty and order.

Stories and Science

Stories will always be with us. They are an important part of our life, providing coherent explanations
of complex events. They help people act by conferring a moral dimension to events… stories can
inspire people to action.
Managers have to act… endless debate about alternative courses o faction can’t be conductive to
success when performance is relative and companies that stand sill are rarely successful… surely it
can’t be such a bad thing if a manager navigates by those few basic principles… like deeply held
values, purpose of clear vision, care about employees, focus on customers and strive for
excellence… can’t it?
The nine delusions can be harmful:
      • Pursuing a dream of enduring greatness may divert attention from the pressing need to win
         immediate battles. Companies that achieved lasting success may be best understood as
         having strung together many short term successes.
      • The delusion of absolute performance may divert attention from the fact that success and
         failure always take place in a competitive environment. Success in business means doing
         things better than rivals, not just doing things well.
      • The delusion of the wrong end of the stick may let us confuse causes and effects, actions
         and outcomes. Unless we start with the full population of companies and examine what they
         did we have an incomplete and indeed biased set of information.
      • The delusion of organizational physics implies that the business world offers predictable
         results. Claiming that one approach can work everywhere, at all times, for all companies, has
         a simplistic appeal but doesn’t do justice to the complexities of business.

What leads to high performance?

According to Michael Porter of Harvard Business School, company performance is driven by two
things: strategy and execution.
Strategy is about performing different activities from those of rival companies, or performing similar
activities in a different way. It’s all about being different from rivals in some important way. Strategy
always involves risk because we don’t know for sure how our choices will turn out – concerning
uncertain customer demand, unpredictable competitors and/or changing technologies, but also
concerning internal capabilities.
Execution is carrying out those choices. It refers to the way people, working together in an organized
setting, mobilize resources to deliver on the strategy. No strategy can deliver results unless it’s
converted into specific action. Execution isn’t as risky as strategic choice, but still involve a number of
uncertainties. After all an organization is a sociotechnical system, a combination of men an machine,
of people and things, of hardware and software, but also combination of different ideas, values,
attitudes and expectations. What works in one company, within its people and norms and traditions,
may not lead to the same results in another.
      • In spite of our desire of simple steps, in reality management is much more uncertain than we
         would often like to admit. Wise mangers know that business is about finding ways to improve
         the odds of success – but never imagine that success is certain.
      • Success at one moment doesn’t ensure success in the next moment, because success
         invites new challengers, some of them willing to take greater risk than the incumbents.
      • Success is relative, and not absolute. Competitive advantage demands calculated risk. Good
         decisions don’t always lead to favorable outcomes, and unfavorable outcomes are not
         always the result of mistakes. Luck often plays a rule in business success.
      • Success comes from a combination of shrewd judgment and hard work with a dose of good
         luck mixed in.
      • Success comes by evaluating all the information available to try to judge the odds of various
         outcomes and the possibility gains and losses associated with each. The view of the world is
         based on an appreciation of probability, not a search for certainty… Wise companies assess
         their options and do their best to raise the probabilities of success, but even then their
         fortunes are still uncertain.

See also: authors’ page, amazon, getabstract, Wikipedia
      • http://www.the-halo-effect.com/
      • http://www.amazon.com/Halo-Effect-Business-Delusions-Managers/dp/0743291255
      • http://www.getabstract.com/servlets/Affiliate?u=imd-affiliate&ap=/servlets/
      • http://en.wikipedia.org/wiki/Halo_effect


The Black Swan
The Impact of the Highly Impossible
By Nassim Nicholas Taleb

Summary / Extract:

Black Swan is an event with the following three attributes:
      • First, it is an outlier, as it lies outside the realm of regular expectations (rare and
      • Second, it carriers an extreme impact.
      • Third, retrospective (after the fact, not prospective) predictable.

Many Black Swans can be caused and exacerbated by their being unexpected.

We don’t know that we don’t learn. We don’t learn rules or the general, rather we tend to learn the
precise, facts and only facts. We scorn the abstract.

Platonicity, is the tendency to mistake the map (maps of reality) for the territory (reality). We do not
know beforehand (only after the fact) where the map will be wrong. Platonicity is what makes us think
that we understand more than we actually do.

Living on our planet, today, requires a lot more imagination than we are made to have Our world is
dominated by the extreme, the unknown, and the very improbable (improbable by our current

The human mind suffers from three ailments as it comes into contact with history (triplet of opacity):
     • First, the illusion of understanding, or how everyone thinks he knows what is going on.
     • Second, the retrospective distortion, or how we can assess matters only after the fact, as if
       we were in a rearview mirror.
     • Third, the overvaluation of factual information.

History and society do not crawl, they make jumps. Yet we like to believe in the predictable, small
incremental progression.

Very intelligent and informed persons were at no advantage over cabdrivers in their prediction.
Cabdrivers did not believe that they understood as much as learned people.

