Free Money Finance Guest Blogger, Fred Kobrick, Author of The Big Money, Post #1

Hold on to your hats, I think this is going to be lots of fun!

This week, I'm having my first-ever guest blogger. Fred Kobrick, author of The Big Money, will be writing one post a day. I'll do a short introduction to each one just to make sure new readers know what's going on, but other than that, the thoughts, opinions, and content are all Fred's. That said, here's the first post:

What I did when I was fourteen still comes to mind at times, and still amazes me. I worked a summer in a sweatshop to make a lot of money because I wanted to.  At summer’s end, I felt that my money was so hard earned, that I could not spend it yet. So, I bought my first stock, even though I was intent on being a doctor and knew nothing about stocks.

I saw over the years that rules and formulas are all nice, yet I learned real investing from grand masters as a rookie, and later from my own experiences.  And then, it was the greatest management teams in the world that taught me the most.

I met with, and watched the “Bill Gates’ of the world” beat all their competitors and make countless shareholders wealthy. It was exciting and I was thrilled to be part of it. I learned well and invested well.

I learned the two main reasons why people do not make “the big money”: they beat themselves, and they cannot distinguish a great company from an ordinary one early-on, when it is possible to make 100 or 300 times your money (or much bigger returns like with a Dell or a Wal-Mart).

Some books present simple investing formulas/methods, while some present complex analytical things that put people to sleep. Mostly, they all ignore the two problems I just mentioned.

I think I learned more from one lunch, as I was job-hunting near graduation, than many people learn in years. A guy told me how he bought small companies again and again until he invested in Haloid and became filthy rich. It sure was not formulas; it was an understanding of what makes for a great company. It was the great lesson of the quest for “the big money”.

My stories are lessons I learned, and I’ve got more to tell… check back tomorrow.

Comments

[buhler]

great idea to have a guest blogger ... enjoyed today's post and am looking forward to checking back the rest of the week

[FRED KOBRICK]

This is Fred. Good morning, fellow investors and stock pickers. Let's have some fun today, and find out why people have trouble making the big money. Let me know any thoughts on my writing and what you may have learned from great stocks or mistakes, and then, let's go!!
I will answer.

[FRED KOBRICK]

Hi, from FRED again.

After seeing that USA Today punched holes in some other stock books recently, I was glad that they reveiwed mine and that they loved my book in this morning's review, and for the right reasons. Here is a quote from USA TOday:

"There are countless books on how to pick stocks, but Kobrick tells you more than how to read an income statement....People lack focus and the secret of what to look for....a company's four critical factors."

"We learn from hearing other people's stories....Kobrick's confidence and insight, honed from more than three decades as a leading mutual fund manager and investor, make his stories worth a good listen."

So, fellow stock pickers, know that each of my stories has a lesson to help you on the path to the BIG MONEY,and if I can answer questions by blog, let me know. FK

[FMF]

Fred --

Congrats on the review from USA Today.

Everyone else --

If you're interested in reading the entire review, you can find it here:

http://www.usatoday.com/money/books/reviews/2006-05-08-big-money-book_x.htm

Also -- now's your chance to "talk stocks" with an expert. Leave a message, comment, or question here and Fred's ready and willing to give you his thoughts!

[Laine]

Hi Fred. My company uses Fidelity for it's 401k portfolio. They only have one index fund, that tracks the S&P, and has an amazing expense ratio. I've diversified about 1/3 of my stuff into foreign markets (half that into emerging and half into more established), 1/3 into a low cost janus small caps and 1/3 into the S&P index. So far it's going really well, any tips though on what might be better? What are your thoughts on the emerging markets vs. sticking with an index at home?

[FRED KOBRICK]

Hi, Laine. Thanks for the question, it is a good one and on many investors' minds.
The Vanguard Group is the seocnd largest fund company after Fideltiy, and I htink they wre the originator of the index fund, and they are known to have the lowest expense ratio for that fund and all funds, actually in the industry.
They do have some great funds, so you might look them over in general and thier web sire is highly educational (by the way, the majority of the equity funds are managed by Wellington Managment, my first employer and one that I highly respect).

Fidelity has some great funds for making money, of course, my favorite right now being the Contra Fund managed by a truly great investor, Will Danoff.

Emerging markets are fine, but right now with low U.S. inflation, good corporate earnings growth, and money flowing into our markets, I like domestic for the time being.