What do you really know about investing?

[Temperament]

I think many times it is the mermaid song of "following the Joneses" that brings many to woes, from investments to consumptions, to kids' education.

For some reason we cannot stand people around us having more things to brag about... so we do something about it.

Ha! Ha!
真 人 不 露 相 is very , very rare indeed. i can say so much here because i think i am a "nobody" here.
By the way, i dislike to compare. If you think i am like that, it's always O. K. lol. i am like that lol! If you see me walking on the street, you will think i am " 一 无 所 有 ” lol.
i am just happy to be like that. i am just happy to let others think they are much better than me lol! Then i think i am "safer" lol

[Life is a game]

I think many times it is the mermaid song of "following the Joneses" that brings many to woes, from investments to consumptions, to kids' education.

For some reason we cannot stand people around us having more things to brag about... so we do something about it.

Two sides to a coin. Sometimes my surrounding makes me feel very small so I yearn to learn more and improve and match the ppl around me who are so successful. It really depends on a positive environment with people of right mindset and I'm lucky to meet the right people in the course of my life who coached and guide me without reserve. Of course the receiver must be willing to take in critics and convert it to strength. 感恩

😇天堂与地狱😈就在当下

[specuvestor]

^^Agree. "We do something about it" can be either positive, progressive, upgrading, and hungry for success; or it can be passive chasing after the wind, ignorant monkey see monkey do, shallow pursuit of bragging rights...

Many times I wonder for whom is the pressure on the kids' education is for.

It's a paradigm issue with huge implication on character and ideology formation

[muns]

Hi All! In my opinion, the line between investing and speculating is a fine one, 2 individuals can purchase the same stock at the same price but for totally different reasons.

Everyone has a different threshold and appetite for risk and reward thus what may be an investment for one may not be for another. You have to understand your own mindset to understand which camp you belong in. Not saying that either camp is right or wrong, but personally investing provides more of a systematic framework for one to replicate over and over again

As mentioned by others above, we have to know what we are investing into because at the end of the day, it is our money and no one forced us to "invest" in XYZ company, we still have to do our own due diligence. At the end of the day we are still the one that gives the call to buy or sell. If we are investing in a fund, we have to find out more about the fund manager and the fund then!

Cheers
___________________________________________________________
Finding the Value in a Speculative World
http://www.valueinvestasia.com

[Temperament]

The GAAP CASH FLOW STATEMENT.

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Extract :-
FREE CASH FLOW - Seeing Through the Accounting Fog Machine to Find Great Stocks.

The GAAP CASH FLOW STATEMENT.

GAAP's Cash Flow Statement is a cash flow in name only. Yes, the Consolidated Statement of Cash Flows provides critical information not provided by the Income Statement such as the period's Depreciation expense and investment in new plant, equipment and other long-term assets (Capital Expenditures, or Cape). But the GAAP Statement of Cash Flows has several serious problems. GAAP allow companies substantial latitude in choosing into which of the Cash Flow Statement's three sections--Operating, Investing, or Financing--they put an item. An example: Some companies classify insurance reimbursements for fixed asset losses (resulting from a fire or flood, and so forth) in the Operating section rather than in the Investing section and some companies do the reverse. In 2005, some Fortune 500 companies were ordered by the SEC to reclassify the sale of their captive finance units' receivables from Investing section to the Operating section, thereby reducing "Cash provided from operating activities." Another example: If a company sells a division and receives a tax benefit from the sale, that tax benefit appears in the Operating section rather than in the investing section. Another example: A company that finances new equipment with a capital lease is not required including the cost of the new equipment in either the capital expenditures line in the Investing section or in the Financing section. The amount must be disclosed in a footnote. The last example: So many public companies had been classified incorrectly, classifying cash flow from discontinued operations that the SEC in early 2006 was forced to allow companies to issued corrections that required no earnings' restatements. There are many, many more examples. The flexibility companies enjoy in deciding into which of the three CASH FLOW sections they put an items is one of GAAP's biggest failings.

The Author further described you have to Beware of The Balance Sheet, etc. and his humble advice: DO NOT MAKE INVESTMENT DECISIONS BASED ON A COMPANY's BALANCE SHEET or any item(s) therein other than CASH and Marketable Securities accounts.


Unquote:-
"I say recently many companies from China, (S CHIPS, how many of you were not caught?) listed here and US have been reported forging CASH Holdings and maybe Marketable Securities too. So, really what items cannot be smoked if they want to?

Investing is really very, very hard. Every items/data in accounting report can be manipulated. And by the time Market Professionals or Regulators spotted the manipulated company's account, it is already too late for you and me. Unless you can or know how to spot them like Professionals before everyone knows. Then, you may still recover some of your money or even profited from the market. Or you won't even consider buying this company at all in the first place.
So the characters of the management in a company should be considered first and how the company earns its keeps (economic moat) before even wanting to look into its books, which you can never be sure off its accuracy or truthfulness."

Shalom to all investors.

[Temperament]

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{THE BEHAVIOR GAP}

You're Responsible, but you are not in control:-

While you're thinking, make sure you consider the bigger picture--the context of your behaviour. A single action may have broader financial consequential that aren't immediately obvious. For example , you decide to start your own business. Your daughter works there in summer and ends up running it. This could be good or bad--but it probably wasn't part of the plan.

