Friday, September 26, 2008

Living in a Capitalist Society

It is always intriguing to realize that despite the capitalist world that we live in most of us never attempted to be one. In a capitalist society, the one who owns the capital gets its rewards and risks.

The one who could utilize his capital in the most efficient way would come out ahead. The one who does it consistently is richly compensated. Most successful capitalists have the basic requirement of capitalism, that is capital. Before that, they either saved it, inherit it, worked for it, or shared it with someone. Someone risked something, property, talent, cash, skills and even time. But the most important element is ownership. Who owns the capital? He who owns capital receives its product.

The next question would be who controls capital. Once the capitalist gives up the control, he reduces his burden of management of capital and increases the risks of inefficiency. The management he chooses must have at least three qualities (according to one of the greatest capitalist of the modern times) , integrity, intelligence and energy. Absence of the first quality would make any other subsequent quality useless. Presence of the first only would not ensure success. The last quality could also translate to passion. The manager must be driven not of simply profits but of love for the work he does. These qualities would help in achieving in the capitalists' goal and humanity's goal in love for work.

Tuesday, September 23, 2008

Reflections from the Street

As I've checked my portfolio of stocks, I realized stuffed that I have never realized on an up market. I have learned about myself and others. I have found an old system and learned an age old wisdom. "Only invest in what you know and understand at prices that makes sense."

Invest in what you know and understand. This reduces basically the investment population by more than 80%. Maybe it'll just leave about 5-20% of the businesses that one understands. It also means learning new things and not buying in things one does not fully understand.

Prices that makes sense means that within a reasonable time one expects that the prices one buys at will be rewarded with realistic profits and distribution of dividends. It also means not rushing into a rising market and being patient for it to be within one's price range. Moreso, it means having a margin of safety for any unforseen events one does not expect.

After about five years of experience, I have learned this much.

These fundamental philosophy would guide my investing strategy over the next years.

Sunday, September 21, 2008

September 21, 2008

Income = 0

Expenses = 1135 + 17 = 1,152

Net worth = Reduced