People became encyclopedias. Yet too no avail

Categorizing always produces reduction in true complexity. It is a manifest of the Black Swan

generator. Any reduction of the world around us can have explosive consequences since it rules out
some sources of uncertainty

Mediocristan (mild or type 1 randomness) and Extremistan (wild or type 2 randomness):
       In the utopian province of Mediocristan, particular events don’t contribute much individually –
       only collectively. When you sample is lager, no single instance will significantly change the
       aggregate or the total. Matters that belong to the Mediocristan are not scalable; there is a cap
       on the numbers: height, weight, calorie consumption, car accidents, IQ, … Mediocristan is
       where we must endure the tyranny of the collective, the routine, the obvious, and the
       In Extremistan, inequalities are such that one single observation can disproportionately impact
       the aggregate, or the total. Almost all social matters are from Extremistan. Matters that belong
       to the Extremistan are scalable; there is no cap on the numbers: wealth, income, book sales
       per author, book citations per author, damages caused by earthquakes, death in war, sizes of
       companies, stock ownership, financial markets, commodity prices, inflation rates, economic
       data,… Extremistan is where we are subjected to the tyranny of the singular, the accidental,
       the unseen, and the unpredicted.

We do not live in Mediocristan! We are blind to the Black Swan!

We focus on preselected segments of the seen and generalize form it to the unseen: The error
of confirmation!

Don’t confuse statements like “no evidence of Black Swans” with “evidence of no Black Swans”. Or
“all terrorists are Moslems” with “all Moslems are terrorists”. Or “no evidence of cancer” with “evidence
of no cancer”. Or “absence of evidence” with “evidence of absence”!

We have a natural tendency to look for instances that confirm our story and our vision of the world –
these instances are always easy to find. Cognitive scientists call the vulnerability to look only for
corroboration the confirmation bias.

We get closer to the truth by negative instances, not by verification! The Philosopher Karl Popper
called this “falsification” (to falsify is to prove wrong). It is misleading to build a general rule from
observed facts. Disconfirming instances are fare more powerful in establishing the truth.

We fool ourselves with stories that cater to our Platonic thirst for distinct patterns: The
narrative fallacy!

We like stories, we like summarize, and we like to simplify. Our need to fit a story or pattern to a
series of connected or disconnected facts is called narrative fallacy – the statistical application is
data mining
The fallacy is associated with our vulnerability to overinterpretation and our predilection for compact
stories over raw truth. While narrativity comes from an ingrained biological need to reduce
dimensionality. Information wants to be reduces!

It takes considerable effort to see facts (and remember them) while withholding judgement and
resisting explanations! First, we just store patterns. Patterns are more compact than raw information.

Second, we need a cause to swallow the news and make matters more concrete.

Researchers have mapped our activities into (roughly) a dual mode of thinking. System 1 and System

      • System 1: The experimental one, is effortless, automatic, fast, opaque (we do not know that
          we are using it), parallel processed, and it can lend itself to errors. It’s what we call intuition.
          It’s highly emotional and it produces shortcuts.
      •   System 2: The cognitive one, is what we normally call thinking, what you use in the
          classroom. It is effortful, reasoned, slow, logical, serial, progressive, and self aware, makes
          fewer mistakes, you can retrace your thinking steps and correct them in an adaptive

Most of our mistakes in reasoning come from using System 1 when we are in fact thinking that we are
using System 2.

Our misunderstanding of the Black Swan can be largely attributed to our using System 1, e.g.
narratives, and the sensational – as well as the emotional – which imposes on us a wrong map of the
likelihood of events.

A way to avoid the ills of narrative fallacy is to favour experimentation over storytelling, experience
over history, and clinical knowledge over theories.

We behave as if the Black Swan does not exist!
Human nature is not programmed for Black Swans. We live in a society where the reward mechanism
is based on the illusion of the regular. Our hormonal reward system also needs tangible and steady
The world has changed too fast for our genetic makeup. We do not live in an environment where
results are delivered in a steady manner (linear) – Black Swans dominate much of human history.
Some people are exposed to a major blowup without being aware of it, while some are prepared for
big events that might surprise others. In other word, you bet either that the Black Swans will happen,
or that it will never happen.

What we see is not necessarily all that is there. The distortion silence evidence!

History hides Black Swans from us and gives us a mistaken idea about the odds of these events: The
distortion of silence evidence.

We see the obvious and visible consequences, not the invisible and less obvious ones. It’s much
easier to sell “look what I did for you” than “look what I avoided for you”.

We humans are an extreme lucky species. Evolution is a series of flukes, some good, many bad. We
only see the good. The idea that we are here, that this is the best of all possible worlds, and that
evolution did a great job seems rather bogus in the light of the silent evidence effect. Our being here
is a consequential low-probability occurrence, and we should not forget it.

Do not compute odds from the vantage point of the winning gambler (the lucky one), but from all
those who started on the cohort!

                                                     - 10 -
We “tunnel”: that is we focus on a few well defined sources of uncertainty, on too specific a
list of Black Swans.

Lucid fallacy (or the uncertainty of the nerd): Ludic comes from ludus, Latin for games; and a nerd is
simply someone who thinks exceedingly inside the box. A nerd sees the world form within his model,
focusing on what he knows.

In real life you do not know the odds (like in a casino), you need to discover them and the sources of
uncertainty are not defined. Probability is a liberal art, it is a child of skepticism, not a tool for people
with calculators on their belts.

Those who spend too much time with their noses glued to maps will tend to mistake the map for the
territory. The building is inside the Platonic fold, live stands outside of it!