You send your kid to Harvard because you think it's a good investment in her financial future--and she (bless her heart!) ends up teaching high school kids in an urban setting for $19,000 a year. This is probably not the outcome you expected.(Maybe it's the right outcome, but that's a different matter.

Get it? You're not totally in control even when you are making wise decisions. So beware of making decisions for purely financial reasons. Instead, make decisions that square with your notion of virtue, wisdom, and common sense.
And remember: you're responsible for your own behavior--but you can't control the results.

NB:
In a nutshell, that's life (especially money & investment)
Shalom.

[specuvestor]

^^ Agree... and it's not just in investing

Focus on the principles; control is illusionary

[theasiareport]

My experience is that studying the financial statements aren't enough.

The thing is that some of these companies are getting ready to list and to defraud investors as part of their plan. It's different from when a company relies on financial manipulation to massage results due to declining conditions.

You have to take a step back and look at the composition of the board. Related party transactions are also extremely important to see if the management are looting the company.

Finally, if companies are sitting on huge cash piles, but issuing massive amounts of debt or equity and paying no dividends...

Regards,
theasiareport.com

"I say recently many companies from China, (S CHIPS, how many of you were not caught?) listed here and US have been reported forging CASH Holdings and maybe Marketable Securities too. So, really what items cannot be smoked if they want to?

[Temperament]

Extract-THE FEAR FACTOR (Colin Read)
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A Beautiful Mind-About John Nash.

His insight was in describing the strategies of what he called non-cooperative games. While he had poker in mind, it turns out that he also described the free-market system. His insights were so profound that he became the only pure mathematician to ever win the Nobel Memorial Prize in Economics.
In short, a non-cooperative equilibrium describes how various participants develop their economic strategies, given the strategies of other participants. These uncoordinated actions in the self interest of individual market participants form the basis for free-market system. It turns out though that these acts, while in the isolated self-interest of individuals, are not in the collective best interest. In other words, we often find ourselves pursuing our self-interest at our own peril. Economic depressions are but one particularly painful example of the dilemma when pursuit of individual happiness harms the individual and economy alike.
A Prisoner Dilemma
To see how we can get stuck in a non-cooperative equilibrium like our current Global Financial Meltdown, let’s look at what economists call the Prisoner’s Dilemma. Imagine 2 people running down the street with boxes of stolen DVD players under each arm as a burglar alarm blares in the background. The police arrest the 2 for possession of stolen goods that would net each of them a year in prison.
The 2 alleged burglars are brought to the police station and individually interrogated. The police can’t prove they broke into the looted electronics store. If they could, the prisoners would get 10 years in prison. The police make each of them an offer – if one prisoner confesses and the other does not, the former will get 6 months in prison and the later will get the full 10 years.
If prisoners do not confess, they will only face a year in prison, no more or no less. And if each cooperates with the police, they will get the full 10 years because the police offered a reduced sentence only if one confesses but the other does not.
John Nash’s equilibrium shows us that they will both turn the other in to save themselves and both will consequently serve 10 years in jail. How is it we can individually pursue what we think is in our best interest, but collectively we find ourselves in a bad spot?
The prisoners find themselves acting to better their position, based on what they think the other will do. If one does not confess and the other does, the first goes to jail for 10 years, while the other gets off almost scot-free. And if one states he absolutely won’t confess, the other has an even greater incentive to confess. Despite their best efforts, the very nature of individual confessions and actions forces them each into a non-cooperative equilibrium that does neither any good.

Fixing Coordinating Failures.
How do we prevent our own uncoordinated actions from harming ourselves and others? Either we cooperate in making joint decisions, or we create rules, institutions, or policies that prevent us from pursuing our individual interest at the expense of others. While we may individually find such rules an imposition, they exist for our collective good to prevent a troubling non-cooperative equilibrium. For instance, an individual hedge fund or investment bank may resent onerous regulation. However, if regulation helps ensure a healthy banking system, it is a good policy for the industry and individual banks and funds, alike.
For example our current economy is stuck in just the persistent non-cooperative equilibrium John Nash describes. Each of us has cut back in our spending as a natural response to our economic dilemma. The combined decrease in spending reduces demand for domestic production. Employers must lay off workers, reducing income and, in turn, reducing spending further. Our belief in a recession became a self-fulfilling prophecy.
What can get us out of this dilemma? As Keynes noted earlier, a Totalitarian state can, in a heavy handed fashion, force producers to produce and consumers to consume. A free-market economy cannot compel individual firms to produce or individual households to spend. Instead, as distasteful as huge doses of government spending may be in free market, it is the only entity capable of coordinating our spending and production and pushing us from a bad equilibrium to a normal sate of economic affairs.
At first, John Nash did not realize that his theory of non-cooperative games could explain the most exasperating nature of the free market. John Maynard Keynes realized this sometimes-fatal flaw in economics a generation earlier, but without the mathematics rigor to prove it. Both, though, had no solution to prevent a Prisoner’s Dilemma from occurring. Given the response of humans to crisis situations, perhaps the dilemma will never be solved.
NB:
So this is how all of us behave in a free-market system - The Prisoner’s Dilemma.
Or is it, all of us?
What about the US GOV and other GOVs?
What about you?

[specuvestor]

^^ Nice read

My observation is that people often confuse effectiveness and efficiency. Capitalism is highly efficient. High salary for public servants will also get talents efficiently. Free markets are also very efficient

But it doesn't address the issue of effectiveness or objectives. That's why money politics or Super PAC in US is a big mistake that will bite in years to come.