Wednesday, November 5, 2008

What is Cauliflower Ear?

I train in Brazilian Jiu Jitsu (BJJ), Mixed Martial Arts (MMA), Muay Thai Kickboxing (Kickboxing) and American Collegiate style Wrestling (Wrestling). I've been training in these Martial Arts since March 2004. I am a Purple Belt in BJJ, 1-0 in MMA. I've won several BJJ and Submission Wrestling Tournaments and placed in the top 3 in all Tournaments I've competed in. I've won cash and prizes at several tournaments.

One of the results of training and competing in these Martial Arts is called Cauliflower Ear. Imagine taking a piece of cauliflower, removing a persons ears and putting the chunks of cauliflower on the persons head. Some people hate it and some people love it and wear it like a badge of honor. The reality is if you compete and train for long enough you usually get it. In some ways it is a reflection of commitment, intense physical training and experience. It's the price we pay to gain skill in these Martial Arts.

How does this relate to investing? I've tried investing in the past and had mixed results. My initial experience was during 1991 to 1993. I was in the US Army in Panama and I started investing in growth mutual funds. I stuck with large succesful fund families like Janus and American Century (then called 20th Century). I had good returns and was generally satisfied with the results. I stuck with growth mutual funds over the next few years.

My next experience was during 1999 to 2000. I was excited by the dot.com boom and wanted to buy individual stocks. I chose companies I thought were succesful, would be considered growth companies and I thought would provide better returns than the mutual funds I invested in previously. I bought Microsoft, Labor Ready and a few smaller companies. My theory was buy succesful companies regardless of share price and my investments would be succesful.

How did it work out? I bought at almost the peak of a bull market and my stocks lost value as the market turned. I sold all my stocks at losses. I made the classic mistake of buying when the prices were going up and selling when the prices went down.

During the 2000's I've bought and sold shares in several companies including Berkshire Hathaway and Harley Davidson. These investments actually made a little money but I sold all the shares for different reasons. The good thing to come out of these investments was receiving the Berkshire annual report which led to me finding the other available reports on the Berkshire website. Warren Buffett is obviously an investing genius and his writing is an excellent source for investing knowledge. Learnig about Buffett led to me learning about Benjamin Graham and his books.

So my long winded post is designed to say that I've started the path to earning my Cauliflower Ears in investing. I plan on sharing my journey hear as I try to apply the lessons and principles taught by Benjamin Graham in his books titled The Intelligent Investor and Security Analysis.

2 comments:

t said...

Rob-This is interesting. Benjamin Graham's investment approach has been very successful, and, Buffett, one of his disciples, is the best.

The VALUX mutual fund seems to have been a pretty good value investing fund over the years. I read a newsletter from VALUX's manager years ago and found it to be great. The name of the newsletter is the "Prudent Speculator" -- http://www.prudentspeculator.com/news/samh.asp. He gives a bunch of good tidbits on his approach and picks about about 20 stocks each month that meet his "value" criteria. I also learned a lot by reading Warren Buffet's annual reports distributed each year even though I never had the chance to buy Berkshire's stock.

Buffett seems to focus on businesses, as opposed to stocks. I'm going to check to see if I can find any of Berkshire's annual reports.

Michel

RAC III said...

Hey Michel,
Yeah those Berkshire annual reports are great. I printed a bunch from the Berkshire site and have a few from when I used to own some Brk.b.
Thanks for posting a comment, you are the first one!
I always figured the chain of Graham to Buffett would be good to follow. I've been reading a lot of the book Security Analysis also by Graham. It takes most of the concepts taught in The Intelligent Investor and puts more numbers and examples behind them.
Rob