Platonic is top-down, formulaic, closed minded, self-serving, and commoditized; a-Platonic is bottom
up, open-minded, skeptical and empirical.

To be able to focus is a great virtue if you are a watch repairman, a brain surgeon, or a chess player.
But the last thing you need to do when you deal with uncertainty is to focus.

Epistemic arrogance: The limits of our knowledge, the difference of what someone actually knows
and how much he thinks he knows (epistemic, Greek word that refers to knowledge). We tend to
overestimate what we know and underestimate uncertainty. We do not know what we do not know.

We humans are victims of an asymmetry in the perception of random events. We attribute our
success to our skills, and our failures to external events outside our control, namely to randomness.
We feel responsible for the good stuff, but not for the bad.

Statistically sophisticated or complex methods do not necessarily provide more accurate forecasts
than simpler one. Plan fails because of “tunneling”, the neglect of sources of uncertainty outside the
plan itself. We cannot truly plan, because we do not understand the future. This is not necessarily bad
news: We could plan while bearing in mind such limitations – it just takes guts!

The classic model of discovery is as follows: You search for what you know (say, a new way to reach
India) and find something you didn’t know was there (America). Engineers tend to develop tools for
the pleasure of developing tools… so it happens that some of these tools bring us more knowledge,
because of the silent evidence effect.

Prediction requires knowing about technologies that will be discovered in the future. But that very
knowledge would almost automatically allow us to start developing those technologies right away.
Ergo, we do not know what we will know.

We are dealing with what we called a dynamic system – and the world is a little too much of a
dynamical system. The inability to think dynamically, to position oneself with respect to a future
observer, we should call “future blindness”.

If you believe in free will you can’t truly believe in social science and economic projection. You cannot

                                                     - 11 -
predict haw people will act. You simply assume that individuals will be rational in the future and thus
act predictability.
When we think tomorrow, we just project it as another yesterday.

We cannot / should not theorize or derive general knowledge from past events (history) to find causes
/causal links to current or future events.

We do not know the future, nor do we know or understand the past, because of incomplete
information. Randomness, in the end, is just unknowledge – fundamentally incomplete information.

Luck favors the prepared. The best way to get maximum exposure is to keep searching. Collect
opportunities! Be prepared for all relevant eventualities.

      • Make distinctions between positive and negative Black Swans!
      • Don’t look for the precise and the local. Do not be narrow-minded. Work hard to let
          contingency enter your working life! Invest in preparedness, not in prediction.
      • Seize any opportunity, or anything that looks like an opportunity. Opportunities don’t grow on
      •   Beware the precise plans by government.
      •   Do not waste your time trying to fight forecasters, stock analysts, economists, and social
          scientists, except to play pranks on them.

Put yourself in a situation where favorable consequences are much larger than unfavorable.

We can’t figure out what’s going on because of…
     • epistemic arrogance and our corresponding future blindness,
     • the Platonic notion of categories, or how people are fooled by reduction, particulary if they
        have an academic degree in an expert-free discipline (e.g. stockbroker, clinical
        psychologists, financial forecasters, economics, political scientists, “risk experts”, personal
        financial advisors,…),
     • flawed tools of interference, particulary the Black Swan free tools from Mediocristan (e.g. the
        bell curve).

Capitalism is, among other things the revitalization of the world thanks to the opportunity to be lucky.

Everything is in transition. Luck made and unmade Carthage; it both made and unmade Rome.

Randomness has the beneficial effect of reshuffling society’s cards, knocking down the big guy.

Thanks to globalization and concentration we now have fewer failures, but when they occur… We will
have rarer but more severe crises. The rarer the events the less we know about its odds. It means
that we know less and less about the possibility of a crisis.

In the last fifty years, the ten most extreme days in the financial markets represent half the returns.

It is more difficult to be a loser in a game you set up yourself. In Black Swan terms this means that
you are exposed to the improbable only if you let it control you.

                                                   - 12 -
We are quick to forget that just being alive is an extraordinary piece of luck, a remote event, a chance
occurrence of monstrous proportions.

Stop looking the gift horse in the mouth – remember that you are a Black Swan.

Sources: The Black Swan, Amazon , or look at Nassim Nicholas Taleb’s home page:
     • http://www.amazon.com/Black-Swan-Impact-Highly-Improbable/dp/1400063515
     • http://www.fooledbyrandomness.com/


How the mighty fall
How The Mighty Fall: And Why Some Companies Never Give In, business book by Jim Collins

A five-stage framework of how the mighty fall…

Stage 1: Hubris born of success

We are so great, we can do anything!
When the rhetoric of success – “We are successful because we do these specific things” – replaces
penetrating understanding and insight – “We are successful because we understand why we do these
specific things and under what conditions they would no longer work” – decline will very likely follow.
     • Success, entitlement and arrogance
     • Neglect of a primary flywheel (distraction by extraneous threats, adventures and
     • What replaces Why (rhetoric of penetrating understanding and insight)
     • Decline in learning orientation (leaders lose the inquisitiveness and learning orientation)
     • Discounting the role of luck (leaders begin to presume that success is due entirely to the
         superior qualities of the enterprise and its leadership)

