Lesson No. 2: Always buy with a margin of safety.
Graham was perhaps the first stock analyst to understand this fundamental truth about investing: Price is everything. Indeed, buying shares of a great company means nothing if you overpay. And buying rubbish on the cheap will frequently leave you with only the unpleasant odor of a rotting portfolio.
Graham details how to buy with a margin of safety, which he calls the "central concept" of investing. Put simply, the "margin of safety" is the difference between the intrinsic value and the price at which a stock trades. For example, a security worth $50 per share but trading at $25 per share enjoys a massive 100% margin of safety. Buying in that situation heavily stacks the odds in favor of the investor.
Conversely, a stock that trades close to or above its intrinsic value offers almost no margin of safety. And buying without a margin of safety, in Graham's book, is no better than mere speculation. Or worse, gambling. Consider the recent performance of oft-hyped gaming stocks such as Shuffle Master (Nasdaq: SHFL), Gaming Partners (Nasdaq: GPIC), and WPT Enterprises (Nasdaq: WPTE) to see what I mean
I know he was talking about Kbloisab2, But his statement sounded general. Some of us (me included) have less than 500 shfl shares. It is purely to fulfil the old saying from the LVR, "everyone should own a little of stock xyz".
There are some stock that I hold a large number of shares. The shfl shares are doing well for me though. I wish I had more!
BTW, who is the "real" kbloisab or kblosab?
Why is it that when confronted with the truth, you insist on resorting to name-calling and other childish posting. Perhaps you should just address the issues that are presented. Most adults do not need to stoop to name-calling and personal character attacks to make their points. Please address your previous assertion that you were short 250K shares of SHFL at $27.95, when your own posts clearly showed that this could not have been the case. Why do you insist on posting things to try to make yourself look better that are provably not true? Do you have an inferiority complex that you are working on? Why are you so obsessed with Bob and Brig? The last person so obsessed with these two that haunted these boards was LVR. Are you the LVR? Or one of his clones?
Wethinks we must pity poor ole NOBRAINBIGHAM. This poor ole lost soul rants on with his silly nonesense, with nothing to say. This poor ole LOSER is mentally challenged--thus, our name for him NOBRAINBIGHAM.
Sober up NOBRAIN!!!- Lay off the DIXIE MOON SHINE. Take anger management classes-- take a shower-shave, clean up your silly mode of cry baby conduct.Stop whining--Act like a man!!! Stop living in the past--you can't change history.
Lord help this poor mis guided fool. We urge all posters to pray for his sobering up and his speedy return to common sense[ if that is possible ]
Nothing wrong with only having a few hundred shares. Remember, unless you came from royalty or were born rich, we all started with little or nothing.
Worse yet, we could all be back there at ground zero. So, the best thing to have is an education. Money is a very handy close 2nd though.