Stop dancing like that. it looks like the kids are on their way to the guillotine. (g) It's like, uh, you guys at Enron paying off a D in accounting. If you fail to keep the stock price up, you die and I don't know if I can have a baby. I'm not the one doing the talking. You know, if you were CEO of Enron Corp. we wouldn't be having this chat. We would get Enron off the dime. I don't think the average investor wants to hear you singing any more about poor accounting. And Enron's going to do just fine. Enron CEOs are always apologizing to investors, like you. "We have a D in accounting." And then five minutes later their chairman, the guy they paid a hundred and twenty million bucks to, makes a move to give himself another fifty million. I mean, what's the problem? (g) The issue is the guy they hired to give them those options ain't so in-charge-of-this-joint no more, and they got a helluva mess. I think it would be nice to see a little humility from those guys. (g) This guy has no clue how he got here. (g) (g) What's the difference between a good stock and bad stock? A good stock grows. (g) A bad stock, sells off. Well, you should ask to see the financial statement on your stock, because in this case, the stock is worth less than you paid for it. A lot of new investors are asking themselves some tough questions, and you're not really going to get an answer that you're happy with. (g) If you're a long-term investor, you want to be buying your stocks on pullbacks, and not too early in the morning. The big guy in the gray suit wants your money in the afternoon, the middle of the afternoon. He's been doing this for 40 years. And he gets the buy signal from the guy in the gray suit, which is a hundred times worse than any analyst. (g) This fellow's probably got a bigger job than you have. He probably isn't working full-time. But the one thing you must remember: You're working for him. And he doesn't care about your portfolio. (g) I think we can make this work. (g) You're starting to tell me now about another issue. What's the relationship with the firm that puts you out here? (g) That's what I was getting ready to talk to you about. What's the thing you're most worried about? (g) The most worrisome thing is if you're working for a big firm, what are you worried about? (g) You have more to lose. I do. (g) One-hundred percent. (g) Now, they might not fire you, but they'll probably make you miserable. But, they could. That's the way the system is set up. And you're in the middle of it. (g) But they'll make you miserable. They're trying to get you to join the sales force, and you don't want to go there. I'm glad you had a conversation with your boss. Now you can go to lunch with him. Hey! He doesn't know your number. Let's just hope they haven't written it down somewhere. (g) And this is kind of the issue with accounting. Accounting isn't an exact science. (g) You have an accountant, in the beginning of the year, and he tries to make his accounting close to what the general public expects. But after a few years, it gets to the point where, you've got the SEC breathing down their neck, and they're trying to put out fraud alerts on these accounting changes. Like Enron. And now, we're on Enron's heels. And Enron's going to lose in the end. (g) They should go to jail. (g) They should go to jail. (g) (g) And there's an interesting story about what happened with Enron. Because when Enron fired those accountants, they replaced them with Arthur Anderson. And Arthur Anderson happened to be the biggest auditor at that time. (g) But the guy who runs Arthur Anderson is a man named John Riley. And he, too, is an ardent follower of value investing. And, I saw this book. It was called, "How to Detect Value." And it is full of great stories, and they all involve the phrase "for sale by owner." (g) They never met a value investor they didn't like. That's it. (g) If you really want to keep all this money, it's gonna have to be in your pockets. And it's got to be at risk. (g) How do you get a whole company out of your portfolio, or what you're really trying to do? (g) You always start by looking for companies that are out of the mainstream. (g) And they don't even have to be undervalued. There's a category of companies, but they're undervalued in value. You want to look at undervalued value investors. (g) Okay. I know. What's the best indicator you could give me? (g) Companies where the balance sheet is bad, the market cap is good. (g) They're selling. (g) We have companies like this in our portfolio. (g) (g) You have a bunch of companies in there, but the stock's going up on the hopes that one of these companies gets bought out. (g) At a premium. (g) You should come on over, then. So, you're coming in here saying here's what I'm going to do. Tell me how you do it. (g) You gotta find things that are out of the mainstream. (g) You got to know when to get out, or something's gonna happen. (g) The fact that the stock is going up. (g) The fact that someone wants to buy it. (g) That's not your job, to find out. (g) We're not going to get involved with people in the media. (g) Well, I'm sure the guys in the media are going to be watching. (g) Do you believe in value investing? No. (g) I mean, there are good value investments. (g) How do you find them? (g) What would you do if somebody gave you a million dollars, a hundred million dollars, how would you invest it? (g) When you get into these things, the only thing you have is your eyes, and your ears. (g) And your ability to understand, where are people making these kinds of investments? That's what separates value investors from people who think they're value investors. (g) I've heard a lot of stories about people that are willing to take chances. I wonder what they're doing with their money. (g) And I don't think that their investors are going to get the returns that they expect. And I don't think they're going to get the kind of return they expect. (g) You don't want to do that in a leveraged account. You'll lose all your money. (g) You always get a lot of calls when a value investor goes out of business. You should consider that. (g) I've done a lot of research. (g) In the 1950s, there was a fellow named Benjamin Graham. And his book was "Security Analysis." And it had a table of all the companies that they thought were value investments. (g) And they were beaten down, and nobody wanted to buy them. I mean, he had the