The thesis underlying everything, whether you’re an actively managed fund or a passive fund, is that the U.S. will be OK. If you don’t believe that, you shouldn’t be in the stock market.
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A lot of people when they get negative on the market put 50% in cash, but unfortunately a lot of times when you get to that position it’s just about when the market’s about to rally.
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My record on long shots is horrible. A tiny airline I recommended two years ago went bankrupt.
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Maybe you’re right 5 or 6 times out of 10. But if your winners go up 4- or 10- or 20-fold, it makes up for the ones where you lost 50%, 75%, or 100%.
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The stock market’s been the best place to be over the last 10 years, 30 years, 100 years. But if you need the money in 1 or 2 years, you shouldn’t be buying stocks.
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In the stock market, the most important organ is the stomach. It’s not the brain.
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I think it’s dangerous to buy companies that everyone thinks are excellent and that are relatively slow-growth companies.
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I believe in stocks. If you look at the returns of the last 72 years, stocks are the undisputed champs.
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People go to the library and they do incredible research on a microwave oven. And then they’ll go out and spend $10,000 on a stock because they heard a tip on the bus.
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I always look for red flags. My major red flag all the time is when long governments yield 600 basis points over the yield on the S&P 500. At that point, stocks have always been overpriced.
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I’ve studied the Constitution and the Bill of Rights, and I don’t see anywhere that we have to have a recession every four years. I don’t see why you can’t have a decent environment for years and years.
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There are people that own electronic stocks that don’t know the difference between an EEPROM and the senior prom and they’re trying to buy stocks.
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Almost everybody on this planet has the brain power to make money in the stock market. The question is whether you have the stomach for it and whether you’re willing to do a little bit of work? Those are the key elements.
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People are very careful with their money. When they buy a refrigerator, they do some work. When they buy an apartment or rent an apartment, they’re careful. For some reason, when it comes to stocks, they just go coo-coo. They don’t do any work at all.
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You only need one or two good stocks a decade. You don’t need a lot of action.
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The strength of our economy is that it is dynamic and always adapting to changing conditions. That’s our advantage in the world.
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Job insecurity has been a problem for as long as people have depended on a paycheck.
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If it’s a choice between investing in a good company in a great industry, or a great company in a lousy industry, I’ll take the great company in the lousy industry any day. Good management, a strong balance sheet, and a sensible plan of action will overcome many obstacles, but when you’ve got weak management, a weak balance sheet, and a misguided plan of action, the greatest industry in the world won’t bail you out.
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Buy only what you understand, believe in, and intend to stick with — even when others are chasing the next miracle.
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If discounting terrific things are already in the stock, I don’t want to own it.
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I always thought if you looked at ten companies, you’d find one that’s interesting, if you’d look at 20, you’d find two, or if you look at hundred you’ll find ten. The person that turns over the most rocks wins the game.
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You have to say to yourself, “If I’m right, how much am I going to make? If I’m wrong, how much am I going to lose?” That’s the risk/reward ratio.
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If you don’t understand a company, if you can’t explain it to a 10-year-old in 2 minutes or less, don’t own it.
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I don’t think people understand there’s 100% correlation with what happens to a company’s earnings over several years and what happens to the stock.
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Spinoffs have a terrific, terrific record in my lifetime. When companies get spun off, something seems to happen to them. They get better run, even though they were well run before.
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There is no Ground Hog Day, when all the economists come out from the tunnel and declare the recession is over. They have a retroactive, seasonally-adjusted Ground Hog Day.
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Every time you have one of these recessions, there are always groups who say it is different this time. We won’t get out of this one.
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A lot of my stocks don’t work. The beauty of the stock market is that if you are wrong, if you put $1,000 up, all you lose is $1,000. I have proven that many times.
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A lot of mutual fund managers don’t know what they own. The odds are the best they have ever been for the individual.
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All you have to do, really, is find the best hundred stocks in the S&P 500 and find another few hundred outside the S&P 500, to beat the market.
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People spend all this time trying to figure out “What time of the year should I make an investment? When should I invest?” And it’s such a waste of time. It’s so futile.
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In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.
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If you looked at September 1986 to October ’87, the market was unchanged. It had a thousand points up and a thousand points down and they only remember the down.
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I’ve always said if you spend 13 minutes a year on economics, you’ve wasted 10 minutes.
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Some stocks go up 20-30 percent and they get rid of it and hold onto the dogs. And it’s sort of like watering the weeds and cutting out the flowers. You want to let the winners run.
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I think the secret is if you have a lot of stocks, some will do mediocre, some will do okay, and if one or two of ’em go up big time, you produce a fabulous result.
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For some reason, you lose money rapidly in the stock market but don’t make it rapidly.
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You can lose money very fast, in two months, but you very rarely make money very fast in the stock market. When I look back, my great stocks took a long time to work out.
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The best companies often thrive even as their competitors struggle to survive.
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When there’s a war going on, don’t buy the companies that are doing the fighting; buy the companies that sell the bullets.
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If you’re lucky enough to have one golden egg in your portfolio, it may not matter if you have a couple of rotten ones in there with it.
