One Up on Wall Street: How to Use What You Already Know to Make Money In
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inflated price of, 228, 242
stock chart of, 116–17
brokerage firms, 16
legal status of, 279
using, 32, 184–86, 197, 199
Brown, Tom, 151–52
Browne, Harry, 69
Browning-Ferris, 246
Brunswick, 266
Bufferin, 108, 198
Buffett, Warren, 11, 55, 209
Berkshire Hathaway and, 89, 155, 157, 208
exclusive franchises and, 141
on futures and options, 273
as greatest investor, 89, 90
New Bedford textile plant and, 141, 155, 208
Burlington Northern, 109, 126, 210
burying the evidence, 63
buying on margin, 78
Cabbage Patch dolls, 42
cable-TV, 126–27
Cajun Cleansers, 145–46, 148
Calgon, 124
Callery, Elizabeth and Peter, 28
Calmat, 131, 141
Campbell’s Soup, 192
Cap Cities, 246
capitalization, market, 64
capital spending, 214
Carnegie Hall, 50
carpet industry, 151
cash:
on annual reports, 194
flow, 213–15
positions, of companies, 199–201
CBS, 155
CDA Investment Technologies, 136
CDs, 67, 71
Channel 5 (Boston), 210
Charles River Breeding Labs, 142
Charles Schwab, 25, 26
charts, stocks, see stock charts
Chevron, 256
Chicago Rawhide, 132, 133
Child World, 153
Chrysler, Walter, 111
Chrysler Corporation, 11, 49, 64–65, 109, 136, 193, 241
back stock buying by, 145, 147
as cyclical company, 255
debt of, 203
stock chart of, 147
as turnaround company, 122, 123, 203, 231, 255
Circle K, 54
Circuit City Stores, 153
Cisco, 16, 21
Cities Service, 48
C. J. Lawrence, 85
Clear Channel Communications, 26
Clear Shield, 133
CNA, 155
Coastal Corporation, 214–15
Coca-Cola, 34, 109, 118, 134, 159, 241, 247, 281
brand name, value of, 142, 209
hidden assets of, 210–11
as stalwart company, 112, 115, 162, 163, 176
Coca-Cola Enterprises, 134, 210–11
Coleco, 42
Colgate-Palmolive, 112, 115–16
Comdial, 159
companies:
asset-play, 125–27, 128, 129, 174–75, 209–13, 231, 241, 256–57; see also assets
biotech, 21
bonds of, 68, 70, 203
book value of, 207–9, 210–11
buying back shares by, 18, 19, 144–45, 153, 157
cash position of, 194, 197, 199–201, 214–15
classification of, 110–29
consumer demand and, 142, 254
contacting, 186–91, 287
cyclical, 119–22, 127–29, 175, 207, 225, 228–29, 241, 253–54
debt of, 194–97, 201–4, 208, 255
diversification of, 135, 145
diworseification of, 124, 153–57
dullness of, 130–32, 160
earnings as value of, 161–62, 164, 167
economy and, 110–11, 120–21
European, 212–13
exclusive franchises and, 140–41
fast-growing, 118–19, 127–29, 162–63, 167, 176, 222, 229–30, 241, 243, 254–55
financial reports of, 194–97; see also annual reports
fundamental strength of, 108, 220–21
growth rate of, 110–11, 127–29, 199, 217–19
headquarters of, 190
industries and, 110, 111, 118, 119, 139–40
institutional ownership of, 55, 57, 136, 179, 257
inventories of, 215–16, 253, 255
life of, 222–24
middleman, 160
names of, 160
pension plans of, 217
performances of, 131–33, 138
representatives of, 191
restructuring of, 124, 153
rumors on, 137, 183–84
size of, 64–65, 109–10
slow-growing, 111–12, 127–29, 175, 205, 228, 241, 251–52
spinoffs of, 133–36, 159
stalwart, 112–18, 128, 176, 205, 228, 241, 243, 252
