There is a benefit to investing directly in common stocks as an individual.? I’ll let Buffett help me explain this:

?I am a better investor because I am a businessman and I am a better businessman because I am an investor.?

My own life is one of having been an amateur investor, and became a professional investor over time.? My mother is an excellent amateur investor, one whose record would put 90%+ of professionals to shame.? I know some great amateur investors, but they are not the norm.? If they were the norm, we would not have lots of financial intermediaries trolling for business.

After yesterday’s piece, I want to say that though most amateur investors do not beat index funds, there is still one big reason to buy individual common stocks: it can make you a better businessman.

As an example, I had? never worked in a marketing department in my life, but because of my investing, and study of marketing on the side, I was able to lead a revamp of a marketing department, leading to a threefold increase in sales in five years.? Return on equity went from 10% to 50%, aided by the booming stock market of the ’90s, but that was only a help.

Technical specialists have to ask, “Do I want to remain a technical specialist, assuming that I have that option, or do I want to broaden my skill set and learn the economics of the business that I serve?”? Those that invest in stocks, and study them carefully learn practical economics.? You may earn money or you may not.? You may beat the market or you may not.? But you will become a more valuable employee, because you will grasp more and more about what makes your company tick economically.

I can tell you that while I was in insurance, the brightest move I made was investing in stocks privately, and studying equity and bond investment intensively.? It made me more valuable to my bosses, and helped me understand my own company better.? It made me better in interviews as well.? Questions that were designed to see if I could think beyond my narrow specialty became easier for me.

Now, some of the successes came with failures.? For a while, I told my kids never to mention the name “Caldor” to me.? Yeh, Michael Price may have lost a billion on that one, but I more than took my licks.? Until you lose a decent amount, you don’t really understand how the market works.? You can call it market tuition, but like tuition at college, you don’t know how much value you will get out of what you have paid.

I encourage new investors to paper-trade.? I did that when I was young.? It allows you to experiment and learn about what you think works in the market, without consequences.? I think it helps ease the transition into investing.? When you start investing, your emotions will be a lot higher, but it helps a lot to have a guiding theory going into it, it helps control the emotions that will come.? It took me 5-10 years to discipline my emotions, and think about markets rationally, not emotionally.

So, there are benefits to investing in individual common stocks, but they may not be the ones you expected.? It will help you understand your business better, your industry better, and perhaps even your nation and the world.

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But, this is not to say that if you act as a bettor, rather than an investor, that you will benefit.? Think of Buffett’s quote above — business and investing go together.? Inside a corporation, one of the highest levels of what is done is the investing.? Buffett looks for businesses that will throw off gross profits well in excess of financing costs — that is different than most investors think, because Buffett is a businessman.

For budding businessmen, you could ask where business value is growing the most rapidly relative to the price that you pay — Earnings relative to price helps but there are sometimes aspects of businesses where growth in value does not reflect in the earnings statement.

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And, all of this is not to say that professionals do better than amateurs.? Professionals don’t do well, and they add on fees.

There is one area where professionals seem to do better, but I could be wrong.? If I am wrong, could someone send me some research?? As I pointed out yesterday, amateur investors tend to become greedy and fearful at the wrong times.? Professionals seem to be less prone to this problem, perhaps because of discipline.

As Baruch commented at my blog:

I think it is also something you can learn, because so much of investing skill is not innate, in my opinion, rather it really comes from an attitude, and an act of will. Discipline comes from will. The rest comes from a basic knowledge of accounting, markets and finance which anyone with a university education is capable of grasping. A lot of people without a university education are as well.

To which I will agree — it’s not that you need a high IQ, but a lot of general learning, wisdom on accounting, markets, and finance, and common sense.? Read stuff by Charlie Munger, the man is under-rated in the shadow of Buffett, but at least he has written? a book.? Would that Buffett would do the same.? There are many that interpret him, but I would like to hear how he views investments in theory in full, so that the rest of us could benefit.? In many ways he has surpassed his teachers, Ben Graham and Phil Fisher.

