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To: goldsnow who wrote (19341)	9/19/1998 9:59:00 PM
From: Alex	Respond to of 116764

SERENITY NOW, SERENITY NOW. Guess you had to see that Seinfeld episode : - )....................... More pearls from the world's most successful investor Unless you can watch your stock holdings decline by 50% without panicking, you shouldn't be in the market IN MY previous column I outlined some of the principles Warren Buffett followed to become the richest individual in America through investing. Here are some more of those principles for you to take note of - and apply. It's 'owner earnings' that matter This figure gives a true reflection of the value of any business in whose shares you're considering investing. It is net income, plus depreciation, depletion and amortisation, less capital expenditure (capex) and any additional working capital required. Earnings as normally reported are only useful to your analysis if they approximate the expected cash flow of the company. But even cash flow is not a perfect tool for measuring value, as it ignores capex, which is critically important on an ongoing basis for manufacturing companies. Go for high profit margins These reflect not only a strong business, but also management's tenacious spirit for controlling costs. Buffett says: "Managers of high-cost operations tend to find ways to continually add to overheads, whereas managers of low-cost operations are always finding ways to cut expenses." And every rand spent unwisely deprives the owners of the business of a rand of profit. Buffett's principal company, Berkshire Hathaway, has no legal, public affairs or investor relations departments, no security guards, no drivers, no messengers - its overhead corporate expense is less than 1% of operating earnings. Measure reinvestment for good value For every rand retained out of earnings and ploughed back into the company, there should be equivalent improvement in market value. Combine both the 'value' and 'growth' approaches to investing The share price increase should at least match the growth of retained earnings over time. The value of any business in which you're thinking of investing should be determined by estimating the net cash flows expected to occur over the life of the business, discounted at the current yield obtainable on long-dated gilts. Buffett says the debate between the two ways of selecting shares - the "value" and "growth" approaches - is nonsense as they are "joined at the hip". "Value is the discounted present value of an investment's future cash flow; growth is simply a calculation used to determine value. "Irrespective of whether a business grows or doesn't, displays volatility or smoothness in earnings, or carries a high price or low in relation to its current earnings and book value, the investment shown by the discounted-flows-of-cash calculation to be the cheapest is the one the investor should purchase." Focus on four- or five-year averages When studying the figures, don't take yearly results too seriously. Only invest in a business when its share price is significantly below its true value. Buffett believes in buying stakes in great businesses when they are having a temporary problem, or when the stock market declines and creates bargain prices for outstanding franchises. Stick with the simple and stable To avoid mistakes in valuation arising out of wrongly estimating future cash flow, stick with businesses that are simple and stable, and insist on a substantial margin of safety between the share price and your determined value. Ignore stock market trends This is one of Buffett's most controversial principles. He doesn't care what the market has done recently or is expected to do in future. He buys value. And he doesn't care if a stock has already risen greatly. He bought Coca-Cola after it had already risen fivefold in six years - and then made four times his initial investment over the next three years. Be extremely selective Normally only five shares account for more than 75% of Buffett's main investment vehicle. Getting a few decisions right is what matters Buffett says that in his 40-year career, it's just 12 investment decisions that have made all the difference. "An investor should act as though he had a lifetime decision card with just 20 punches on it. With every investment decision his card is punched, and he has one fewer available for the rest of his life." Don't buy a share unless all the facts are in its favour Ignore the environment; focus on the company. Stop trying to predict the direction of the stock market, the economy, interest rates or elections, and stop wasting money on individuals who do this for a living." Study the facts and the financial condition, value the company's future outlook, and purchase when everything is in your favour. Keep lots of cash ready to snap up bargains Buffett's company Berkshire Hathaway hasn't declared a cash dividend since 1967 - shareholders get their reward through the rising value of their shares. The money that would otherwise be paid out to shareholders is used in the company to make it grow faster - and make the price of its shares grow faster. It's even OK to borrow money to snap up a bargain on one of those rare occasions when one comes on offer. But more usually, you should have a pile of cash waiting in the bank to use when you need to. Individual investors can do as well as professionals America's most successful individual investor doesn't believe individual investors are at a disadvantage relative to professional fund managers. "Because of the erratic and illogical behaviour of institutional investors, individuals can easily profit, as long as they stick to simple business fundamentals." However, they must be able, financially and psychologically, to handle market volatility. Buffett believes that "unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market". The Buffett way to stock market success does not require computer programs, complex mathematics or expert knowledge of a company or its industry. It boils down to valuing a business according to particular principles, then buying a piece of it when the shares are seriously undervalued. However, you have to do your own thinking and be prepared to ignore what the stock market is doing. "If you plan on owning shares in an outstanding business for a number of years, what happens in the market on a day-to-day basis is inconsequential. "Ultimately, the best investment ideas will come from doing your own homework". Martin Spring is editor of Personal Finance newsletter

