ABC on Investing

Einstein goes to heaven

Einstein dies and goes to heaven only to be informed that his room is not yet ready. "I hope you will not mind waiting in a dormitory. We are very sorry, but it's the best we can do and you will have to share the room with others" he is told by the doorman.

Einstein says that this is no problem at all and that there is no need to make such a great fuss. So the doorman leads him to the dorm. They enter and Albert is introduced to all of the present inhabitants. "See, Here is your first room mate. He has an IQ of 180!"
"Why that's wonderful!" Says Albert. "We can discuss mathematics!"

"And here is your second room mate. His IQ is 150!"
"Why that's wonderful!" Says Albert. "We can discuss physics!"

"And here is your third room mate. His IQ is 100!"
"That Wonderful! We can discuss the latest plays at the theater!"

Just then another man moves out to capture Albert's hand and shake it. "I'm your last room mate and I'm sorry, but my IQ is only 80."
Albert smiles back at him and says, "So, where do you think interest rates are headed?"

10 signs you think about your portfolio too much

1. You gave your broker a gift on the fifth anniversary of the day you opened your brokerage account, but forgot to give your wife anything on your wedding anniversary.
2. You tell your children they can't go to college because you are convinced you can make another 15% on their education accounts when the market turns around.
3. You go camping, a bear attacks you, and your insurance has run out. You have a choice between selling your Microsoft stock or paying for an operation to save your leg. You choose the stock.
4. When asked to speak at your graduation, you recite line-for-line Gordon Gekko's "Greed is Good" speech.
5. You miss your business partner's funeral because Cisco is releasing its earnings report... After all, if he was still alive, he would want you to carry on with business as usual.
6. You make your sixteen year old daughter get a job at a little-known manufacturing company in the hopes she will hear something and give you valuable insider trading tips.
7. After a company has a disappointing quarter, you throw all of their products out of your house in anger and call your extended family, demanding they do the same.
8. The Dow Jones drops 10% or more. You demand your family skip one meal a day so you can quickly raise cash to buy stock at the new, cheap levels.
9. You wander the house on Saturday and Sunday because you have nothing to do. Every hour, on the hour, you loudly announce to the house the time remaining until the stock market opens.
10. Your broker has issued a restraining order.

Fantastic Bubbles that Popped

The Ponzi Scheme - Named after Charles Ponzi, a scam artist who promised investors a return rate of 100% in just 90 days. Ponzi lured trusting thousands into his Security and Exchange Company (SEC). The supposed whiz kid merely used the new funds to pay off existing investors, a practice now known as a Ponzi Scheme.
The South Sea Bubble - South Sea Company was supposed to monopolize trade between England and the Americas. It didn't work out.
The Mississippi Bubble - A company operated by John Law to operate in the Mississippi Valley and other French colonial Areas went down the tubes as well.
Florida's Real Estate Boom - After Florida was won for the USA in 1821, the State remained relatively inhabited until developers realized the immense vacation potential of the 'Sunshine State'. A huge real estate boom occurred. At one point, an amazing one-third of Miami's population had become real estate agents :-). A typical case of bad timing, two Florida hurricanes (1926 and 1928) made the Florida Real Estate Bubble burst.
The Roaring '20s Stock Market - In two days in October 1929 The Dow Jones lost nearly 25% of the value it had collected in years of highly leveraged stock speculation (putting 10% down and taking out a 90% loan from a broker, secured by the value of the shares, was no problem at all. The crash was promptly followed by the Great Depression, and the market bottomed a few years later at just 11% of its 1929 peak.
Japan's Stock Bubble - In the 1980s, Japanese firms seemed to do everything right, management methods such as TQM, Kaizen, Kanban, PDSA were being very popular, and investors were extremely bullish on Japanese stocks until the 1987 Black Monday crash.
Russia's Notorious MMM - After the collapse of the Soviet Union in 1991, in 1994 an obscure company called MMM opened offices in Moscow and other Russian cities, and began offering fantastic returns on its shares. Russians had an unshakeable faith in the capitalist system at the time, and they en masse pulled their hard earned rubles out of their mattresses, not asking how MMM was going to earn such returns. The pyramid scheme collapsed in 1995, leaving an estimated 50 million Russians in the dark. The biggest fraud in history.
The Internet Bubble - In the second half of the 90s, Western investors followed the earlier example of their Russian peers. Internet companies that never made a single dollar of profit were valued at hundred times their revenues. At one moment serious analysts began measuring the number of mouse clicks. In March 2000 the Internet bubble collapsed, leaving only Amazon, eBay and Google as winners.

The Investing Bride

A young bride approached her awaiting husband on their wedding night and demanded $10 for their first love-making encounter. In his highly aroused state, he readily agreed. This scenario was repeated each time they made love for the next 30 years, him thinking it was a cute way for her to buy new clothes, etc.

Arriving home around noon one day, she found her husband in a very drunken state. Over the next few minutes she heard of the ravages of financial ruin caused by corporate downsizing and its effects on a 50 year old executive.

Calmly, she handed him a bank book showing deposits and interest for 30 years totaling 3 million dollars. Pointing across the parking lot she gestured toward the local bank while handing him stock certificates worth 40 million dollars and informing him that he was the largest stockholder in the bank. She told him that for 30 years she had charged him each time they had sex, and this was the result of her investments.

By now he was distraught and beating his head against the side of the car. She asked him why the disappointment at such good news and he replied, "If I had known what you were doing, I would have given you all of my business!"

Investing Humor