Fred Schwed

Simple Way of Investing
A little wonderful advice

Fred Schwed J. give “a little wonderful advice” in his book, “Where Are the Customers’ Yachts?”. 

It is still relevance.  John Rothchild, Author, a Fool and his Money, Financial Columnist, Time Magazine has this to say about his book:

It’s amazing how well Schwed’s book is hold up after fifty five years.  About the only things that’s changed on Wall Street is that computers have replaced pencils and graph paper.  Otherwise the basics are the same.

Schwed recommended:

Like other great ideas, this one is simple:

When there is a stock-market boom, and every is scrambling for common stocks, take all your common stocks and sell them.  Take the proceeds and buy conservative bonds.  No doubt the stocks you sold will go higher. 

Pay no attention to this – just wait for the depression which will come sooner or later.  When this depression – or panic – becomes a national catastrophe, sell out the bonds (perhaps at a loss) and buy back the stocks. 

When the Market Crash, there would be as many shares sold as brought.

The public reads the papers and reading about the “large selling”, “new selling wave threw the market into utter chaos”, and “during the final hour equities were thrown overboard in huge lots, without regard for price or value.”, it get the impression that on the catastrophic day everyone sold and nobody bought.  Of course, there is just no truth in that at all.  If on that day the terrific “selling” amounted to seven million, three hundred, sixty-five thousand shares, the volume of the buying can also be calculated.  In this case it was 7,365,000 shares.

No doubt the stocks will go still lower.  Again pay no attention.  Wait for the next boom.  Continue to repeat this operation as long as you live and you’ll have the pleasure of dying rich.

A glance at financial history will show that there never was a generation for whom this advice would not have worked splendidly. …….

In fact, I think you need to do it only once and will benefit greatly from it

Simple But Not Easy

It looks as easy as rolling off a log, but it isn’t.  The chief difficulties, of course, are psychological.  It requires buying bonds when bonds are generally unpopular and buying stocks when stocks are universally detested.

Schwed Jr, F. (1940). Where Are the Customers’ Yachts? By Fred Schwed Jr,. John Wiley & Sons,.