Stage 2: Undisciplined pursuit of more

The undisciplined pursuit of more: More scale, more growth, more acclaim, more of whatever those in
power see as “success”.
Companies in stage 2 stray form the disciplined creativity that led them to greatness in the first place,
making undisciplined leaps into areas where they cannot be great or growing faster than they can
achieve with excellence, or both.
     • Unsustainable quest for growth, confusing big with great

                                                  - 13 -
     • Undisciplined discontinuous leaps (dramatic moves that fail because they do not fit with the
         company’s core values, or the company cannot be the best in the world at these activities or
         in these areas, or the activities will not drive the organizations economic or resource engine)
     •   Declining proportion of right people in the key seats (loosing the right people)
     •   Easy cash erodes cost discipline
     •   Bureaucracy subverts discipline (people think in terms of jobs rather than responsibilities)
     •   Problematic succession of power (poor succession planning)
     •   Personal interest placed above organizational interests

Stage 3: Denial of risk and peril

Leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data…
blame external factors for setbacks rather than accept responsibility.
     •   Amplify the positive, discount the negative
     •   Big bets and bold goals without empirical validation
     •   Incurring huge downside risk based on ambiguous data
     •   Erosion of healthy team dynamics
     •   Externalizing blame
     •   Obsessive reorganizations
     •   Imperious detachment (executive class status symbols)

Stage 4: Grasping for salvation

Leaders respond to the decline by lurching for a quick salvation – a charismatic visionary leader, a
bold but untested strategy, a radical transformation, a dramatic cultural revolution, a hoped-for
blockbuster product, a “game changing” acquisition, or any other silver bullet solution).
Initial results from taking dramatic action may appear positive, but they do not last.
     •   A series of silver bullets
     •   Grasping for a leader as saviour
     •   Panic and haste
     •   Radical change and “revolution” with fanfare
     •   Hype precedes results
     •   Initial upswing followed by disappointments
     •   Confusion and cynicism
     •   Chronic restructuring and erosion of financial strength

                                                  - 14 -
Stage 5: Capitulation to irrelevance of death

Accumulated setbacks and expensive false starts erode financial strengths and individual spirit to
such an extent that leaders abandon all hope of building a great future.

Well-founded hope

All companies go through ups and downs, and many show signs of stage 1 or 2, or even stage 3 or 4,
at some point in their history. Yet stage 1 does not inevitably lead to stage 5. You can come back
from stage 1, 2, 3 and even 4 – but you cannot come back from stage 5.

Never give in!
Be willing to change tactics, but never give up your core purposes.
Be willing to kill failed business ideas, even to shutter big operations you’ve been in for a long time,
but never give up on the idea of building a great company
Be willing to evolve into an entirely different portfolio of activities, even to the point of zero overlap
with what you do today, but never give up on the principles that define your culture.
Be willing to embrace the inevitably of creative destruction, but never give up on the discipline to
create your own future.
Be willing to embrace loss, to endure pain, to temporarily lose freedom, but never give up faith in the
ability to prevail.
Be willing to form alliances with former adversaries, to accept necessary compromise, but never
–ever – give up on your core values.

Source: Amazon: Jim Collins: How The Mighty Fall: And Why Some Companies Never Give In
      • http://www.amazon.com/How-Mighty-Fall-Companies-Never/dp/0977326411/


Die 36 Strategeme (German)
nach Harro von Senger

Strategem = Kriegslist, List, Trick, „Etwas Außergewöhnliches erzeugen, um den Sieg zu erringen“.
Strategem und Manager: Auf jeden Fall sollten global tätige Manager nicht nur über Geld, sondern
auch über Strategemkompetenz verfügen. Denn sie vermag denjenigen Marktteilnehmern Vorteile zu

                                                   - 15 -
verschaffen, die nicht stets die alten, bekannten Weisheiten nachbeten und zu nutzen suchen,
sondern unkonventionell denken, Regen in Frage stellen, die Kraft der eigenen Kreativität nutzen und
sich so Innovation- und Handlungsvorteile schaffen.
Ohne eigene Denkanstrengungen lassen sich aus dem Katalog der 36 Strategeme freilich keine
Patentlösungen für den Einzelfall abrufen. Die 36 Strategeme sind kein Kochbuch mit Rezepten für
die buchstabengetreue Umsetzung... bloß Wegrichtungen geben die 36 Strategeme an, sie vermitteln
außerroutinemäßige Denkanstöße.
Die 36 Strategeme bleiben ethisch neutral und sind ethisch nicht klassifizierbar. Die ethische
Bedeutung kann nur deren Anwendung betreffen.

Der Katalog der 36 Strategeme:

1 Den Himmel [den Kaiser] täuschend das Meer überqueren

... das Meer [Schwierigkeiten] überwinden... Sand in die Augen streuen... Zieltarnung... vor den
Augen des Gegners etwas vorführen und damit das eigentliche Ziel tarnen...

2 [Die ungeschützte Hauptstadt des Staates] Wei belagern, um [den durch die
Streitmacht des Staates Wei angegriffenen Bündnispartner] Zhao zu retten

... Angriff / Bedrohung einer ungeschützten Schwachstelle des Gegners... ins Leere vorstoßen und
die Fülle meiden... Archillesfersen-Strategem... Wer seine Taktik nach der Lage des Feindes richtet
und so den Sieg erringt, den kann man göttlich nennen...