summarizing prospects of, 174–75, 229–34
turnaround, 12, 122–24, 127–29, 153, 159, 175–76, 202, 203–4, 213, 230–31, 241, 255, 260
unpredictability of, 265
as users of technology, 142
value of, 161–62, 164, 167
see also stocks
competition, industrial, 139, 176–80
compounding:
of earnings, 219
of interest, 67–68
Con Ed, 76, 123, 205–6, 265
Coniston Partners, 279
Conrock, 131
Consolidated Edison, 76, 123, 205–6, 265
Consolidated Foods, 37
Consolidated Rock, 131
Consumer Price Index, 70
Consumer Reports, 107
Container Corporation, 154
Contel, 213
Continental Air, 224–26
copying industry, 152
Corn Products Refining, 72
corporate bonds, 68, 70, 203
corporations, see companies
Cosmic R and D, 33
Cray computer, 49
Crazy Eddie, 153
Crown, Cork, and Seal, 131, 160, 190, 267, 268
back share buying by, 144
CSX, 210
Cuban missile crisis, 276
CVS, 155
Dairy Queen, 144
Dart, 133
Dart & Kraft, 133
Datapoint, 134
day traders, 20
Dean Witter, 158
debt:
bank vs. funded, 202–3
of companies, 194–97, 201–4, 208, 255
investment in, 67, 70
tax deductions and, 285
-to-equity ratio, 202
deficit, U.S. trade, 284
Del Haize, 212–13
Dell Computer, 25, 26
Delta Airlines, 226
Denny’s, 178
depreciation, 214, 215
deRoetth, Peter, 55, 192, 249
Digital Equipment, 111, 129
diluting, 145, 264
discounting, 100, 171
disk drive industry, 151, 160
Disney, 128, 256
diverse performance, 59–60, 64
dividends, 18–19, 112, 204–7
p/e ratio and, 199
stock price and, 205
taxing of, 285
Dollar General, 25, 26
dot.com stocks, 11
market capitalization of, 13–14
p/e ratio and, 12–13
Dow Chemical, 109, 119, 128, 164, 165
Dow Jones, 47, 48, 51, 52, 53, 88, 128
Japanese, 55, 278
in 1988–89, 288
in 1970s, 278, 289
in October 1987, 28, 69
rise, since 1966, 55
twentieth-century history of, 71–72
Doyle’s, 28, 29, 30
Dravo, 141
Drexel Burnham Lambert, 280
Dreyfus, 89, 95, 102, 103, 104, 247
Dunkin’ Donuts, 33, 64, 66, 163, 281
investment research on, 36, 40–41, 95, 106
as multibagger, 35, 58
DuPont, 109, 212
earnings:
compounded, 219
dot.com stocks and, 13
future, 172–73, 187
growth rate and, 199, 217–18
inventories and, 215
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punishing, 164–65, 211
as value of stocks, 161–62, 164–65, 167
see also price/earnings ratio
Eastern Airlines, 224
Eastman Kodak, 61, 96, 108, 152, 231
Eaton, 61
economic growth, definition of, 110
economy of 1988 vs. 1930, 282–83, 288
Edelman, Asher, 279
efficient-market hypothesis, 52
E. F. Hutton, 83
Eisenhower, Dwight D., 110
election of 1960, 276
electric utilities:
as dividend-payers, 205
growth of, 111, 119
Electrolux, 279
Electronic Data Systems (EDS), 14, 170–71, 172, 242
Envirodyne, 133, 247
equity funds, size of, 65
Esselte Business Systems, 212–13
Ethyl Corp., 269
Exxon, 59, 96, 136, 141, 144, 154
Fairmont Foods, 54
Fannie Mae, 11
Federal Express, 159
Federal Reserve banks, 62, 250
Federated, 104, 128
Fidelcor, 288
Fidelity Capital, 51
Fidelity Capital Appreciation Fund, 133
Fidelity Destiny Fund, 137
Fidelity Magellan, 9, 10, 22
assets of, 29–30, 53–54
funds of, 51
Kaiser Industries shares bought by, 259–60
1987 profits of, 82
performance of, 65
regulations of, 65
