Working capital

Current assets less current liabilities is Working capital. Some books said that the more the better. But I think it's not exactly right. Because when a business utilise a small capital but generate a comparative huge profit, that implies it allocates the capital more efficient and effectiveness. As the result, distributes more treasures to shareholders.

Lovely words (4)

"Every trend goes on forever until it ends"

（someone speculates on hot stocks will say same sentence but stop on forever ).

Take advantage of

Rational value investors take advantage of the someone's irrational behavior. Although the former can't influence the latter emotional swings, but he has to wait for such swing.

Two things

Value Investing- it is based on two principles: what's it worth (intrinsic value), and don't lose money (margin of safety).

Swing

If you're a long term investor and can handle market risk, then hold on to stocks with value and dividends. You will be rewarded when the mood swing shifts the market in your direction again.

Security analysis (1)

Careful study of available facts is part of the scientific method. But in applying analysis to the field of securities we encounter the serious obstacle that investment is by nature not an exact science. Both individual skill (art) and chance are important factors in determining success or failure.

Speculator's psychology

On the theory that a good speculation is undoubtedly superior to a poor investment. But here again we mush recognize that the psychology of the speculator militates strongly against his success. For, by relation of cause and effect, he is most optimistic when prices are highest and most despondent when they are at bottom. Hence, in the nature of things, only the exceptional speculator can prove consistently successful, and no one has a logical right to believe that he will succeed where most of his companions must fail. For this reason, training in speculation, however intelligent and thorough, is likely to prove a misfortune to the individual, since it may lead him into market activities which, starting in most cases with small successes, almost invariably end in major disaster.

Investment theory

Investment theory should recognise that the merits of an issue reflect themselves in the market price not by any automatic response or mathematical relationship but through the minds and decisions of buyers and sellers. Furthermore, the investors' mental attitude not only affects the market price but is strongly affected by it, so that success of a commitment-properly considered-must depend in some part on the subsequent maintenance of a satisfactory market price. Hence in selecting an investment, even one presumably purchased for income only, reasonable allowance must be made for such purely market-price elements as can be ascertained, in addition to the more primary consideration which is paid to factors of intrinsic value.

ASI (10)

If a particular industry or type of security becomes popular with investors, that popularity will always prove temporary and, when lost, won't return for many years.

ASI (9)

In free-enterprise nations, the earnings on stock market indexes fluctuate around the replacement book value of the shares of the index.

ASI (8)

In the long run, the stock market indexes fluctuate around the long-term upward trend of earnings per share.

ASI (7)

The fluctuation of share prices is roughly proportional to the square root of the price.

Speculation

In speculation, when to buy and sell is more important than what to buy, and also that almost by mathematical law more speculators must lose than can profit.

Behavioural economics

Investors are consistent in their patterns: they sell winners too early and hold on to losers too long. That's mostly because of regret and fear of loss, according to prospect theory, developed by Daniel Kahneman and Amos Tversky.

Macroeconomics

The cycles of credit expansion and contraction closely tracked business or trade booms and busts. So why, if you are a value investor and focus on long run. Although you cannot takes profit in first third year, eventually you may get huge profit in fifth. Then, 15%-25% return from portfolio per year is possible.

The theory of moral sentiments

What can be added to the happiness of a man who is in health，out of debt, and has a clear conscience? To one in this situation, all accessions of fortune may properly be said to be superfluous; and if he is much elevated upon account of them, it must be the effect of the most frivolous levity.

 --- Adam Smith

ASI (6)

To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude, even while offering the greatest reward.

ASI (5)

The fluctuation of share prices is roughly proportional to the square root of the price.

ASI (4)

For all long-term investors, there is only one objective -- "maximum total real return after taxes"

ASI (3)

Too many investors focus on "outlook" and "trend." Therefore, more profit is made by focusing on value.

ASI (2)

If a particular industry or type of security becomes popular with investors, that popularity will always prove temporary and, when lost, won't return for many years.

Art of successful investment (ASI)

It's impossible to produce a superior performance unless you do something from the majority.

Decision

No decision is worst decision