3 Mit dem Messer eines anderen töten

... den Gegner durch fremde Hände ausschalten... Stellvertreter-Strategem... den Gegner auf
indirekte Weise schädigen... Schreibtischtäter-Strategem... raffinierter Einsatz von Drittpersonen bzw.
ausgeliehenen Ressourcen... die Kraft eines Dritten / des Gegners ausleihen um etwas zu bekommen
/ den Gegner zu schädigen...

4 Ausgeruht den erschöpften Feind erwarten

... Aussitzungs-Strategem... warten und Kräfte sparen... Erschöpfungs-Strategem... den Gegner auf
den Beinen halten um ihn zu erschöpfen...

5 Eine Feuersbrunst [als günstige Gelegenheit] für einen Raub ausnützen

... Notausnutzungs-Strategem... Aasgeier-Strategem... auch negatives hat oft ein positives Potential...
finding strength in adversity... die Not des Gegners ausnutzen...

6 Im Osten lärmen, im Westen angreifen

... man führt an einer Stelle ein Scheingefecht, greift aber an einer anderen Stelle an... Ablenkung der
Aufmerksamkeit des Gegners... dort zuschlagen, wo der Feind es nicht erwartet... vom eigentlichen
Ziel ablenken / verschleiern (nicht tarnen wie bei #1)...

                                                  - 16 -
7 Aus einem Nichts etwas erzeugen

... das Nichts ist kein Vakuum... aus dem Nichts wird eine Wirklichkeit aufgebaut, die man ausnutzt...
die Täuschung / Vorspielung der vermeintlichen Wirklichkeit ist das Ziel dieses Strategems...
Wirklichkeit und Fiktion miteinander mischen... die Wirklichkeit ist die Illusion, die wir uns von ihr

8 Sichtbar die [verbrannten] Holzstege instand setzen, insgeheim [vor
beendeter Reparatur] nach Chen Cang marschieren

... die Marschrichtung verschleiern... Umweg-Strategem... die wirkliche Absicht hinter etwas
unverfänglichem, völlig normalem verbergen... Normalitäts-Strategem... hinter dem Normalen /
Gewöhnlichen / Orthodoxen / Konventionellen etwas Unnormales / Ungewöhnliches / Unorthodoxes /
Unkonventionelles verbergen... Türen entdecken, wo andere Mauren sehen...

9 [Wie unbeteiligt] die Feuersbrunst am gegenüberliegenden Ufer beobachten

... auf dem Berge sitzend, schaut man dem Kampf der Tiger zu... Abwarte-Strategem... warten,
Geduld haben, Behutsam sein... nicht aussitzen (#4) sondern abwarten... langfristig denken... der
Dumme verdient heut, der Kluge verdient morgen...

10 Hinter dem Lächeln den Dolch verbergen

... Doppelzüngigkeit... Januskopf-Stragegem... vorspielen von Ehrlichkeit und Mitgefühl... mit Worten
schmeicheln aber im Herzen böses planen... im Auftreten freundlich und sanft, im Innern aber
unbeugsam und hart... hinter dem Lächeln die waren Absichten verbergen... wenn der Feind ohne
vorherige Vereinbarung plötzlich um einen Waffenstillstand ersucht, dann lauert dahinter eine List...

11 Den Pflaumenbaum an Stelle des Pfirsichbaums verdorren lassen

... die eigene oder die Haut eines anderen retten, indem man eine andere Person den Kopf hinhalten
lässt... Bauernopfer... Sündenbock-Strategem... sind Verluste unausweichlich, opfert man einen Teil
zum Vorteil des Ganzen / Konzentration auf die Entscheidungsschlacht...

12 Mit leichter Hand das [einem unerwartet über den Weg laufende] Schaf
[geistesgegenwärtig] wegführen

... Schaf steht hier für irgendeine überraschende Chance außerhalb des eigentlich anvisierten
Zielbereichs... Zusatzschancen-Strategem... die einmalig günstige Gelegenheit nutzen...
Entschlossenheit zum Augenblick... Glück fordert Entschlossenheit - man muss es packen, sobald es
sich zeigt... Spielräume nutzen...

13 Auf das Gras schlagen, um die Schlangen aufzuscheuchen

... Methode zum Beschaffen und Verbreiten von Informationen... auf den Busch klopfen...
Versuchsballon-Strategem... ein Huhn töten um den Affen einzuschüchtern... Warnschuss-
Strategem... die Schlange aus der Höhle locken... Provokation-Stragegem...

                                                 - 17 -
14 Für die Rückkehr der Seele einen Leichnam ausleihen

... Altes, Ausgedientes (Gedanken, Dinge) mit neuem Inhalt füllen / wieder aufleben lassen... das
Ausnützen jeglicher Mittel zur Überwindung einer misslichen Lage...

