The ultimate cheat sheet

By JAMES ALTUCHERTHE ALTUCHER CONFIDENTIAL via businessinsider.com   Article

The Ultimate Cheat Sheet For What You Should Do With All Of Your Money

“WELL, WHO MAKES MONEY IN THE MARKET THEN?

Three types of people:

1) People who hold stocks FOREVER. Think: Warren Buffett (has never sold a share of Berkshire Hathaway since 1967) or Bill Gates (he sells shares but for 20 years basically held onto his MSFT stock).

2) People who hold stocks for a millionth of a second (see Michael Lewis’s book ‘Flash Boys’ which I highly recommend.) This is borderline illegal and I don’t recommend it.

3) People who cheat.

I’ve seen it for 20 years. … Reg S, Calendar trading, Mutual fund timing, Death spirals, Front running, Pump and Dump, manipulating illiquid stocks, Ponzi schemes, and inside information. Inside information has always existed and always will exist. …

What stocks should I hold?

Warren Buffett has some advice on this … He says, ‘if you think a company will be around 20 years from now then it is probably a good buy right now.’ … It seems to me he has five criteria:

a. A company will be around 20 years from now.
b. At some point, company’s management has demonstrated in some way that they are honest, good people. If you can get to know management even better.
c. The company’s stock has crashed for some reason (think American Express in early 60s, which he loaded up on. Or Washington Post in the early 70s. Or Coca-Cola in the early 80s).
d. The company’s name is a strong brand: American Express, Coke, Disney, etc.
e. Demographics play a strong role.”

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