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I've always said if you spend 13 minutes a year on economics you've wasted 10 minutes and uh the uh and uh all you need to know about the stock market is it goes up and it goes down and it goes down a lot and that's all you need to know again it'd be terrific to know what's going to happen the economy but I deal with facts if inventories are going up if copper prices are going down if room occupancy is going the wrong way people people building too many hotels I look at freight car loading I own railroad stocks I deal with facts I don't deal what people tell me something's going to happen in the future you might as well call the psychic hotline for that stuff think have better average at uh you got plenty of time this is true or Sal may this through Dunkin Don is through a stopping Shop people are so insistent I'm that way too I have to fight it they have to buy a stock let's say let's say let's see it's now see it's now 501 I haven't found a stock yet today you know I got to find a stock Before Sunset you know at the you get about Walmart 10 years after Walmart went public let's say you're a very careful investor you waited you said I don't know if this company can make it you waited for Walmart to roll it out you could by Walmart 10 years after they went public and made 30 times your money 30 times your money 10 years after they went public they're only in 15% of the United states5 they had saturated the5 you could say well why can't they go to 177 why can't they go to 19 I mean why don't I take a leap of faith here why can't they go to 26 all they did for the next three decades was roll it out you could bu Walmart if the day they went public your body would made 500 times your money if you waited 10 years in Walmart you made 30 times your money you got plenty of time in this business uh now what I'd like to talk about is what I call the 10 most dangerous things uh people say about stocks uh uh here's a good one if it's gone down this much already it can't go any lower uh I remember when Polaroid went from 140 to about 107 people said if you ever get Polaroid under 100 got to buy it just back up the truck buy the stock you know uh stock you get to 110 then rally you know fall 103 you got 112 got 105 you said gets under 100 buy Polaroid Polaroid broke 100 people started buying it and within nine months the stock was 18 uh I saw the same with Avon products so just saying you you know it's gone down this far you know how much lower I mean it's crazy but you know it can keep going in fact I tried this out Kaiser Industries I was a new Analyst at Fidelity and we were about to buy the biggest block ever at Kaiser Industries the stock had gone from 29 to 17 we're about to buy the largest block ever in the history of the American Stock Exchange we bought I don't know 10 or 15 million shares at 15 and 3/4 I said my God the stocks gone from 29 to 17 how much lower can it go so he bought this enormous block at 15 and 3/4 so I called my mother and I said mom I guess s kais he it's 10 so about 3 months later said you ought to buy this it's gone from 29 to 10 how much lower can it go well it went to nine it went to eight it went to seven it went to six it went to five it went to four now fortunate for me this happened very rapidly I'd be working at the Stop and Shop bag in behind the line the state of fidelli so fortunately this was compressed in only about 6 months so I had to go to the fun and say I was a little bit early on this at 15 and 3/4 it uh but it uh we call this premature in the business the uh had a correction which you know is a euphemism for losing a lot of money rapidly at the uh uh so I said let's check this again the stocks for they own 45% of Kaiser Aluminum they own 59% of Kaiser steel they own 38% of Kaiser cement they own all of Kaiser Electronics all of Kaiser broadcasting which had seven TV sets they own Jeep they had Kaiser fiberglass they about Kaiser Santa gravel they had a bunch up other Kaisers and they had no debt now in this room because I know Freeman Billings is very interested final stocks no one's ever gone bankrupt without any debt now that would take a real I think you have to give some kind of distinguished service award to somebody did that but they had no debt I said it's not going to go to zero you know I was wrong when I said it can't go below 15 so we hung on and within three years they gave out the shares in Kaiser steel gave out the shares in Kaiser SP gave out the shares in Kaiser steel and aluminum and they sold off all the businesses you got about $55 a share but if you didn't know the story and the stock went from 1511 and you're just saying how much lower can it go when it went to 9 went to 8 you you would have gone so you can't just say it can't go any lower because I saw a Taco Bell go from 14 to1 in 1974 and they had no debt and making 60 cents a share uh there's a coral area to that that's even more dangerous if it's gone this high already how can it possibly go lower uh higher sorry that Philip Morris adjusted for splits uh sold for 12 cents in 1951 and then it goes to 60 cents in 1961 so it goes up five-fold and you say yourself how much this it never sold for that but just for splits you say how much higher can this go it's gone up fivefold they missed the power of Maro they missed the there's 220 countries in the world they missed the cash flow of the company they missed everything this stock was a 100 bagger after going up fivefold but people sold it just saying how much higher can it go can't go any higher they did the same in Home Depot did the same with Toys R R Us I did the same thing Toys R R Us just saying it can't go any higher it's gone this much already that's very dangerous and don't don't use that one and uh I it's a very bad thing to do eventually they always come back here's another one that sucks uh that's a technical stock market term we just use only in the stock market the uh uh RCA just about get back to its 1929 price was backed out by G uh manvil never came back International Harvester even with its name Chang and adjusted for splits hasn't got all the way back yet Western Union double nits from those wonderful things floppy discs they don't have to come back but they say eventually they always come back uh not true uh here's a great one it's $3 how much can I lose this is a great one you see I get get out this is I don't have a computer and I can't do high level math but uh just do this one let's say you buy your neighbor buys $10,000 of a stock at 50 the Stock's now three and you put $25,000 in at three