Thread by @WealthTalkRecap

𝗣𝗲𝘁𝗲𝗿 𝗟𝘆𝗻𝗰𝗵 𝗼𝗻 𝗰𝗮𝘁𝗰𝗵𝗶𝗻𝗴 𝗳𝗮𝗹𝗹𝗶𝗻𝗴 𝗸𝗻𝗶𝘃𝗲𝘀 𝗮𝗻𝗱 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗻𝗼𝘁 𝘂𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝘁𝗵𝗲 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀:

THREAD
⤵️⤵️⤵️

There's a lot of times people buy on the basis; ‘The stock has gone down this much...you know, how much further is it gonna go down?’. I remember Polaroid went from 130 to a 100, people said here's this great company, great record, but [if it] ever gets below 100, you know;

just by every share. And it would get below 100, a lot of people bought on that basis saying ‘Look it's gone from $135 to $100, it's now $95, what I buy!’. Within a year it was $18, and there's kind of no debt, I mean there's a company that was just so overpriced it went down.

I did the same thing in my thing my first or second year in Fidelity. Kaiser industries had gone from $26/share $16; I said ‘how much lower can it go, it's 16!’. So I think we bought one of the biggest blocks ever in the American Stock Exchange of Kaiser industries at $14.

I said; ‘You know, it's gone from $26 to $16 how much lower can it go?’. Well at $10 I call my mother and said ‘Mom, you've gotta look at this Kaiser Industries, I mean how much lower can it go? It's gone from $26 to $10.

While it went to 6 and went to 5 and went to 4 and went to 3 and I unfortunately this happened rapidly or I would probably be still caddying or working at the stop and shop but it happened fast, compressed.

At 3 I figured out you know there's something very wrong here because Kaiser industries owns 40% of Kaiser Steel, they own 40% of Kaiser Aluminum, they own 32% of Kaiser Cement, they own Kaiser Broadcast, and then

Kaiser Sand and Gravel, Kaiser Engineers, they own Jeep, they own business after business and they had no debt.

Now I learned this very early, this might be a breakthrough for some people; it's very hard to go bankrupt if you don't have any debt, it's tricky some people can approach that, its a real achievement. But they had no debt and the whole company at 3 was selling at about $75

million and that point it was equal to buying one Boeing 747. I said ‘There's something wrong with his company sign for 75 million, I was a little premature at 16, but I said everything's fine and eventually this’ll work out.

What they did was they gave away all their shares to their shareholders; they passed out shares to Keiser Cement, passed out shares to Kaiser Aluminum, they passed out shares to Kaiser steel they sold all the other businesses and you got about $50 a share.

But if you didn't understand the company, if you're just buying on the fact that the stock had gone from 26 to 16 and then again to 10; what would you do when it went to 9? what would you do when it went to 8? What would you do when it went to 7?

This is the problem that people have; they sell stocks because they didn't know why they bought it then it went down and they don't know what to do now; do you flip a coin? Do you walk around the block? Psychiatry hasn’t worked so far,

I've never seen them running and the psychological psychiatry fund I've never seen listed with the SEC to make it through as a mutual fund so they haven't seem to help. I've tried prayer that hasn't worked. So if you don't understand the company of this problem when they go down.