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We've had 15 declines in 93 years. So every six years the market's going to have a 25% decline. That's all you need to know. You need to know the market's going to go down sometime. If you're not ready for that, you shouldn't own stocks. And it's good when it happens. If you like a stock at 14, it goes to six.
That's great. You understand the company, you look at the balance sheet, and they're doing fine. You're hoping to get to 22 with it. 14 to 22 is terrific. 6 to 22 is exceptional. So you take advantage of these declines. They're going to happen. No one knows when they're going to happen. It would be very people tell you about it after the fact that they predicted it, but they predicted it 53 times.
And uh so you can take advantage of the volatility in the market if you understand what you own. Uh so I think that's the key to element. Another key element is that you have plenty of time. People are in unbelievable rush to buy a stock. I'll give you an example of a well-known company. Walmart went public in October of 1970.
1970 went public already had a great record. It had 15 years performance, great balance sheet. You could have waited 10 years saying you're a very conservative investor. You're not sure this Walmart can make it. You want to check you're you see them operate in small towns. You're afraid they can only make it in seven or eight states.
You want to wait till they go to more states. You keep waiting. You could have bought Walmart 10 years after they went public and made 35 times your money. If you bought it when they went public, you would have made 500 times your money. But you could have waited 10 years after Walmart went public and made uh 30 over 30 times your money.
You could wait three years after Microsoft went public and made 10 times your money. Now, if you knew something about software, I know nothing about software. If you knew something about software, you would have said, "These guys have it. I don't care who's going to win compact, IBM. I don't know who's going to win Japanese computers.
I know Microsoft MS DOSS is the right thing. You could have bought Microsoft. Again, I'm repeating myself. Stocks are not a lottery ticket. There's a company behind every stock and you you can just watch it. You have plenty of time. People are in an amazing rush to purchase a security. They're out of breath when they call up.
You don't need to do this. It's uh the uh you need an edge to make money, too. People have incredible edges and they throw them away. I'll give you a quick example of uh Smith Klein. This is a stock that had tagament. Now, you didn't have to buy Smith Klein when Tagment was doing clinical trials. You didn't have to buy Smith Klein when Tagment was talked about in the New England Journal of Medicine or the British version, Lancet.
You could have bought Smith Klein when Tagment first came out, a year after came out. Let's say your spouse, your mother, your father, you were a nurse, you're a drugist, you're writing all these prescriptions. Tagment was doing an amazing job of curing ulcers and it was a wonderful pill for the company because if you just stopped taking it the ulcer came back.
See it wasn't it would have been a crummy product if it you took it for a buck and it went away but it was a great product for the company. But you could have bought it two years after the product was on the market and made five or six times your money. I mean all the drugists, all the nurses, all the people, millions of people saw this product and they're out buying oil companies, you know, or drilling rigs, you know, it happens.
And then you three years later or four years later, Glaxo, even a bigger company, it's a huge company, British company, brought Zantac, which was a better at that time, an improved product. And you could have seen that take market share, do well. You could bought Glaxo and triple your money. So you only need a few stocks in your lifetime.
They're in your industry. I think of people if you'd worked in the auto industry. Let's say you're an auto dealer the last 10 years. You would have seen Chrysler come up with a minivan. You seen if you're a Buick dealer, a Toyota deal, Honda dealer, you would have seen the Chrysler dealership packed with people.
You could have made 10 times your money on Chrysler a year after the minivan came out. Ford introduced the Taurus Sable, the most successful line of cars in the last 20 years. Ford went up sevenfold on the tourist table. So, if you're a car dealer, you only need to buy a few stocks every decade. When your lifetime's over, you don't need a lot of five baggers to make a lot of money starting with $10,000 or $5,000.
So, in your own industry, you're going to see a lot of stocks. And that's what bothers me. There are good stocks out there looking for you, and people just aren't listening, and they're just not watching it. And uh they have incredible edges. People have big edges over me. They work in the aluminum industry.
I see aluminum industries coming down in inventories coming down six straight months. I see demand improving in America today. You you know it's hard to get an EPA permit for a bowling alley, never mind an aluminum smelter. So, you know, when aluminum gets tight, you just can't build seven aluminum smelters.
So, when when you see this coming, you can say, "Wait a second, I can make some money." When an industry goes from terrible to mediocre, the stock goes north. When it goes from mediocre to good, the stock goes north. and it goes from good to terrific. The stock goes north. There's lots of ways to make money in your own industry.
You can be a supplier in the industry. You can be a customer. This thing this thing happens in the paper industry. It happens in the steel industry. It doesn't happen every week. But if you're you're some field, you'll see a term. You'll see something in the publishing industry. These things come along and it it's just mind-boggling.
People throw it away. Uh one one of the things I find a rule I I a couple rules I want to throw out I find useful. excuse me, is a lot of times people buy on the basis the stock has gone down this much how you know how much further can it go down. I remember when Polaroid went from 130 to 100. People said, "Here's this great company, great record." If it ever gets below 100, you know, just buy every share, you know, and it did get below 100.
A lot of people bought on that basis saying, "Look, it's gone from 135 to 100. It's now 95. What a buy." Within a year, it was 18. And this is a company with no debt. I mean, this is a company, it was just so overpriced. It went down. Uh I did the same thing in my uh I think my first or second year Fidelity.
Kaiser Industries had gone from $26 a share to 16. I said, "How much lower can it go?" "It's 16." So, I think we bought one of the biggest blocks ever on the New York on the American Stock Exchange of Kaiser Industries at 14. I said, "You know, it's gone from 26 to 16. How much lower can it go?" Well, at 10, I called my mother and said, "Mom, you're going to uh look at this Kaiser Industries.
I mean, how much lower can it go? It's gone from 26 to 10." Well, it went to six. It went to five. It went to four. It went to three. And uh now I unfortunate this happened rapidly. I would probably be still catting or be working at the stop and shop. But I it happened fast. I was able to this was compressed at uh and at three I figured out you know there's something very wrong here because Kaiser Industries owns 40% of Kaiser steel.
They own 40% of Kaiser aluminum. They own 32% of Kaiser cement. They own Kaiser Broadcasting. They own Kaiser sand and gravel. Kaiser engineers. They own Jeep. They own business after business. And they had no debt. Now I learned this very early. This might be a breakthrough for some people. It's very hard to go bankrupt if you don't have any debt.
It's it's tricky. Some people can approach that. It's a real It's a real achievement. But they had no debt. And the whole company at three was selling at about 75 million. In that point, it was equal to buying one Boeing 747. I said, "There's something wrong with this company selling for 75 million.
I was a little premature at 16." But uh I said, "Everything's fine and eventually this will work out." And they what they did is they gave away all their shares to their shareholders. They they passed out shares in cement. They passed out shares in Kaiser aluminum. They passed out their public shares in Kaiser Steel.
They sold all the other businesses and you got about $50 a share. And but if you didn't understand the company, if you're just buying on the fact the stock had gone from 26 to 16 and then it got to 10, what would you do when it went to nine? What would you do when it went to eight? What would you do when it went to seven?
This is the problem that people have is they sell stocks because they didn't know why they bought it. Then it went down and they don't know what to do
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