15 Den Tiger vom Berg in die Ebene locken [wo er sich nicht verteidigen kann]

... den Gegner von seinem Stützpunkt / von seinen wichtigsten Helfern wegzulocken, um ihn zu
vernichten oder um seinen Stützpunkt einzunehmen... den Gegner isolieren / auf für ihn fremdes
Terrain locken... das Strategem kann auch rhetorisch angewandt werden, indem man das Gespräch
auf ein dem Gegner nicht vertrautes oder fremdes Thema wechselt...

16 Will man etwas fangen, muss man es zunächst loslassen

... wenn man in gewissen Situationen den Gegner völlig einschnürt und ihn von allen Seiten unter
Druck setzt, läuft man Gefahr, dass er seine sämtlichen Reserven mobilisiert und härtesten
Wiederstand leistet... im positivern Sinne bedeutet es, Freiheiten einzuräumen, sodass Kreativität
aufblühen kann, Vertrauen und Autonomie zu schenken und so die Herzen zu gewinnen...

17 Einen Backstein hinwerfen, um einen Jadestein zu erlangen

... der Backstein symbolisiert etwas Geringfügiges, der Jadestein etwas Wertvolles... Köder-
Stragegem... Will man etwas nehmen, muss man zuerst etwas geben / Wen man schwächen will,
muss man zunächst stärken...

18 Will man eine Räuberbande unschädlich machen, muss man deren
Anführer fangen

... in jeder Lage zuerst auf das Hauptsächliche erfassen und sein Handeln auf diesen Punkt
konzentrieren und sich erst danach, also in zweiter Linie, mit den Nebensächlichkeiten abgeben... die
wichtigen Personen einer Gruppe identifizieren und fangen... Schaltstellen-Strategem... die Menge
ohne Haupt ist unnütz...

19 Unter dem Kessel das Brennholz wegziehen

... dem Gegner die Kraft / Kraftquelle entziehen (beseitigen, schwächen, verwässern, entschärfen)...

20 Das Wasser trüben, um die [ihrer klaren Sicht beraubten] Fische zu fangen

... Chaos und Verwirrung stiften und diese Unklarheiten / Unordnung / Verwirrung / Mehrdeutigkeit
ausnutzen... im Trüben ist gut fischen, aber auch gut entwischen...

21 Die Zikade entschlüpft [einer Situation, indem sie sich verwandelt und aus]
ihrer goldglänzenden Hülle [steigt, die ihre Verfolger ablenkt]

... unbemerkt entkommen, während die Aufmerksamkeit des Verfolgers auf die zurückgelassene
goldene Hülle konzentriert ist... physisch (Flucht) oder abstrakt (Worte, Verträge) entkommen... in
eine andere Daseinsform / Gestaltenwechsel übergehen und neuen Handlungsspielraum gewinnen...

                                                 - 18 -
Chamäleon-Strategem... Überwindung einer Notlage... Fluchtverschleierung durch hinterlassen einer
Attrappe / eines Scheingebildes...

22 Die Türe schließen und den Dieb fangen

... Umzingelungs-Strategem... die Umzingelung muss unüberwindbar sein... Vorsicht: die in die Ecke
gedrängte Katze kann zum Tiger mutieren (siehe #16)...

23 Sich mit dem fernen Feind verbünden, um den nahen Feind anzugreifen

... Strategem der einstweiligen Fernfreundschaft... Strategem des Vernichtungsbündnisses... nah und
fern ist nicht nur geographisch gemeint, sondern auch im Sinne eines strategischen Gegners... sich in
der Ferne verbünden mit einem weniger gefährlichen Gegner um in der Nähe den besonders
gefährlichen Gegner anzugreifen...

24 Einen Weg [durch Yu] für einen Angriff auf Guo ausleihen [um danach
ebenfalls Yu zu erobern]

... Zwei-Stufen-Stragegem... Doppelziel-Strategem... beide Ziele werden nur dadurch erreicht, dass
man mit dem einen Gegner ein Bündnis eingeht und ihm das erste Ziel offen legt, das zweite Ziel –
welches für ihn fatal ist – aber verschleiert... Endzielverschleierungs-Strategem...

25 Die Tragbalken stehlen und die Stützpfosten austauschen [um etwas von
innen auszuhöhlen]

... Auskernungs-Stragegem... Etikettenschwindel... der Inhalt eines Gegenstandes / eines Wortes wird
ausgewechselt – Äußerlich gesehen bleibt alles beim Alten

26 Die Akazie scheltend auf den Maulbeerbaum zeigen

... das Umfeld der Zielperson genau und dosiert kritisieren und den Gegner damit auf feine und
indirekte Weise (ohne zu beleidigen oder herauszufordern) zu kritisieren... Indirekte-Kritik-
Strategem... den Sack schlagen, aber den Esel meinen... einen schwachen Feind angreifen – und
besiegen – um einen stärkeren Feind zum Nachgeben zu bewegen... Indirekte-Aggression-

27 Verrücktheit mimen [Harmlosigkeit vortäuschen], ohne dabei das
Gleichgewicht [und sein Ziel aus den Augen] zu verlieren

... vortäuschen von geistigen oder körperlichen Mängeln... vorgegaukelte Schwäche oder
Ahnungslosigkeit... Narren-Stragegem.. Greenhorn-Strategem... Unschuldslamm-Strategem... man
mindert durch scheinbare Unbedarftheit die Wachsamkeit / das Interesse des Gegners... weniger
ausplaudern und mehr zuhören... im positivern Sinne wird man dank kreative Ignoranz erst zu einem
guten Gesprächspartner...

