"Buy stocks, take sleeping pills"
André Kostolany was born in Germany on February 9, 1906 as the youngest of 4 children, and stopped his journey of life on
September 14, 1999. He was known as a Bonvivant who enjoyed his luxury life. “Lunch at Chez André on the Rue Marbœuf, then to Le Fouquet's on the Champs Elysées (France), that's my life,” says Kostolany. He liked art and classic music. “Rosenkavalier” from Richard Strauss, whom he knew personally, was one of his favorite composition. His career aspiration was that of an art critic, from which he then abandoned. He also earned a degree in economics, which he kept locked away in a drawer with the words "economics is not a science”. His father, a wealthy industrialist, saw things differently and placed his son with a French financial broker friend, Adrien Perquel. He now ended up at the Paris Stock Exchange, where he learned the principles of the stock market. He later summarized the basic principle jokingly in the following sentence:
"On the stock exchange, the only thing that matters is whether there are currently more fools than papers or more papers than fools"
After successfully completing his traineeship, the young speculator Kostolany joined the brokerage firm Amerongen & Compagnie. This was the beginning of a unique career in the stock market. At the end of the 1920s, André Kostolany had his first stock market success with Russian shares. After a disappointing visit to the Paris stock exchange, he decided to do something different and speculate on falling prices. This paid off for the first time in 1930: When the Paris stock exchange collapsed in 1929, Kostolany became a rich man overnight, despite he filed bankruptcy twice in his life. A year later, there were major changes in the markets. Kostolany, a speculator, had bet on falling prices by means of forward transactions. But suddenly, U.S. President Hoover deferred huge reparation payments to the Germans, whereupon share prices shot up. André Kostolany lost his entire fortune and was in debt. Humbly, he asked for a job as a broker again.
At the end of the 1930s, Kostolany trusted that Adolf Hitler would lead the countries of Europe to ruin. He again bet on falling prices - this time with success. Prices plummeted and Kostolany bought passage on a ship to America. Because of his Jewish origins, the stockbroker emigrated to the USA and obtained citizenship there. For ten years he held the post of president and general secretary of an investment firm, but he only felt really at home on Wall Street.
After Kostolany's death on September 14, 1999, in Paris, stock market experts are particularly fond of recalling the numerous wisdoms of the great stock market master, which were as apt as they were timeless. He liked to refer to the four "G's" that make up success on the stock exchange (own money, own thoughts, patience and luck).
André Kostolany lived the stock market and loved fine arts, especially opera. Kostolany's favorite piece was the "Rosenkavalier" by Richard Strauss, whom he was still able to meet in person, much to his delight. The speculator Kostolany enjoyed life to the full. Kostolany was able to retire to his house on the Cote d'Azur, while in the metropolises of Paris and Munich he lived and worked at the pulse of the world. His wife, Francoise Russell, who was much younger than he was, he married at the age of 58, urged him to move to the vacation home altogether. "Then I would soon be dead," Kostolany told friends. However, the marriage remained childless.
It urged him to express the opinion on the course of the world stock markets. In 1999, Kostolany warned once again from the wheelchair about the herd instinct of investors who drive up the quotations of Internet shares: "There will be a bloodbath." The great financial expert did not live to see the Internet bubble burst after the turn of the millennium.
His birth states Hungarian Roman of Jewish originate. He was born in Budapest. As a result of his father’s persuasion, Andre went to Paris in 1924. He started his career as a stockbroker. Later he has become a speculator and he had the marvelous ability to make a profit in the declining markets.