if it goes to zero who loses the most a lot of people cannot answer this question you know the uh I mean if you put a billion in at three you can lose a billion if you know I mean they blow Taps and lots of companies every year you know you just have they can go to zero uh the uh here's a good one that helped me a lot It's always darkest before the dawn uh the uh this business is terrible it's aw you ought to buy the group this is not a good way of making money uh the uh here's one you're probably talking about before lunch freight car deliveries uh 1979 there was 96,000 Freight cars deliv United States two years later it fell to 45,000 the lowest in 23 years so it goes from 96,000 to 45,000 people say business is awful it's horrible pathetic then it falls to 25,000 they say just load up there's about 15 opportunities to lose money here there's about 15 suppliers of Freight cars 15 manufacturers business was awful well last year we shipped 7,000 Freight cars in the United States the business just contined to be miserable and uh I'll give you one that's even there's even greater opportunity to lose money on uh Energy Services industry this we all had a great opportunity to get our heads hand to us uh in 1982 there was 11,000 of those oil rigs drilling left you know drilling those holes all over Oklahoma and Texas and Colorado we used to have the rec count every week and the count fell from 11,000 in 882 to 6,083 then fell a little bit lower in 84 and there's hundreds and hundreds of companies here companies that made the muds and did the downhole stuff the fracturing companies the the the wall companies all the measurement companies the shamb the bid companies lots of opportunities to lose money here there's an equal opportunity opportunity here for serious losses and the people said listen the business is terrible let's buy these groups well the recount was only a th000 three years ago so it went from 11 000 to 6,000 to 5,000 then 8 years later it was under a th000 the industry really started turn about two years ago so just saying the business can't get worse I I was lucky enough addition have the metals industry in start Val I had the textile industry which is a great group to follow because you follow companies like JP Stevens was founded in the 18th century and uh West Point peppol was found the 18th century Burling Industries is one of the new companies was founded 1904 these people have been through recessions depressions were Wars they they've seen it all and there a great expression Tex industry It's always darkest before pitch black now that's a good one to remember because when business is terrible it can get considerably terrible get terrible to the power of six and uh it uh I love those numbers on freake card you ever watch I love the show Jeopardy you watch Jeopardy and people come out they will know those numbers they'll know the numbers and they'll know you know what uh what country uh box uh took a first vacation in and they'll know Phil rosuto is batting average and what his wife's first name was and they'll know the stock symbols of Xerox before it was halloy or you know they know everything and you watch the show and you feel like an absolute idiot watching the show because they answer all these questions but they're really smart I own this I've owned this stock before King world right after it they show Wheel of Fortune and they what happens is they'll have this word up there and it'll be th and there's a t and it say I buy a b h i buy a u you know buy an i and and you know they Vanna spins the wheel byy the A and you know you you're Redeemed by watching The Wheel of Fortune after feeling like an absolute jerk on the Jeopardy game and uh it's really smart it uh uh when I rebound to 10 I'll sell uh here's a great rule uh somebody buys a stock at 10 and it falls to six they say if it gets back to 10 I'll sell now I think the math four and six I can handle this love math I think that's about a 66% return you ought to buy it if you think it's going back to 10 you ought to buy the hell of the damn thing but they think if it gets back to 10 I'll sell now what you ought to do is never put down a round number because I think for the next 26 years the stock will between five and 9 and a quarter it'll never get to 10 so maybe put 9 and e or 8 and 3/4 but just saying the stock if it gets back what I paid for it this is a very important rule this is a very one of the key rules the stock doesn't know you own it remember that you could be a miserable person you could have uh you know never helped anybody never done anything right had 67 spouses never done anything right you own Coca-Cola last 50 years it's gone up 300 fold you could be the greatest human in the world help Special Olympics help the mentally challenged help poor people help AIDS people if you own Bethlehem Steel it's lower than it was 30 years ago it's not your fault don't take this personal you know but people treat stocks sometimes like a grandchildren or a puppy they they think they think the stock knows who you are you know it's you know it doesn't work that way it uh uh what me worry I own conservative stocks uh I don't have to worry I own conservative stocks I when Con Ed fell uh 80% then tripled uh Public Service Indiana went down 90% Gulf States utilities long on lighting this may be oxymoron with quality Texas banks that went to zero we had uh quality New England banks that went to zero uh these were companies have been around for 150 years 120 years saying I own conservative stocks I don't have to worry I've seen a lot of people that inherit a stock from somebody they'll say you know my mother said on her deathbed don't sell the Long Island lighting you know you always wondered you know is it she's going to heaven or hopefully where she's going to heaven you know they talk about a lily game or a vacation or game of Hearts they had or imagine talking on your death bed about long on the lighting and you know but you get these stories all the time and I think your mother would have noticed she wouldn't have sold a 29 but she when she would have noticed they had this little plant that was about 6 billion over budget no one wanted it and wasn't working and uh Long Island stopped growing so maybe she would have turfed at 22 or got up at 18 she wouldn't have let it go to four you know so just because you inherit some stock and it's so-called conservative like Eastman Kodak fell 75% IBM fell 75% don't tell anybody you own a conservative stock companies are very Dynamic I don't buy that argument
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