So Warren, could you give us the 21st century version of “The Intelligent Investor?”? That could be an invaluable legacy that many would thank you for, as much as they do for Ben Graham today.

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Final note — if you invest in common stocks, it is likely you will underperform the major averages until you gain wisdom and discipline.

I was minding my own business, doing research when I saw an ad that showed a back view of a woman in very tight jeans, with the text: “If you think I?m hot you should see this stock! OBJE”

Remember my rule, “Don’t buy what someone wants to sell you.? Buy what you have researched for yourself.”? It is true with physical objects, but even more true where the goods are immaterial, and quality cannot be easily verified, as with stocks.? So when I hear a pitch for a stock through advertising, I am immediately skeptical.

Now, I am not the first to the scene here, partially because I delayed. 24/7 Wall Street noted that OBJE has a going concern problem.? Good job, Doug.

But there is more: where is the company located?? In a residence in Florida.? Not much for a company with a market cap of 30MM+.? But what else is located there?? These businesses:

• Stark Enterprises
• Eagle Golf Cruiser USA Inc
• CAJO SOURCING LLC
• Free Up Usa Inc

Quite a lot to be going on in one residence.? But wait, the woman who lives there, who was a crucial part of OBJE’s strategies has been let go by OBJE.? Curious, huh?

Now the current CEO, Robert Federowicz has done many things, but nothing worthy of being a CEO of a small public company.

He previously served as Chief Information Officer of a start-up international power development company and as government affairs liaison for an international power company. From 2005 to 2009, Mr. Federowicz was an Owner and Operator of a fitness gym in Houston, Texas. During 2010, he served as an Account executive for Screentek, Inc., a seller of LCD screen technology for laptop computers.

Of course the company has press releases touting its non-existent products.? And there are penny stock touts that pick up the furor.? Just because a stock has a low price does not make it a buy.

Then there is the investor relations page at their website.? No credible company lays on the “buy us” mantra so thick.

That leaves us with the hard data.? Let me start with the opening lines from the risk disclosures in the 10K:

BECAUSE WE HAVE NOT PRODUCED A SAMPLE OF OUR OBSCENE BRAND JEANS AND COMPLIMENTED PRODUCTS, THESE PRODUCTS, MAY NOT WORK OR FIT PROPERLY AND/OR THE PRODUCTION COST CAN EXCEED EXPECTATIONS

OUR LACK OF AN OPERATING HISTORY GIVES NO ASSURANCE THAT OUR FUTURE OPERATIONS WILL RESULT IN PROFITABLE REVENUES, WHICH COULD RESULT IN THE SUSPENSION OR END OF OUR OPERATIONS

WE ARE A NEW COMPANY WITH NO OPERATING HISTORY AND WE FACE A HIGH RISK OF BUSINESS FAILURE WHICH WOULD RESULT IN THE LOSS OF YOUR INVESTMENT

As of the date of this prospectus, we have earned no revenue. Failure to generate revenue will cause us to go out of business, which could result in the complete loss of your investment.

BECAUSE OUR CURRENT OFFICER AND DIRECTOR DOES NOT HAVE SIGNIFICANT EXPERIENCE IN STARTING A JEANS PRODUCTS COMPANY AND WE LACK CUSTOMERS AND SUPPLIERS, OUR BUSINESS HAS A HIGHER RISK OF FAILURE

BECAUSE WE ARE SMALL AND DO NOT HAVE MUCH CAPITAL, WE MUST LIMIT OUR MARKETING ACTIVITIES. AS A RESULT, OUR SALES MAY NOT BE ENOUGH TO OPERATE PROFITABLY. IF WE DO NOT MAKE A PROFIT, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS

OUR PRODUCTS MAY NOT FIND ACCEPTANCE FOR OUR PRODUCTS IN HIGH END BOUTIQUES AND DEPARTMENT STORES.