                                                - 19 -
28 Auf das Dach locken, um dann die Leiter wegzuziehen

... man lenkt jemanden oder sich selbst in eine Position, von der man nicht mehr zurück kann...
kann im positiven Fall zu Höchstleistungen führen...

29 Dürre Bäume mit [künstlichen] Blumen schmücken

... die mickrige Wirklichkeit, die miserable Realität durch ein Hilfsmittel verschönern, schmücken...
Imponier-Strategem... Schminke-Strategem... Kleider machen Leute... Werbemaßnahmen... (nicht so
kreativ, visionär und schöpferisch wie #7)

30 Die Rolle das Gastes in die des Gastgebers umkehren

... Rollentausch: der passive Gast nimmt die Rolle des aktiven Gastgebers ein... seine eigene
defensive und unterlegene Position in eine aktive und überlegene Position umwandeln...

31 Das Strategem der schönen Frau [die den Feind in eine Falle lockt]

... Venusfallen-Strategem... Lockvogel-Strategem... Bestechungs-Strategem...

32 Das Strategem der leeren Stadt [Einen Hinterhalt vortäuschen, der die
eigene Schwäche verschleiert]

... vorgespielter Hinterhalt... vorgespielte Gefahrlosigkeit... eine Fülle oder eine Leere vorgaukeln...
steht und fällt mit der Leichtgläubigkeit und dem Informationsstand des Gegners...

33 Das Strategem des Zwietracht-Säens

... jemanden beim Gegner einschleusen, der Zwietracht säht... Infiltrations-Stategem...
Destabilisierung-Strategem... Gerüchte und Fehlinformationen streuen, verheimlichen von
Tatsachen... Zwietracht-Sähen-Strategem...

34 Das Strategem des leidenden Fleisches

... man spielt sich als Verfolgter, als Opfer auf, wohl wissend, dass Verfolgte und Opfer automatisch
Sympathien auf sich ziehen... durch Selbsterniedrigung, Selbstgeißelung, Selbstverletzung,
Selbstschädigung oder Selbstschwächung Vertrauen gewinnen... Samariter-Reflex-Strategem...

35 Das Ketten-Strategem

... man setzt gleichzeitig oder hintereinander mehrere Stategeme ein... Strategemverkettung... man
verkettet / verknüpft mehrere positive und negative Bedingungen / Dinge / Worte miteinander, die in
der Summe den Gegner in die Knie zwingen... Kettenstrategem...

                                                   - 20 -
36 [Rechtzeitiges] Weglaufen ist [bei sich abzeichnender völliger
Aussichtslosigkeit] das Beste

... Ein guter Kämpfer schämt sich nicht wegzurennen... was zählt ist der strategische Sieg zum
Schluss... Nur wer verlieren kann, kann auch siegen... Rückzug um neuen Handlungsspielraum zu
bekommen... Abstand gewinnen... die Hintertür zum Ausstieg benutzen... Es ist immer abzuwägen
zwischen Ausharren und Wegrennen um nicht verfrüht wegzurennen und die günstige Gelegenheit zu

„Alle Klugheit und Weißheit sind umsonst, wenn man die Lage nicht zu nutzen weiß... Ein die
Menschen schädigendes Herz darf man nicht haben! Aber ein sich vor den Menschen in Acht
nehmendes Herz ist unverzichtbar!“

Harro von Senger, „36 Strategeme für Manager“ und „Stategeme“ (zwei Bände),
      • http://www.amazon.de/Strategeme-Geheimwissen-vorgestellt-%C3%9Cberlebenslisten-
      • http://www.amazon.de/Strategeme-Geheimwissen-vorgestellt-%C3%9Cberlebenslisten-
      • http://www.amazon.de/Die-Kunst-List-Strategeme-durchschauen/dp/340647568X/


The Money Game
by Adam Smith

John Maynard Keynes, the writer and speculator, a man with a great sense of life and of living…
made a fortune not only for himself, but for his college… he did it in half an hour a morning
from his bed.

“The game of professional investment is intolerably boring and over-exacting to anyone who is
entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the
appropriate toll” (John Maynard Keynes).

I think the market is both, a game and a Game, i.e., both sport, frolic, fun, and play, and a subject for
continuously measurable option.

                                                   - 21 -
Most of what has been written about the market tells you the way it ought to be, and the successful
investors I know do not hold to the way it ought to be, they simply go with what is.

The object of the game is to make money… if you have your money managed by a truly alert mutual
fund or even by one of the better banks, you will have a better job done for you than probably at any
time in the past. But if you have your money managed for you, then you are not really interested… in
the Game element… If you are a successful Game player, it can be a fascinating, consuming, total
absorbing experience, in fact it has to be… The irony is that this is a money game and money is
the way we keep score. But the real object of the Game is not money; it is playing the Game

“There is no such thing as a final answer to security values… market values are fixed only in part by
balance sheet and income statements; much more by the hopes and fears of humanity; by greed,
ambition, acts of God, invention, financial stress and strain, weather, discovery, fashion and
numberless other causes impossible to be listed without omission” (The Battle of Investment Survival,
by Mr. Gerhard Loeb).