size of, 65
stocks of, 53–54
Fidelity Trend, 51
FIFO, 215–16
Filmco, 133
Financial News Network, 13, 279
First Family, 153
Fleet-Norstar, 207
Florida Rock, 141
Flowers, 249
Flying Tiger Airlines, 32–33, 50, 98n
Food Lion Supermarkets, 212–13
Forbes, 40, 164
Ford, Gerald R., Jr., 277
Ford, Harrison, 163, 169
Ford Credit, 201
Ford Motors, 61, 109, 159, 193, 211, 220, 255
cash position of, 200–201
as cyclical company, 119, 122, 207
1987 annual report of, 194–97, 200–201
stock chart of, 120–21
as turnaround company, 122
Fortune 500, 64
Fortune Systems, 89
franchises, exclusive, 140–41
Francis Ouimet Caddy Scholarship, 49
Franklin, 104
free Internet play, 14–15
funded debt, 202, 203
fund managers, work of, 60–63, 183
funds, see equity funds, size of; index funds; money-market funds; mutual funds; pension funds; switch funds
Furman Selz, 158
futures, 270–71, 272
see also options
GAF, 266
Gannett, 138, 141, 246
Gap, The, 25, 26, 35, 118, 254
GCA, 202
GD Ritzys, 159
General Cinema, 246
General Dynamics, 141, 203, 253
General Electric (GE), 18–19, 71, 74, 77, 198, 246, 281
size and growth of, 109–10
General Foods, 218
General Mills, 134, 154, 175
General Motors, 34, 47, 242, 255
General Public Utilities, 75, 122, 123–24, 206, 255
Genesco, 155–56
GeneSplice International, 131
Genetech, 159
Genuine Parts, 246, 281
Getty, J. Paul, 83
Gillette, 49, 145, 154, 157
Gilliam, Maggie, 57–58
Ginnie Maes, 72–73
Glaxo, 98
Goldsmith, Sir James, 257
Good Guys, 153
goodwill, 210–11
Goodyear Tire, 84, 100–101, 124
Gotaas Larsen, 134
government bonds, 70
Government National Mortgage Association, 72–73
Graduate, The, 119
Great Depression of 1990 (Batra), 23, 81
Greece, 54
Greenman Brothers, 268
Greyhound, 52
Griffin, Ben Hill, Jr., 126
Griffin, Gene, 48
growth rate, of companies, 110–11, 127–29, 199, 217–19
G7 conference (1987), 278
Gulf Oil, 256
Hafts, 256, 279
Halliday, Peter, 57
H & R Block, 75
Handy and Harman, 209, 215
Hanes, 37, 107, 198
Hanson Trust, 279
Harcourt Brace, 266
Harley Davidson, 25, 26
Hartford Courant, 141
Harvard Law School, 55
Havalight Photo Cell, 38–39
Hazeltine, 288
Health Maintenance Organizations, 264
Heebner, Ken, 56
Heine, Max, 56
Heinz, 62, 75, 246
Helix Technology, 24
Henri Bendel, 155
Hershey’s, 112
Hertz Rent A Car, 59, 201, 211
Highland Superstores, 153
Hilton International, 137, 178, 211
Hoff, Mrs. Charles, 75–76
Hoffman, Dustin, 119
Holiday Inn, 36, 128, 137, 176–79, 254
Holmes, Susan, 57
Home Depot, 12, 25, 26, 247, 268
Home Shopping Network, 149–50
Honda, 251
Honeywell, 109
Hop-In Foods, 54
houses, as investments, 77–80
Houston Industries, 75, 112, 113
Hughes, Howard, 138
Hughes Aerospace, 201
Hyman, Ed, 85
Hyman, Sam, 279
Iacocca, Lee, 131, 193
IBM, 59, 64, 66, 111, 131, 152, 153, 160
1970 antitrust case of, 277
Icahn, Carl, 64, 257, 279
Imo Delaval, 134
Imperial Chemical, 279
Inco, 128, 140, 247, 253
index funds, 281
Individual Retirement Accounts, 285
Industrial National Bank, 207
industries:
companies and, 110, 111, 118, 119
competition in, 139
complex vs. simple, 130
high-growth, 139
maturity of, 188–89
negative-growth, 152
no-growth, 63, 139–40