As a result of German occupation in France, he had to run for an asylum he has selected New York. A few years after the war, he returned to Paris. There he met his wife, with whom he lived until the end. He went to America in 1940 and from 1941 to 1950 he served as the director and the president of the G. Balai and Co-Financing Company. France has become his main track of living since 1950. He was able to maintain an office in Munich and a luxurious vacation home on the Côte d’Azur. His childhood was full of challenges. Andre was born in 1906 as a Jew and he wanted to study Philosophy and the history of arts, but his father insisted on that and sent him to Paris. Father wanted Andre to study investment, a subject which has great importance at that time. He learned and accumulated knowledge about financial products and the stock market in his childhood. He gained his knowledge to inform both Germany and France. This vast knowledge made him great fame. He was known as the most successful investor in financial history. He was known as the Godfather of the German investor circle. He enjoyed a similar position which was enjoyed by Warren Buffet in America, On many occasions, German investors, experts, and respective media personals consult the knowledge, and the experience of Andre before make their own decisions. He was named as the uncrowned prince of the German Investment market.
He was clever to select the reconstruction industry in Germany after World War 2. The respective economic boom has helped him to accumulate a fortune. As a contribution to the wealth that he was able to earn from the construction industry of Germany, Andre helped the German stock market by writing and holding seminars. His experience and success was a result of accumulated knowledge of various trades and the markets around the world. He had a career of 70 years at his death of 93.
His beliefs
As a result of his success investing in Germany after World War 2. He had a deep respect for the German people, as he admired their unique qualities and extreme capabilities to overcome the challenges that they had to face. He was considered as one of the strong critics of the gold standard. He believed that by fixing respective exchange rates to the price of the gold, the economies have to face dire consequences. According to him, such a move can lead to freeze the growth of the economy and initiate a cyclic crisis. He severely criticized the Bundesbank for its monetary policy during the period of the 1980s and 1990s.
In his speeches, Kostolany highlighted three ways of getting rich:
- Through a rich marriage
- With a happy business idea
- Through speculation.
Other options, such as inheritance or winning the lottery, could not be controlled
When someone asks him “how to become a speculator?" he has a nice answer. He says that when a girl joins the profession of prostitution, first she does it for curiosity, then for fun, and finally for only the money. According to him, a successful speculator must have the following qualities and characteristics.
Ingenuity: Ability to distinguish the logical nature of the processes. or to identify the relationships
Institution: The ability to identify the trends of the market by employing a long period of exposure to the field of the stock exchange as well as to the general life.
Imagination: The ability to picture the movements of the stocks and their outcomes in the future.
His strategy.
Kostolany is famous for his shrewd and strong mixture of psychology, and his gifted knowledge of stocks and markets. He was one of the famous investors who acted based on his quotations. As an example, we can find this one quotation to get an idea of his pattern of investing.
“Never run after a bus or a stock. Just be patient — the next one will come along for sure.”
“Trading has been and always will be, a hard way to make an easy living.”
In the first one, he wanted to convey that the investor has to be a patient, and he should not be carried away by impulses. The second quotation gives the idea that a man has to work hard in making a fortune in the investing process. He admits that the investment should be a carefully planned process and the investor must be ready to follow with courage and great patience.
“Always be fearful, never panic!” — André Kostolany
The process of investment of the public is properly described in the writings of Kostplany. He says that the investors with confidence buy when the price is low and they are m not taken away by the ups and downs of the market, as they are aware of the thing that they are doing and what they have to do. They make the deal when the time is perfect or near-perfect, so they can gain the advantage of the business. They buy at the bottom and sell at the top. These firm-handed investors sell their stocks to the shaky hand investors, who are ready to grab any chance that they can see. They make wrong decisions in almost of the time. When they are ready to make the move the opportunity might have drifted away, and they had to face the sour consequences of investing in the improper time.
The theory of Firm-or-Shaky hands
The basic principles of equity investing are described in this theory. This theory or strategy is not suitable for every investor. The more speculative side will not be able to quench their thirst for the revenues with this theory. This goes fine with an investor who has broad-based ETF's and a lack of fancy speculation. The investing process carries a higher level of risk, so the investor should be patient, steady, and tranquil person. He has to operate with a firm and, and such investors are the people with appropriate psychological balance and sufficient funds. Only such can operate successfully in the field of investing, Andre firmly believed in this theory, so he has become one of the highly successful investors.
