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Economics is extremely
useful as a form of employment for economics.
John Kenneth Galbraith |
Money is better than poverty, if only for financial reasons.
Woody Allen
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Where
large sums of money are concerned, it is advisable to trust nobody.
Agatha Christie |
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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?"
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Would you have invested?
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10 signs you think about
your portfolio too much
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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.
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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.
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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.
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When asked to speak at your graduation, you recited line-for-line Gordon
Gekko's "Greed is Good" speech.
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You miss your business partner's funeral because Cisco is releasing its
earnings report... after all, if they were still alive, they would want
you to carry on with business as usual.
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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.
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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.
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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.
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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 Japanese markets open.
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Your broker has issued a restraining order.
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A little girl visits a
watermelon farmer. She points to a large watermelon and asks the farmer
how much it is.
He says, "That one is three
dollars."
The little girl says, "But
I've got only thirty cents."
The farmer points to a
small watermelon in his field and say, "How about that one?"
The little girl: "Okay,
I'll take it, but leave it on the vine, and I'll be back to get it in a
month."
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One should buy stock when it is cheap. Wait for it
to go up and then sell. If it does not go up, don't buy it.
Randall Price |
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Fantastic Bubbles that
Popped
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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.
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The South Sea Bubble - South Sea Company
was supposed to monopolize trade between England and the Americas.
It didn't work out.
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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.
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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.
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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.
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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.
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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.
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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.
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The Investing Bride
The 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 down sizing and it's effects on a 50
year old executive.
Calmly, she handed him a bank book showing deposits and interest for 30
years totaling nearly million dollars. Pointing across the parking lot
she gestured toward the local bank while handing him stock certificates
worth nearly 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!"
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