Liquidity is the cornerstone of Wall Street.

You can’t just graduate an analyst into managing funds. What is it the good managers have? It’s a
kind of locked-in concentration, an intuition, a feel nothing can be schooled. The first think you have to
know is yourself. A man who knows himself can step outside himself and watch his own reaction like
an observer… If you don’t know who you are, this is an expensive place to find out. You learn
from mistakes… positive decisions have to be made by an individual; groups can’t do it!

The market is a crowd… there are fundamentals in the marketplace, but the unexplored area is the
emotional area… this is no science, it’s an art… it’s a personal intuition, sensing patterns of
behaviour… the real test is how you behave when the crowd is roaring the other way… The crowd
could be better or worse than an individual, depending on the nature of the suggestion to which it has
been exposed.

There is a personality difference between the people who are good at finding stocks and the people
who call the shots on the timing and manage the whole portfolio… The analyst is inductive… he will
break the problems into its components. The old portfolio manager will settle happily into the
problem… he loves it. The aggressive portfolio manager says, “What the hell kind of stupid question
is that, and how is that going to make me any money?... he doesn’t care about being right on each
judgement… he has to be right more than wrong.

The strongest emotions in the marketplace are greed and fear… The most important think to realize is
simplistic: The stock doesn’t know you own it! If you know that the stock doesn’t know you own it,
you are ahead of the game… you can change your mind and your action without regard to what you
did or thought yesterday.

Money… does help people more than it spoils them… the danger it that when you have your million,
you then want two…

Really big money is not made in the stock market by outside investors… Who makes the really big

                                                  - 22 -
money? The inside stockholders of a company do, when the market capitalizes the earnings of that
company. So if you are talking about real big money, forget the stock market… If socialism is the
public ownership of the major institutions and industries of the nation, maybe we are just taking a
unique way of getting there.


There are all kinds of things to make money in the market, and we are all creatures of some sort of
behaviour pattern… Nothing works all the time in all kinds of markets.

      •   If you buy good stocks and put them away, in the long run you can’t go wrong.
      •   In the long run we are all dead – everything is born to die.
      •   If you really love playing the Game, any action is better than inaction.
      •   Sometimes inaction is a proper course, if it has been taken after measuring all the
          measurable options.
      •   Some people can make money in the market by anticipating business cycles… anticipating
          the swings in interest rates.
      •   One of the most riskless forms of investment is the turnaround.
      •   To get rich, you have to find stocks whose earnings have been compounding at a very fat
          rate and then the sock zooms.
      •   Sweet are the uses of diversity, but only if you want to end up in the middle of the average.
      •   If you are concentrated in only a few stocks, you are forced to measure each of them in
          terms of potential against each new idea that comes along, and this in turn makes you bump
          the button stocks of (the worst performing), to take onboard something more promising.
      •   …

For all I know, money is made in the future, even in the near future. What you want is a company
which… earnings are compounding at a very fat rate… and… is about to do that over the next couple
of years. You not only have to know that the company is doing something right, but what it is doing
right, and why these earnings are compounding... earnings do not grow automatically. The
competition can read these earning records too, and fat earning records are an invitation to come in
and sample the cream…. What is unique about a company is not patents or products… it is
people, the brains and talents of people… sometimes these people produce patents, sometimes
they produce a reputation for service; but always they produce something that cannot be easily
duplicated by anyone else…. You do not know how the market will capitalize that… earning
growths…it all depends on the psychological climate of the time. Obviously you are safer buying
compounded earnings cheap than dear…. However marvellous the product is, no company is
immune to mistakes by its management.

Phil Fisher, is a honest man, and one day he sat down and made a study of where his successful
ideas had come from… he found smart people. That’s one of the most important of the irregular rules,
find smart people, because if you can do that, you can forget a lot of the outer rules.

Chartist and A Random Walk:

No one has yet learned how to put emotions into a serial correlation coefficients and analyses of runs.
It is absolutely true that statistically the price of a stock has no relation tomorrow to what it was
yesterday. But people – the crowed – do have a memory that extends from day to day. You do notice

                                                  - 23 -
one thing about the random-walk world and the chart world: There are no people in them. If the
market is truly a Game it would be possible to have the Game without any intrinsic value at all…
enough chartists acting together become a market force themselves…. I suspect that even if the
random-walkers announced a perfect mathematic proof of randomness, I would go on believing that
in the long run future earnings influence present value, and that in the short run the dominant
factor is… the temper of the crowd.

There is not a company anywhere whose income statement and profits cannot be changed, by the
management and the accountants, by counting things one way instead of another… depreciation,
inventory, purchase of other company, conglomerates, … If the Federal Reserve is printing money
like a banana republic, why shouldn’t some private citizens try it?

The sophisticated… investors… never feels comfortable unless they can be reassured that relatively
uninformed … the average… investors are going the other way with some conviction… somebody…
has to be there… to buy from… or to sell to….

Source: Adam Smith, The Money Game (Amazon), or look at his homepage

                                               - 24 -

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