Andre Kostolany, affectionately called “Kosto” by his followers, once gave a piece of strange advice to a group of investors who seeks his assistance in improving their profession. It is somewhat humorous, but it conveys knowledge that the investors must-have in the process of becoming rich. “Buy shares, take some sleeping pills, and stop reading the papers. Many years later, you'll see that you're rich."
Kostolany is making two assumptions in this strange statement. He tells us that the stock market has continuous growth, though there are certain short term fluctuations. The listed companies grow in values with time. Secondly, he speaks about the nature of the investors who sell their shares in panic when there are short-term fluctuations in the market. In his "take some sleeping pills" part he advises them to stay calm in the period of price fluctuations. He was lovingly called "kosto”, and he has passed away in 1999 when he was 93. His books are still published and reprinted in German Spanish and French. He was a strange man, as he was famous for investing in the stock market while traveling and enjoying the life between the cities of Europe. He was popular as a stock commentator. Though he was in stock s, his two biggest investments were from buying bonds. Kostolony has invested his money on default bonds. He usually placed his bets on the countries that no other investors are interested in. in other words, he has selected countries that are overdue in international debts and without much hope of paying them back.
His main achievements
Kostlaony purchased defaulted German bonds after World War 2. These bonds were issued in 1930 by German Reich and it was declared illegal by the Hitler Government. So, the value of the bonds faded away, but Kostolany had another idea. He believed that one day Germany will pay from this, so he purchased 250 (french) francs for each. This took place in Paris, in 1946, and it gives an idea of the mature nature of this investor, as Germany was a shattered place, as the result of the Great War. The bonds reached their nominal value 1’000 Francs, but he did not sell at that time. The prices of the bonds have increased and it gave Kostolany opportunity to increase his investment in 139 times (35’000 Francs)
Kostolany made his second fortune in 1980. He was able to increase his investment in 100 folds. It was investing in bonds issued by the czarist empire. Those bonds were declared invalid by the new Soviet government and nobody wanted to purchase them. Kostolony purchased them at 1% of the nominal value. He believed that one day the Russian government will pay them. It is around USD 600 million. He was able to cover 4’000’000 Deutschmarks for his investment of 40’000 Deutschmarks. It was one of the unbelievable income for such investment for an old man of 90 at that time.
Some important stock exchange ideas of Andre Kostolany:
"Buy stocks, take sleeping pills"
This quotation can be identified as one of the best ideas of the great investor. The old stock exchanger master highlighted the patience of the investor in the process of the stock exchange. He wanted to convey the idea of long term pays off in the stock exchange process.
"On the stock exchange, two times two are never four, but five minus one." You just have to have the nerve to endure the minus one,
In this quotation, Kostolony wanted to say that the stock exchange never shows a linear increase. There are inevitable price declines, so the investor must have the courage to bear those changes.
“If you don't have the shares when they fall, you don't have them when they go up.”
The master wanted to say that the investors must have the shares to exchange at any time, waiting for the stocks to go very low in price never help to become a successful investor.
"Anyone can speculate. Doing it at the right time - that's the art," Timing is everything, the stock market guru said when it comes to speculative financial investments.
The stock market guru wanted to convey that timely action can bring success when someone is at speculative financial investing.
"You should never run after a tram and a stock,"
Most of the investors do take panic actions and end up in disaster. This wisdom Kostolony tells about the patience that the investors must inculcate, as there is an inevitable second opportunity or a decline of the prices.
"Those who have a lot of money can speculate, those who have little money must not speculate, those who have no money must speculate," said Kostolany.
This wisdom tells the investors to select their respective investing strategies based on their resources. He advises the investors with limited financial capacity must not invest in speculative investments.
“You can win, you have to lose!” warns Kostolany
The investor guru wanted to say that the loss can teach good lessons to the investors. They should identify the reasons for the loss and take relevant actions to win in the next trade.