OUR OPERATING RESULTS MAY PROVE UNPREDICTABLE WHICH COULD NEGATIVELY AFFECT OUR PROFIT

OUR SOLE OFFICER AND DIRECTOR MAY NOT BE IN A POSITION TO DEVOTE A MAJORITY OF HER TIME TO OUR OPERATIONS, WHICH MAY RESULT IN PERIODIC INTERRUPTIONS AND EVEN BUSINESS FAILURE

(and she has been let go)

KEY MANAGEMENT PERSONNEL MAY LEAVE THE COMPANY WHICH COULD ADVERSELY AFFECT THE ABILITY OF THE COMPANY TO CONTINUE OPERATIONS

IF OUR COMPANY IS DISSOLVED, IT IS UNLIKELY THAT THERE WILL BE SUFFICIENT ASSETS REMAINING TO DISTRIBUTE TO OUR SHAREHOLDERS

IF WE ARE UNABLE TO GAIN ANY SIGNIFICANT MARKET ACCEPTANCE FOR OUR PRODUCTS OR ESTABLISH A SIGNIFICANT MARKET PRESENCE, WE MAY BE UNABLE TO GENERATE SUFFICIENT REVENUE TO CONTINUE OUR BUSINESS

MANAGEMENT’S ABILITY TO IMPLEMENT THE BUSINESS STRATEGY MAY BE SLOWER THAN EXPECTED AND WE MAY BE UNABLE TO GENERATE A PROFIT

IF WE ARE UNABLE TO MANAGE OUR FUTURE GROWTH OUR BUSINESS COULD BE HARMED

OUR PRODUCT MAY NOT BE ABLE TO DISTINGUISH ITSELF IN THE MARKET AND WE MAY BE UNABLE TO ATTRACT ENOUGH CUSTOMERS TO OPERATE PROFITABLY, WITHOUT A PROFIT WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS

WE MAY BE UNABLE TO MAKE NECESSARY ARRANGEMENTS AT ACCEPTABLE COST, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS ENTIRELY WHICH COULD RESULT IN A TOTAL LOSS OF YOUR INVESTMENT.

COMPETITORS MAY ENTER THIS SECTOR WITH SUPERIOR PRODUCTS, INFRINGING OUR CUSTOMER BASE, AND AFFECTING OUR BUSINESS ADVERSELY.

SINCE OUR SOLE OFFICER AND DIRECTOR CURRENTLY OWNS 100% OF THE OUTSTANDING COMMON STOCK, INVESTORS MAY FIND THAT HER DECISIONS ARE CONTRARY TO THEIR INTERESTS YOU SHOULD NOT PURCHASE SHARES UNLESS YOU ARE WILLING TO ENTRUST ALL ASPECTS OF MANAGEMENT TO OUR SOLE OFFICER AND DIRECTOR, OR HER SUCCESSORS

Notable, because she was let go with little fanfare, aside from an 8K.

THERE IS SUBSTANTIAL UNCERTAINTY ABOUT OUR ABILITY TO CONTINUE OUR OPERATIONS AS A GOING CONCERN

THE ENACTMENT OF THE SARBANES-OXLEY ACT MAY MAKE IT MORE DIFFICULT FOR US TO RETAIN OR ATTRACT OFFICERS AND DIRECTORS, WHICH COULD INCREASE OUR OPERATING COSTS OR PREVENT US FROM BECOMING PROFITABLE.

SINCE WE ANTICIPATES OPERATING EXPENSES WILL INCREASE PRIOR TO EARNING REVENUE, WE MAY NEVER ACHIEVE PROFITABILITY

IF WE CANNOT SECURE ADDITIONAL CAPITAL, OR IF AVAILABLE CAPITAL IS TOO EXPENSIVE, OUR BUSINESS WILL FAIL.

WE DO NOT HAVE SUFFICIENT CAPITAL TO CONTINUE MAINTAINING OUR REPORTING STATUS.

What do you see when you review the most recent 10K and 10Q?? They are starving for liquidity, and have negative earnings and a negative net worth.? This is not a recipe for success.

This would have been obvious from the share offering as well, which was done at far lower prices.

If I worked for the SEC, I would ask this question — who was willing to buy the shares after the offering, creating prices that would deceive others?? Answering that question could reveal networks that cheat.