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I can’t say enough about the fact that earnings are the key to success in investing in stocks. No matter what happens to the market, the earnings will determine the results.
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If a stock has gone sideways for a couple of years, and the fundamentals are decent, and you can find something new that’s positive in the company, then if you’re wrong, the stock will probably continue to go sideways, and you won’t lose a lot of money. But if you’re right, that stock is going north.
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Gold, much more so than any other commodity, is about sentiment and psychology.
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No stock picker knows so much that he can’t learn a trick or a tip from a peer.
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The harsh truth is that yesterday’s reinvention doesn’t mean as much as today’s execution and tomorrow’s competition. Just as old companies sometimes have to learn new tricks, new companies have to keep changing.
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Don’t buy “cheap” stocks just because they’re cheap. Buy them because the fundamentals are improving.
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Stocks do well for a reason and do poorly for a reason. Make sure you know the reasons.
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One of the oldest sayings on Wall Street is “Let your winners run, and cut your losers.” It’s easy to make a mistake and do the opposite, pulling out the flowers and watering the weeds.
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If your only reason for picking a stock is that an expert likes it, then what you really need is paid professional help.
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People worry about the riskiness of stocks, but bonds can be just as risky.
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If you don’t believe corporate profits will continue to rise, and you can’t stomach a decline in the market, don’t buy stocks or equity mutual funds.
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This is the way the capitalist ecology works. Industries decline, old companies wither away, and young companies rise up to replace them. This process is hard on many, but ultimately, it is healthy.
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A correction is a wonderful opportunity to buy your favorite companies at a bargain price.
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People who exit the stock market to avoid a decline are odds-on favorites to miss the next rally.
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If timing the market is such a great strategy, why haven’t we seen the names of any market timers at the top of the Forbes list of richest Americans?
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As long as people are willing to pay foolish prices for things, no plan is foolproof.
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Corrections are unpredictable. By selling stocks to avoid pain, you can miss the next gain.
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Ultimately, to be an investor in stocks, you have to believe that American business has a decent future, as well as business worldwide, and that corporations will continue to increase their profits.
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As corporate profits increase, corporations become more valuable, and sooner or later, their shares will sell for a higher price.
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What makes stocks valuable in the long run isn’t “the market.” It’s the profitability of the shares in the companies you own.
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Long-term bonds can be almost as volatile as stocks. They have their own corrections.
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As soon as you realize you can afford to wait out any correction, the calamity also becomes an opportunity to pick up bargains.
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Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.
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I’ve never understood the apocalyptic theory of investing. If the world really does collapse, is it really going to do you any good to have a few Krugerrands in your pocket?
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There’s no such thing as a worry-free investment. The trick is to separate the valid worries from the idle worries, and then check the worries against the facts.
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It’s worth reminding ourselves from time to time that gyrations in a stock price may tell us absolutely nothing about the prospects of the company involved.
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The first task of the bargain hunter is to narrow the field and separate the solid prospects from the ones that are counting on hopes, prayers, and miracles.
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There’s a psychological benefit to tossing the bums out: The names disappear from the monthly brokerage statements; we’re no longer reminded of our mistakes.
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Missing the bottom on the way up won’t cost you anything. It’s missing the top on the way down that’s always expensive.
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Fast-growing companies can’t be expected to keep up the pace forever. Eventually, they reach middle age and lose some of their oomph, just like the rest of us.
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You can’t go to sleep holding cyclical stocks for a decade and expect to be richly rewarded. The rich rewards are in growth stocks and special situations.
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It’s in the nature of Wall Street to imagine that whenever a company sets a record for earnings, it will go on setting new ones.
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In cyclicals, a period of silly prices is followed by a period of sobriety.
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In my investing career, the best gains usually have come in the third or fourth year, not in the third or fourth week or the third or fourth month.
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With every company, there is something to worry about, but the question is, which worries are valid and which are not?
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“This one is different,” is the doomsayer’s litany, and, in fact, every recession is different, but that doesn’t mean it’s going to ruin us.
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Every recession brings out the skeptics who doubt that we will ever come out of it, and who predict that we will soon fall into a depression, when new cars will sit unsold in the showrooms forever and houses will stand empty, and the country will go bankrupt.
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The best time to get involved with cyclicals is when the economy is at its weakest, earnings are at their lowest, and public sentiment is at its bleakest.
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Just because the good news is already out doesn’t mean it’s too late to invest.
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The very existence of doubt creates the conditions for a big gain in the stock once the fears are put to rest. The trick is to put your fears to rest by doing the research and checking the facts — before the competition does.
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Everybody in the world is a long-term investor until the market goes down.
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A lot of great companies have made a lot of decisions you haven’t heard about because they decided not to do something. Some of the best decisions they did do was to not do something.
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The companies that do well, look out five, six, seven years, and some decisions they make may not be the right thing for the next year.
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If you own stocks, there’s always something to worry about. You can’t get away from it.
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Avoid long shots. I’ve bought about 30 long shots in my life. I’ve never broken even on one.
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You need to know the market’s going to go down sometimes. If you’re not ready for that, you shouldn’t own stocks. And it’s good when it happens.
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