What has worked in INVESTING ============================ The advertised title of today's lecture was, "What works in the financial markets." Lots of things work in the financial markets. There are many successful investors and speculators. There's also lots of things which don't work. There's lots of shady behavior, which is sometimes succesful for some people. Sad but true, some parts of the securities industry seem to be less than fully devoted to the clients' best interests; witness the enormous fines, disgorgements, and lawsuit settlement monies paid by prominent financial isntitutions in the early 2000's. Obviously, I can't describe every method which works in the markets, and I didn't intend to. I've therefore changed the title to what it ought to have been in the first place, namely: What has worked in INVESTING This title is by no means original. (Imitation is the sincerest form of flattery.) The title is taken from a study on investing posted at , the website for Tweedy, Browne, a New York-based mutual fund group for whom I have the highest regard. You _need_ to READ that document carefully! Now! Still, I'll try to condense it for you into 90 minutes, but don't view my summary as a complete treatment of their article. In preparing this talk, I discovered that the Tweedy, Browne article has been circulated heavily on the Internet, so you may be in good company if you read it. Who are Tweedy, Browne? I'll leave you to read of their history on their website. I first learnt of them back in the mid-80's when I read Warren Buffett's article, "The Superinvestors of Graham-and-Doddsville," which is in an appendix in Benjamin Graham's "The Intelligent Investor." Buffett's article described the financial results compiled by a group of investors who follow Graham and Dodd's philosophy. As much as I found the group's long-term compound returns remarkable, I was even more fascinated by the way in which they avoided permanent loss of capital. Certainly, there were years when their funds lost money, but that seemed to happen only when the crowd went insane, ditched the margin-of-safety concept, and sold good stocks to follow the crowd into bad stocks. Richards' Theorem: Any time is almost always a good time to buy shares in true-blue value funds. A terrific time to buy shares in those funds is when they are LOSING money! Corollary: Almost anytime is a bad time to sell shares in true-blue value mutual funds. As for where to find these true-blue value funds, I'll get to that later. Let's now turn to the Tweedy, Browne article. Handouts, consisting of pages from Tweedy-Browne articles: The first six pages of "What Has Worked In Investing." The first five pages of "10 Ways To Beat An Index." The first six pages of "Investing for Higher After-Tax Returns"