To: goldsnow who wrote (19341)	9/20/1998 12:16:00 AM
From: IngotWeTrust	Read Replies (1) \| Respond to of 116764

Tha'sme, goldsnow, Happy GOLDLucky, Blessed, Loved by God. With +cls N XAU ystdy, well, it's a gold wkend, right? O/49r

To: goldsnow who wrote (19341)	9/20/1998 1:07:00 AM
From: Zardoz	Read Replies (2) \| Respond to of 116764

Not trying to promote Prozac here, but I went back to this post: techstocks.com And had a good laugh. I mean, I thought for sure that that was a sign of someone in need of prozac. Maybe she should check what meds they give her before she opens her mouth. And realize that Viagra is for men. But I figured it out... All that mercury dust she's been inhaling, has finally built up. This is a common illness amongst GOLD panners. I hope she gets the help she needs. {See, stayed on topic.}

To: goldsnow who wrote (19341)	9/20/1998 4:39:00 AM
From: Alex	Read Replies (2) \| Respond to of 116764

Obuchi defends economic policies in Post interview WASHINGTON, Sept 19 (Reuters) - Japan has already taken every measure to pull itself out of recession short of a ''wartime economy'' of massive military spending increases, Prime Minister Keizo Obuchi told the Washington Post in an interview published on Sunday. On the eve of his departure for New York where he will hold his first summit meeting with President Bill Clinton on Tuesday, Obuchi said that Japan is already slicing interest rates, cutting taxes and pumping billions of tax dollars into the economy to try to reverse its decline. Perhaps the only traditional ''remedy'' left, he told the newspaper, would be to build up a ''wartime economy'' with increased defense spending leading the way to new jobs and industrial growth. Obuchi said he would never consider that option, but the Post said he raised the subject and discussed it at length in the hour-long interview at his private residence. By even mentioning military spending, Obuchi may have been sending a message of frustration to officials in the United States and Asia who have been harshly critical of Japan's response to its economic crisis, according to the newspaper. Obuchi noted that America's recovery from the Great Depression was spurred in part by jobs created by the defense industry gearing up for World War Two and that the United States remains the world's major exporter of weapons. Obuchi said that option is not available to Japan, which has interpreted its constitution, written by U.S. officials during the postwar occupation, to mean that all weapons exports should be banned. ''We want to make it very clear that we have no intention of resorting to (military spending increases) and we are strongly determined to restore the economy without it,'' Obuchi said. The Clinton-Obuchi summit comes at a time of great frustration and friction between Tokyo and Washington. Obuchi told the Post that allies such as France had been offering ''encouragement'' to Japan in its hour of need, while the United States offered ''not encouragement but advice.'' The Post described Obuchi as relaxed and funny and said the Japanese leader often spoke in English. He did not consult notes or read from a prepared script. On the Monica Lewinsky sex scandal gripping Washington and threatening Clinton's presidency. Obuchi said the matter would have ''no influence at all'' on Japan's dealings with Clinton or the United States. ''It is true of course, on the other hand, that the Japanese public is interested'' in the scandal, he said. ''As one of the major desires of human beings, this sexual desire naturally attracts much attention. Maybe, for the Japanese male, Viagra is another thing of interest,'' he said.