One Up on Wall Street

All you have to do is put as much effort into picking your stocks as you do into buying your groceries.

The fund manager most likely is looking for reasons not to buy exciting stocks, so that he can offer the proper excuses if those exciting stocks happen to go up.

Perhaps you’ll miss the entire gain, since some dot.coms hit high prices on the first few trading sessions that they never reach again.

There are several different types of turnarounds, and I’ve owned all of them at one time or another. There’s the bail-us-out-or-else kind of turnaround such as Chrysler or Lockheed, where the whole thing depended on a government loan guarantee. There’s the who-would-have-thunk-it kind of turnaround, such as Con Edison. Who would ever have believed

Why did Melville succeed while Genesco failed? The answer has a lot to do with a concept called synergy. “Synergy” is a fancy name for the two-plus-two-equals-five theory of putting together related businesses and making the whole thing work.

If you own a retail company, another key factor in the analysis is figuring out whether the company is nearing the end of its expansion phase—what I call the “late innings” in its ball game. When a Radio Shack or a Toys “R” Us has established itself in 10 percent of the country, it’s a far different prospect than having stores in 90 percent of the

The synergy theory suggests, for example, that since Marriott already operates hotels and restaurants, it made sense for them to acquire the Big Boy restaurant chain, and also to acquire the subsidiary that provides meal service to prisons and colleges. (College students will tell you there’s a lot of synergy between prison food and college food.)

In our business the indiscriminate selling of current losers is called “burying the evidence.”

People don’t buy less dog food during recessions either, which is why Ralston Purina is a relatively safe stock to own.