One of the biggest mistakes you can make is to think that overpriced and going down tomorrow are synonymous. Markets that are overpriced often keep going.
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Investing is a funny business. It’s really easy to be average. Just buy an index fund. It’s really hard to be above average.
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The concept of surviving on average is irrelevant. You have to survive every day. Which means, really, that you have to survive on the bad days.
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The only way one makes money in the market is when the market’s perception of a stock changes.
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Most of the people who are successful in the market are basically optimists, and most of these people are very uncomfortable when they are on the short side.
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A good record doesn’t necessarily prove good management. Outside economic factors such as the business cycle can make any company look good for a while.
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Good management has an extraordinary way of making money for you, and bad management, no matter how favorable the environment, has a way of missing opportunities.
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The market gets obsessed with quarterly results when there are surprises, when management is surprised. And management, as you well know, usually is.
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There has always been, and will always be, windfall profits. At any point in time, certain people are being enriched unjustly because they get there very early.
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There’s something intellectually much more intriguing about failure, which is knowable, rather than success, which is sort of unknowable.
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Plungers normally get their head and their assets handed to them eventually.
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The concept that investment risk is less a function of the individual company than the price of its stock is not recognized by many investors.
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Growth stock investing may be more a philosophy of buying what is popular. Value investing is more a philosophy of buying what is out of favor.
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Money managers are not stupid. They realize that sticking one’s neck out and producing short-term under performance that differs from an index that is used as the benchmark is risky.
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If a money manager cannot explain in plain English what their investment principles are, they probably don’t have any. And if they cannot explain their process for finding and researching an investment idea, they probably don’t have that either.
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The mantra is patience, patience and more patience. Think long-term and remember that the big rewards accrue with compound annual rates of return.
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The reality is that financial markets are self-destabilizing; occasionally they tend toward disequilibrium, not equilibrium.
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Risk is when there are multiple possible future states and the probabilities of those different future states occurring are known.
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The achievements of natural science stand as convincing testimony to man’s ability to use reason. Unfortunately, these achievements do not ensure that human behavior is always governed by reason.
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Market prices of financial assets do not accurately reflect their fundamental value because they do not even aim to do so. Prices reflect market participants’ expectations of future market prices.
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Every bubble has two components: an underlying trend that prevails in reality and a misconception relating to that trend.
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For years I have contended that the average speculator does not lose his money in Wall Street. He loses it wherever he happens to be the instant he decides to let the ticker put unearned dollars in his pocket. The game does not beat the player; he beats himself.
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Not even the “safest” investment is without some risk and some element of speculation.
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