舉例來說，最近電視台財經頻道的主持人總是在談論金價狂飆，還會問現在是否適合投資黃金或黃金期貨。真是可笑的問題，現在當然不適合投資黃金 — 適合的時間是十年前，當年黃金每盎司不到 300 元，投資者早就趁金價便宜建立了大量部位。現在主持人講黃金就如同他們在 2005 講房地產一樣，而當時也正是房地產的最高峰。
前幾天我和一位朋友吃晚飯，他提到一個投資的羅斯公式(Rothschild formula)。羅斯公式是說，在某項投資的增值過程中，不要想賺前面的 20%，也不要想賺最後的 20%，最好是賺中間的 60%。因為中間這一段風險最小，而且趨勢是很確定的。當你感到資產的增值已經快到頂，進入最後 20%，你應該賣掉並尋找下個標的。
只是我們大家都知道，大部分的業餘投資客(而且，多數主持人也是)，通常都是參與最後 20% 那一段。
我說：「在最後 20% 中努力的業餘投資者，他們的目標多是資產增值。那些在房產破沫最末波，使用零首付高利率的短單客，都是希望有比他們更蠢的人會接手他們手上的房產好讓他們賺價差。」
我進一步解釋，我投資數百萬的股票都是有高配息的 — 這是現金流 — 而這些股票因為市場趨勢而跌價，所以我有一些資本利得的損失。
他並不是很精明的主持人，因為他還搞不懂同時擁有現金流與資產增值的意思。約末一小時候，他終於弄懂我並不只是不動產投資客 — 只要價格漂亮，不管這個資產是以現金流為主，還是以獲得資本利得為主，我都願意投資。如果交易可以獲利，我才不管他是不動產、商品、企業、或者只是紙上文章。
我舉個用漂亮價格獲得資產增值的例子：在 1990 年代，每次我只要有多餘的閒錢，我總會去買些黃金或白銀。雖然我無法從這裡得到現金流，但我知道我正在用很便宜的價格買到這些貴金屬，而且總有一天它們會再漲上來。
看美式足球時我很喜歡聽 John Madden 的報導，因為他知道他在說什麼。他曾經是球員在場上打過，也曾經坐在板凳上當過教練，他真的知道美式足球。同樣的道理，一位我很尊敬的財經主持人是 Bloomberg 的 Kathleen Hayes。她是位有機智的播報員，而且她真的懂財經。我很懷疑其他財經記者到底懂多少。
Investing in Better Research
A few days ago, a reporter asked me if I was losing money in real estate. My reply was, “No, I’m making money."
Confused, he asked, “How can you be making money during the subprime disaster?" I explained that since the real estate market took a downturn, there were more people renting rather than buying, which is great for my apartment business. I also informed him that I’m raising rents since demand for affordable apartments is so high. When someone moves out, I increase the rent and new tenants line up, which means my cash flow is increasing.
He then asked, “Are you looking for new investments?"
A shocked look came over his face when I said, “I’ve been investing heavily in the stock market since August 2007. I’ve moved several million dollars into the market."
“The stock market?" he stammered. “Stocks are crashing. Why are you in the stock market? Besides, I thought you were a real estate investor?"
Ignorance Isn’t Bliss
As Warren Buffett has said, it’s important for society to have accurate and informed sources of information. While I agree, I sometimes wonder about the intelligence of many financial journalists, both in print and the electronic media.
For example, lately on financial TV stations, the reporters have been talking about the run-up in gold and asking, “Is it time to invest in gold and gold stocks?" What a ridiculous question. Now isn’t the time to be investing in gold or gold stocks — that time was 10 years ago, when gold was below $300 an ounce. Investors should’ve taken substantial positions when gold was cheap. For reporters to be talking about gold today is no different than them reporting on the hot real estate market in 2005, just before the top blew off.
I had dinner with a friend of a friend the other night and he was telling me about the Rothschild formula for investing. According to him, this involves not parti***ting in the first 20 percent or the last 20 percent of an investment run-up. Instead, it’s investing in the middle 60 percent, when risks are low and the direction of the price is determined. As the asset value approaches what appears to be the last 20 percent, you sell and move on to another asset class.
As we all know, most amateurs (and, possibly, many reporters) only parti***te in the last 20 percent.
I wondered if the reporter who asked why I was investing millions in stocks was an investor himself. I did my best to explain to him that there are two things professionals invest for: 1) Capital gains, and 2) Cash flow.
I said, “The amateurs who come in at the top 20 percent of a market are generally investing only for capital gains. In the last real estate boom, the ‘flippers’ who got no-document, zero-down loans paid very high prices, and hoped for a greater fool than them to take the property off their hands.
“These are some of the people being faced with forecloses today. They’re the investors who make the news — not the investors who are making money."
The reporter then asked me, “So what do you invest for?"
My reply? “Both. If I can, I want both capital gains and cash flow."
I went on to explain that I was investing millions in stocks that were paying a high dividend — cash flow — and also had their prices battered down by the market crash, a loss of capital gains.
Spelling It Out
He wasn’t the brightest reporter, since he had trouble with the idea of investing for both cash flow and capital gains. After about an hour of explanation, he finally began to understand that I’m not just a real estate investor — I’m someone who invests for capital gains at a great price, or cash flow at a great price, regardless of the asset class. If the deal is right, it doesn’t matter if it’s in real estate, commodities, a business, or paper assets.
Here’s an example of capital gains for a great price: Back in the 1990s, every time I had some extra cash I would buy some gold or silver. Although I didn’t receive any cash flow from gold or silver I knew I was purchasing the metals at a great price, and that someday those prices would rise again.
An example of buying for cash flow at a great price is when I buy a stock that pays a dividend. I wait until the stock market dips and then buy, which is what I’m currently doing. One of the better companies I’ve been buying is a bulk cargo shipping company that’s hauling U.S. grains to India. The more the dollar drops in value, the more grains we export. Every time the market drops, I buy more of this stock at a great price, because I love the cash flow from dividends.
Finally, an example of buying both capital gains and cash flow at a great price is when I find an apartment building at a bargain, and then increase the rents. By doing so, I increase the cash flow and the property value, which translates into capital gains.
Leave It to the Pros
When I watch professional football, I love listening to John Madden because I know he knows what he’s talking about. He’s been both down in the trenches and in front of the bench as a coach. He knows the game. By that token, one financial reporter I respect is Bloomberg’s Kathleen Hayes. She’s a savvy reporter who knows what she’s talking about. I wonder about some of the other financial reporters.
The problem with much of the financial news in print and on the web, radio, and television is that it comes from journalists who may not be investors. When I listen to most journalists whine and cry about the subprime mess, the slowdown in the economy, and the volatile stock market, I can all but tell that they’re not really investors. None of these events really has much impact on professional investors, who follow market trends and are familiar with the underlying fundamentals of the assets they investing in.
So the next time you hear a reporter ask, “Is this the time to be getting into stocks, bonds, real estate, gold, silver, or oil?" remember that it’s probably the time to be looking elsewhere. And keep in mind the Rothschild formula of investing. You never want to be too early — and you also never want to be too late.