Berkshire Hathaway CEO Warren Buffett added some homely advice to the 1989 annual report: “No sooner is one problem solved than another surfaces — never is there just one cockroach in the kitchen.” The business adage means that if a company reports one trouble, there are often other troubles to be reported (or, if one company in a business sector experiences trouble, other companies in the same sector often have similar troubles).
Dennis Gartman, author of The Gartman Letter, published the following rule in October 1989: ”There is never one cockroach. When you encounter a problem due to management malfeasance, expect many more to follow. Bad news often begets bad news. Should you encounter any hint of this kind of problem, avoid the stock and sell any shares you currently own.”
Wikipedia: Warren Buffett
Warren Edward Buffett (pronounced /ˈbʌfɨt/; born August 30, 1930) is an American investor, industrialist and philanthropist. He is widely regarded as one of the most successful investors in the world. Often called the “legendary investor, Warren Buffett”, he is the primary shareholder, chairman and CEO of Berkshire Hathaway. He is consistently ranked among the world’s wealthiest people. He was ranked as the world’s second wealthiest person in 2009 and is currently the third wealthiest person in the world as of 2010.
Buffett is called the “Oracle of Omaha” or the “Sage of Omaha” and is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth. Buffett is also a notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Gates Foundation. He also serves as a member of the board of trustees at Grinnell College.
The Gartman Letter
Mr. Gartman has been publishing his daily commentary, The Gartman Letter, since 1987. Over the years, he has also conducted numerous presentations and courses on issues relating to the capital markets and derivatives for various brokerage firms, central banks, and U.S. government entities. In recent years, Mr. Gartman has been a frequent guest on leading financial television and radio networks.
The Great Trader Gartman
In the October 1989 issue of Futures magazine, Dennis Gartman published 15 simple rules for trading. He is a successful trader who has experienced the gamut of trading from winning big to almost losing everything. Currently, he publishes The Gartman Letter, a daily publication for experienced investors and institutions.
Here are three of Gartman’s best rules:
There is never one cockroach.
When you encounter a problem due to management malfeasance, expect many more to follow. Bad news often begets bad news. Should you encounter any hint of this kind of problem, avoid the stock and sell any shares you currently own.
Fundamentals of Managerial Economics
By Mark Hirschey and James L. Pappas
Fort Worth, TX: Dryden Press
“There is never just one cockroach in the kitchen.”
(Citing investor Warren E. Buffett—ed.)
The Executive’s Book of Quotations
By Julia Vitullo-Martin and J. Robert Moskin
New York, NY: Oxford University Press
“No sooner is one problem solved than another surfaces — never is there just one cockroach in the kitchen.”
WARREN BUFFETT, CEO, Berkshire Hathaway (annual report, 1989)
The Essays of Warren Buffett:
Lessons for Corporate America
By Warren Buffett
Edited by Lawrence A. Cunningham
New York, NY: L. Cunningham
In a difficult business, no sooner is one problem solved than another surfaces — never is there just one cockroach in the kitchen.
Mises Economics Blog
Warren Buffett: “There’s never just one cockroach in the kitchen.”
November 3, 2007 by Karen De Coster
Bankers say Bear Stearns’ collapse is no reason for investors to panic
by Chris Knape | The Grand Rapids Press
Tuesday March 18, 2008, 5:26 AM
Wallick said such a volatile market presents a lot of risks and opportunity.
As for another potential Bear Stearns?
“One of the old adages is there is never one cockroach,” he said.
“There’s Never Just One Cockroach”: Can Bulls Survive the Goldman Fraud Fallout?
Posted Apr 19, 2010 07:30am EDT by Aaron Task
“Is the economy expanding enough to overcome something like this?,” wonders Barry Ritholtz, CEO of Fusion IQ and author of Bailout Nation. “It’s a really challenging question.”
Not usually at a loss for words - or opinions - Ritholtz admits it’s “too soon to tell” what the ramifications of the Goldman charge will be for the broader market. “It’s hard to draw conclusions [but] where there’s smoke there’s fire...there’s never just one cockroach,” he says. “Do other big banks engage in this kind of behavior?”
New York City • Banking/Finance/Insurance • (0) Comments • Wednesday, January 12, 2011 • Permalink