Mark Twain’s Failed Paige Compositor Investment

“Ah, if only he could die temporarily!” Mark Twain’s signature character Tom Sawyer thought after initial romantic rejection from neighbor girl Becky Thatcher.

In real life in April 1894, in what is now the Eastern District of Missouri Bankruptcy Court, the balance sheet of Samuel Clemens did experience such a temporary death.

Twain, who had built a fortune of approximately three-million dollars due to over a decade of royalty payments from both Tom Sawyer and Huckleberry Finn, invested nearly all of that money in escalating bets on “The Paige Compositor”, a revolutionary typesetter that promised the possibility of tripling newspaper production during the midnight hours.

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An Important Investing Lesson From Benjamin Graham

benjamin graham

I was recently going over some of Benjamin Graham’s old lectures at Columbia University when I came upon one gem of wisdom that I wanted to share with you. In my paraphrase, Graham said this: Achieving satisfactory results with stock market investing is much easier than people think. Beating the S&P 500 on a reliable basis is much harder than people think.

The funny thing about investing is that we will never know how we did because it is a lifelong pursuit. Sure, if you have been investing for twenty years you can get an idea of how you have performed in relation to the S&P 500 index overall, but that tells you little about how you will be doing going forward. After all, if you have beaten the S&P 500 for the past twenty years, there is no guarantee that you will continue to do so over the next twenty. And if you trailed the S&P 500 for the past twenty years, it is possible that you may have learned from your mistakes and will perform better over the next twenty.

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Originally posted 2013-06-30 07:17:17.