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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Posts Tagged ‘Thomas Phelps’

100 to 1

Posted by Muthu on January 10, 2015

I came to know about the book ‘100 to 1 in the stock market’ written by Thomas Phelps through Prof.Sanjay Bakshi. Prof.Bakshi is a great teacher and a brilliant investor. I consider him as one of my mentors in investing. This book was published in 1972 and a copy including shipping cost around 10K in Amazon. I purchased and read this book in July 2014. I would rate this as the best book I’ve read in 2014. It reinforced and provided excellent insights on the need for long term orientation and the role of time and patience in equity investing.

The 10K paid for the book was one of my best investments.

Throughout the book, Phelps emphasise the need to buy right and sit tight for a long time. This way, any ordinary investor can create extra ordinary wealth.

I want a share a small passage from this great book.

“An elderly client sought my advice on whether he should sell or give to his family a valuable piece of property. This involved estate planning, including calculations of alternative tax consequences. To do this properly I needed to know the old gentleman’s net worth. When I asked him for this information, he insisted on giving me only an admittedly arbitrary figure to work with. This I used.

“Having been pleased with the help he received in the first matter, this same client later sought my help in planning his will and possible lifetime gifts to his children. I told him I would be glad to do this, but I emphasized the vital importance of my having accurate information as to his net worth. Still reluctant to disclose that information, he wanted time to think it over.

“A few weeks later, he came to my office with his middle aged son. After the usual greetings, I waited to hear what the old gentleman’s decision would be. There was a long pause. Then he turned to his son and said ‘Shall I do it?’ ‘Yes, father,’ replied the son. ‘I think you should.’ Whereupon the old gentleman reached into his side pocket, pulled out a slip of paper and handed it to me.

“I had suspected that the figure he had given me to work with in the earlier matter had been unduly low. But, when I saw the very large figure on the slip he gave me, representing primarily the value of his security portfolio, I whistled and exclaimed: ‘Mr.Blank, how did you do it?’

“To which he replied, ‘I never sell anything.’”

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