After leaving the presidency, Kostolany did not retire. On the contrary, he started his second career in his secret dream job - as a writer.
Kostolany the book author
In total, André Bartholomew Kostolany has written 13 books, which have sold more than 3 million copies to date. When his first book, entitled " „Der Friede den der Dollar bringt", was published in 1957, his authorial activity was not yet crowned with great success. He achieved this from 1960, when he wrote for the French magazine "La Vie francaise". However, most people noticed him for the column he wrote for the German magazine "Capital" from 1964 until his death. His column appeared 414 times during that period. One of his best friends reported, "André's dream was to have his column published in the January 2000 issue of Capital." But unfortunately, this dream remained forever unfulfilled. Even he hosted workshops and seminars for over 15’000 interested students.
These are some of his published works:
- Suez, Le roman d'une entreprise - French (1939)
- La paix du Dollar - French - Der Friede, den der Dollar bringt - German (1957)
- La Grande confrontation - French (1959) • Si la bourse m'était contée - French (1960)
- L'aventure de l'argent - French (1973)
- … und was macht der Dollar? Im Irrgarten der Währungsspekulationen - German (1987) • Kostolanys Börsenpsychologie - German (1991)
- Kostolanys Bilanz der Zukunft - German (1995)
- Weisheit eines Spekulanten - German (1996)
- Die Kunst über Geld nachzudenken - German (2000)
- Der grosse Kostolany – German (2003)
Quotations:
- Success in the stock exchange is an art and not a science.
- The whole exchange just depends on whether there are more stocks than idiots - or vice versa.
- If you want to eat well, buy stocks; if you want to sleep well, you buy bonds.
- The logic on the stock exchange is that you often have to be illogical - and that's the great art of speculation and stock market analysis.
- The greatest speculation in the world would be to buy a politician for the value that he has and to sell him for the value that he gives himself.
- Anyone can speculate. Doing it at the right time - that's the art.
- When all players speculate on a supposedly surefire thing, it almost always goes wrong.
- Spend as much time buying shares as buying a used car.
- The market price is related to the economy like the dog to the stroller. He runs ahead and always comes back.
- You often have to close your eyes on the stock exchange so you can see better.
- Making money on the stock market with the advice of a professional is a success; without the advice, it is a great success, and if you just make money against the advice of the experts, it is a huge success.
- An old stock exchange trader can lose everything except for his experience.
- If the stock market speculation were so easy, there would be no miners, lumberjacks, and other heavy workers. Everyone would be a speculator.
- The devil invented the stock market to punish people for believing that God can create something out of nothing.
- The Germans are not up to the pitfalls of money. The people of romantics, philosophers, and musicians are unromantic in matters of money and lose all penchant for philosophy and especially for imagination.
- You should never run after a tram and a stock. Just be patient: the next one is sure to come.
- On the stock exchange it is not the new broom, but the old one that sweeps well.
- An engineer must not be under the influence of alcohol at work. This is more of an advantage for speculators because it eliminates certain inhibitions.
- The stock exchange, i.e. the financial market, is theater, in which the same piece is always played, but always under different titles.
- Everything is possible on the stock exchange - even the opposite.
- There are old pilots and there are bold pilots, but there are no old, bold pilots.
- Money is the oxygen of the exchange.
- Always scared, never scared!
- Stock market gurus often recommend exactly the stocks that you want to get rid of yourself at a cheap price.
- The stock market is moody and unpredictable. You also have to guess the reaction of the audience.
- A man can choose between several methods of getting rid of his wealth: the fastest way is at the roulette table, the most pleasant with beautiful women, and the stupidest on the stock exchange.
- If you don't believe in miracles on the stock exchange, you're a realist.
- On the stock exchange, 2 times 2 are never 4, but 5 minus 1. You just have to have the nerve to endure the minus 1.
- In the beginning, I was firmly convinced that the stock exchange was the greatest invention in the world. I still share the same opinion.
