100-to-1 In The Stock Market - Thomas William Phelps

[giofranchi]

As for the book and the study.  Without having read it I will review it and call BULLSHIT!  No one can predict the future.  A good chunk of S&P earnings today are from companies that didn't exist or barely existed 25 years ago.  Others have disappeared or shrunk: Kodak comes to mind.  Show me a single company from a list 25 years ago that has gone up by 20 times that you could have predetermined 26 years ago. 

 

Oh, if only it were that easy.  Mr. Phelps would be richer than Warren.

 

Al,

don’t you think that business, like any human endeavor, might be taught, learnt, and improved upon? Don’t you think there are patterns that, if properly studied and followed, might at least help and lead to business success? Do you really think everything in business is just random?

If you find common features among companies that in the past went from 1 to 100, why not to look for those same features in the companies you investigate and want to buy?

This being said, I think we learn as much from failure than we do from success. But the point here is my belief that we can learn and get better! I have the book, but have not read it yet… I cannot judge its quality or usefulness. I cannot say if it is a good learning tool, or otherwise… But the tone of your post seems to suggest: A waste of time! No one recognizes a good business from a bad one! Don’t even try! You will never know!

This I think is misleading. And what I try to do every day is to get better and better at business.

 

Gio

 

[WhoIsWarren]

Well I read it a while back and I thought it was a pile of crap. For all the hindsight-related reasons that have been articulated already.  The nicest thing about the book is that it is the oldest one in my collection.

 

It's a fairly quick (and repetitive!) read, so I suppose Gio you could flick over it and form your own opinion, seeing as you own the book already.  But I just think there's too much other good material to read before this one.

 

Just my tuppence worth.

[kirkomi]

 

If you find common features among companies that in the past went from 1 to 100, why not to look for those same features in the companies you investigate and want to buy?

 

I will argue against the broader point you are trying to make here.

 

Looking at the winners and trying to find common features will lead you to learn things which might be innocuous or worse detrimental. This is how some of the superstitions survive.

 

"Bacon mentioned a man who, upon being shown the pictures of those worshipers who paid their vows then subsequently escaped shipwreck, wondered where were the pictures of those who happened to drown after their vows. The lack of effectiveness of their prayers did not seem to be taken into account by the supporters of the handy rewards of religious practice. “And such is the way of all superstition, whether in astrology, dreams, omens, divine judgments, or the like”, he wrote in his Novum Organum. That was written in 1620."

 

The worshippers who drowned, do not appear in our sample set. Likewise, you need to look at commonalities, but your work is not done. You need to then look for all the companies who actually had the common feature but failed nevertheless. This is akin to destroying your thesis.

 

Once you have evidence that property (call it X) will lead to success and will never lead to failure, you have a better chance of screening with X. Even then it might be just that your sample set is too small. I might even argue that this may lead to a false sense of security.

 

What I am trying to drive at is that you might be empirically right but scientifically/logically very wrong.

 

EDIT: I haven't read the whole thread. I apologize if I am repetitive.

[giofranchi]

Well I read it a while back and I thought it was a pile of crap. For all the hindsight-related reasons that have been articulated already.  The nicest thing about the book is that it is the oldest one in my collection.

 

It's a fairly quick (and repetitive!) read, so I suppose Gio you could flick over it and form your own opinion, seeing as you own the book already.  But I just think there's too much other good material to read before this one.

 

Just my tuppence worth.

 

Well WhoIsWarren,

after your review, it certainly is not on top of my reading list… ;)

 

Gio

 

[giofranchi]

Well kirkomi,

But that’s exactly why I have said that you might learn more from failure than from success!

My idea is simply that, if you critically study success, and if at the same time you also critically study failure, you might draw some useful lessons that help you take better business decisions.

“Critically” means that you must be able to understand by yourself that “prayers won’t save you from shipwreck”. ;)

Our experiences are necessarily limited, because our time is limited, we cannot know everything and cannot be sure to be always right. Yet, I don’t think there is either complete cluelessness or full control. You might start completely ignorant, but you might also get better and better each day that passes, even if you never reach full control.

Believe me, I know and understand very well what you have written. I have read it myself many times! Over and over again. And I have always found it to be scientifically / logically very sound… but unfortunately not very useful!

 

Gio

 

[kirkomi]

Believe me, I know and understand very well what you have written. I have read it myself many times! Over and over again. And I have always found it to be scientifically / logically very sound… but unfortunately not very useful!

 

I agree that it does not find much use. The only thing I use it for is to handicap my confidence. No research, however complete, should give you extreme confidence.

[giofranchi]

I agree that it does not find much use. The only thing I use it for is to handicap my confidence. No research, however complete, should give you extreme confidence.

 

All historical facts, by their very nature, are psychological facts.

--Marc Bloch, “The Historian’s Craft”

 

Business facts are nothing but a part of those historical facts and, therefore, they also are essentially psychological facts.

If you read that classical essay by Mr. Bloch, you come to realize how right Mr. Keynes was, and why, when he said:

 

I’d rather be vaguely right, than precisely wrong.

 

This being said, I agree with you that prudence is always warranted and very welcomed! ;)

 

Gio

 

[twacowfca]

As for the book and the study.  Without having read it I will review it and call BULLSHIT!  No one can predict the future.  A good chunk of S&P earnings today are from companies that didn't exist or barely existed 25 years ago.  Others have disappeared or shrunk: Kodak comes to mind.  Show me a single company from a list 25 years ago that has gone up by 20 times that you could have predetermined 26 years ago. 

 

Oh, if only it were that easy.  Mr. Phelps would be richer than Warren.

 

Al,

don’t you think that business, like any human endeavor, might be taught, learnt, and improved upon? Don’t you think there are patterns that, if properly studied and followed, might at least help and lead to business success? Do you really think everything in business is just random?

If you find common features among companies that in the past went from 1 to 100, why not to look for those same features in the companies you investigate and want to buy?

This being said, I think we learn as much from failure than we do from success. But the point here is my belief that we can learn and get better! I have the book, but have not read it yet… I cannot judge its quality or usefulness. I cannot say if it is a good learning tool, or otherwise… But the tone of your post seems to suggest: A waste of time! No one recognizes a good business from a bad one! Don’t even try! You will never know!

This I think is misleading. And what I try to do every day is to get better and better at business.

 

Gio

 

Good point, Gio.  All information is potentially useful for prediction.  That's the heart of Bayes Theorem.  The book provoked more than one profound insight when I read it, although those insights escaped the author.  :)

[ValueMaven]

Looks like you can pick up a paperback on AMZN for $39.95