inflation, long-term rate of, 70
initial public offerings (IPOs), of stocks, 159
Insiders, The, 143
insider trading, 135, 142–43, 180
Insilco, 288
institutional ownership of stocks, information on, 136, 143
insurance companies, preapproved stock lists of, 60
Integrated Circuits, 159
Intel, 15, 21, 25, 26
Intelogic Trace, 134
interest, compounded, 67–68
interest rates, 68, 72–73, 85, 172, 287
Interlake, 134
International Dairy Queen, 144
International Harvester, 145, 230
International Nickel, 128
International Shiphold, 134
International Textbook, 51–52
Internet, 10–17
Interstate Department Stores, 124, 133, 248
Intertan, 134
inventories, 215–16, 253, 255
investment:
amateur vs. professional, 31–32, 35–36
in bad vs. good markets, 48
brokerage firms and, 184–86, 197, 199, 249–50
common knowledge and, 35–40
common misconceptions of, 258–269
in debt, 67, 70
formulas for, 129
ignorance and, 40, 60–61
individuality and, 66
long-term, 19–20
personal attitude
toward, 45, 81, 237, 267–68
personal experience and, 95–97, 98, 122, 127, 130
personal risks of, 80
preserving capital vs. making profit with, 49
professional vs. consumer knowledge and, 100–102
in real estate, 77–80
research for, 32, 35–41, 42, 74, 106–8, 183–84, 186–97
rumors and, 250
skill in, 73–74
summary evaluation of, 227–33
when to buy in, 245–47
when to sell in, 247–49, 251–57
Investor’s Daily, 143
Investor’s Intelligence, 81
IU International, 134
Jacobs, Irwin, 257
Jaguar, 251
John Blair, 134
John Hancock, 48
John Harland, 246
Johns-Manville, 124, 264
Johnson, Edward C., II, 51
Johnson, Edward C. (Ned), III, 51, 53, 54, 69
Johnson, Lyndon B., 277
Johnson, Mister, 51–52
Johnson & Johnson, 98, 108
Johnson Chart Service, 76
JP Stevens, 188–89
junk bonds, 280
Kaiser Industries, 259–60
Kaufman, Henry, 148
Kay-Bee Toys, 155
Kellogg, 34, 75, 118, 207, 228
Kelso, 279
Kennedy, John F., 276
Kenner Parker, 134
Kentucky Derby, 51
Kentucky Fried Chicken, 52
Keynes, John Maynard, 275
Killeen golf course, 28
KLM, 107
K mart, 155, 169, 280
KMS Industries, 158
Kohlberg, Kravis, and Roberts, 279
Kraft, 133, 134, 218
Kress, 155
Laclede Gas, 71
Lance, 249
Lane Bryant, 223
La Quinta Motor Inns, 36, 59, 110, 192, 249
as fast-growing company, 176
history of, 176–80
as multibagger, 35
Lassie Dog Food, 192
L’eggs, 40, 192
and Hanes, 107, 198, 229
history of, 36–38
Lerner, 223
leverage, real estate and, 78
leveraged buyouts, 279–80
Lewis, Brad, 211
Lexan plastic, 198, 229
Liberty Corp., 126
Liedtke, Hugh, 205
LIFO, 215–16
Limited, The, 95, 181, 193, 219, 246
earnings of, 164
history of, 38–40, 223
stock chart of, 168
Wall Street and, 57–58
Lions Club, 53
Lockheed, 123, 201, 230
Loeb, Gerald, 239
Loew’s, 155
London stock market, 29
Long Island Lighting, 288
long-term investing, 19–20
Loomis-Sayles, 56
Lorillard, 155
Los Angeles Times, 141
Louisiana BayouFeedback, 145
Lowe’s, 25, 26
LTV, 90, 128
Ludlow Manufacturing, 48
Lukens Corp., 207, 266
Lynch, Carolyn, 11, 27, 36, 37, 52, 56, 98n, 127, 192, 193, 287
Lynch, Peter:
caddy experience of, 48
family stock market advice to, 48, 49
Fidelity Magellan fund administered by, 9, 10, 22, 53–54
in U.S. Army, 52–53