Our Philosophy
1. Our Philosophy
2. How this Website is Different
3. About the author, J.L. Eaton
Our Philosophy
This website's capitalist-centric financial approach represents a patent
rejection of the modern term, "investor". Benjamin Graham, co-author
of the seminal investment work
Security Analysis
and also Warren Buffett's mentor, all but pronounced the term "investor" as dead -- and that was in 1934! During the great speculative bubble that Wall Street so aggressively encouraged in the late 1920s, little distinction was made between naked gambling and investment. It didn't get any better. In the 21st Century, absolutely
no distinction is made in the
financial media between dice-throwing, day-gamblers and what Graham and
Buffett would rightly deem investment operations. Because of the
devolution of our language concerning investment, "capitalist and capitalism" is used by JL
Eaton to reference Graham-Buffet-style investment operations that are
clearly distinct from casino-like speculative gambles.
Warren Buffett, the world's most successful capitalist, provides a capital allocation philosophy that represents CapitalistCurriculum's first set of guiding principles. Mr
Buffett has demonstrated for more than 50 years that he is the master
capital allocator. This makes him an outstanding economist (he holds a Masters in Economics from Columbia); however, Buffett's economic philosophy has been tested by real events for many decades.
Having taken $100 of his own money, and increased it to a fortune worth
tens of billions of dollars, Buffett has demonstrated to the world all
that needs to be known about finance. Buffett, in turn, has
unapologetically called Benjamin Graham his hero. Graham wrote and
taught a comparatively simple premise: if you don't analyze the business that underlay a given stock, you will lose money, and possibly lots of money on that single point of ignorance.
Stocks
represent, in the first and last analysis, a business. Buffett took
this fundamental premise and greatly increased its effectiveness by
treating all businesses, whether privately- or publicly-held, the same.
All businesses are evaluated as if there is no other market; there is
simply a buyer and a seller in a private transaction. If you were to
purchase the Dry Cleaners around the corner, what would you pay for the
entire business? If you don't know how to place a total purchase price
on that business, how do you know whether you are being asked to pay far too much for a given stock?
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How this Website is Different
This
website is different than most, as it relates to its readers a coherent
and logical methodology for pursuing the benefits of long-term
investment. It is presented in the form of learning the Capitalism
written of by Adam Smith (Wealth of Nations), and practiced by Warren
Buffett, Charlie Munger, Benjamin Graham, and several others who
Buffett included in his intellectual village of Graham and Doddsville
during a 1984 address to a group of Harvard finance students.
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About the author, J.L. Eaton
Through
the mechanism of CapitalistCurriculum.com,
J.L. Eaton brings the aspiring mini-capitalist a coherent, multi-tiered
approach to the fundamental precepts that underlay economics, finance,
income
tax, and advanced investment strategies. Mr. Eaton brings to bear a
unique blend of undergraduate Business Law teaching experience, more than 15 years of real estate and securities investment experience, and both broad and deep study of finance and economics, as they relate to investments.
Following the award of a Juris Doctor (law) degree with
honors, Mr Eaton served as a Business Law lecturer at the University of Maryland. Among
the topics covered in his Business Law courses were: Debt Obligations, Business
Bankruptcy, Law of Sales, Contracts, Business Entity
Structure, Income Taxes, and fundamental precepts that underlay Banking and Securities laws.
Additionally,
all prior teaching experience and a formal commercial law education
served as a mere introductory prelude to what became an intensive,
five-year self-study program that integrated the pre-existing business
and law foundation with the most important elements of economics and
finance. The subsequent combined education can best be described as a
comprehensive financial approach that emulates the approach taken by
capitalists (but in so doing, it rejects the Wall Street approach).
Specifically, an unbroken line of successful capitalism runs from the
original writings of Adam Smith in Wealth of Nations
to the most successful capitalist of them all, Warren E. Buffett,
Chairman and CEO of Berkshire Hathaway, Inc. Buffett is not alone,
however. Such modern capitalists as T. Boone Pickens, Michael Dell,
and slightly more remote individuals such as J. Paul Getty of Standard
Oil are called upon, as well.
Through organized
lessons for enrolled students, Mr Eaton introduces fundamental
financial, economic, legal, and income tax concepts in a graduated
series of seminars. All seminars, from the most fundamental, to the
most advanced, are aimed at the singular goal of fully preparing
students to comprehend critical, but all-too-often misunderstood
information about capital markets, true investments, and long-term
wealth-building.
The intensive study of traditional
finance, economics, and advanced investment philosophy led to one
startling conclusion: the subject areas are not in concert.
That is, traditional economics and finance, developed in earnest since
the late 1950s and still practiced today (catastrophically as of
2007-2009), cannot be squared with the investment philosophy and
practical experience of Bejamin Graham, John Burr Williams, John
Maynard Keynes, Phil Fischer, Charlie Munger, and, most astoundingly of
all . . . Warren Buffett . . . the most successful capitalist and
investor of all. Advanced economic theories, such as Modern Portfolio
Theory (MPT), must be closely re-examined in light of empirical data.
That is, the named individuals above found tremendous success by acting
in a manner that is diametrically opposed to the principles of MPT.
If MPT were a good representation of reality, the successes should not
have been possible. However, an alternative conclusion for the
empirical data is that if the succcesses occurred, then the theory is
flawed.
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