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Portfolio management: lessons learned from Buffett

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“Be Greedy When Others Are Fearful”: Why Buffett Didn’t Buy More at the Bottom (Yahoo Tech-ticker)

More importantly, I think controlling one’s emotion is key in this market (like yesterday and today :-(. Obviously easily said than done. Yesterday I read the WSJ top page story on people trading AIG stock, most of them lost money eventually (I believe so, at least most people gave back the gains). Trading AIG stock is an extreme example, because of its volatility in last month (August).

Other lessons from Mr. Buffett:

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This “Wang Yang Bu Lao thing” on credit rating

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(Update) Big bro started to act now.

(Original) We all know the stock rating game: I mean those “buy”, “hold” and “sell” rating usually issued by sell side (brokeage) analysts. They are mostly not objective, because at the end of the day the dealers want to sell you more stocks, regardless they are good or bad. At the height of this analyst game is Goldman “conviction buy”, my question for them is why there are no “conviction sell”? Presumably, one can use a sell list to short stocks?

Oh well, Michael Lewis, the former Soloman bond salesman, described the analysts in his “Liar’ Poker” very well. So I won’t keep beat on them. My focus on this little article is on the credit rating (bond rating) game. We all know the credit rating agencies (agencies may have mislead some to think they are independent organization, they are really for-profit companies) have been under attack for the debale of housing/mortgage markets because they had been slept in the same bed with the issuers of MBS (mortgage backed securities).

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Dow 5,000?

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I remember years ago (in dot com era) there is a book named Dow 36,000. Obviously that predication was a laughing stock becaue Dow crashed in year 2000. No I am not trying to make a fool of myself, my title Dow 5,000 is merely to reflect today the Dow and S&P dropped to 12 year low again (source: bloomberg).

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My investing Journey II: late 2003

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Today I saw in the news that Opsware (OPSW) is bought out by HP. Interestingly, OPSW is one of the first stocks I bought in my Scottrade account. The reason I bought it is simple: it’s being mentioned in the Kiplinger Personal Finance magazine, and its founder and CEO Marc Andreessen is the developer and the co-founder of Netscape. Opsware is software/solution provider for data centers, it did not turn out to be a blockbuster, but I did get moderate return on this one (in a few months).

Another stock I traded is GE, the well known US conglomerate which makes things from aircraft engines to trains. I bought it at around 29, and sold it at 32 a few months later (same for OPSW). Today it’s at about 40. The GE stock did not do too much in past four years, the great bull market. But it started to move up lately. Some people argue that when large cap stocks (like GE) move up, we are at the last stage of bull market. Let’s see.

Back to Opsware, it’s Mr. Andreessen’s second baby. It’s not as spectacular as the Netscape IPO, but notheless did bring some values to share holders if they are patient to hold it for 4 years (from $5 to $14). It’s interesting to see the “serial entreprenurs” such as Neil Shen, Ji Qi co-founded Ctrip, Home Inns, and working on the next big idea now. But typically if someone hits something really big, it’s hard to create the “second baby” exceeding the first one. Bill Gates and Jeff Bezo both has one baby: Microsoft and Amazon. Steve Jobs is an exception: he co-founded both Apple and Pixar, the animation company created Toy Stories, and Finding Nemo.