What’s comfortable is not the right way to invest. You must own things that you’re uncomfortable with. Otherwise you’re not really diversified.
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The analysis of security values is not an abstruse science. While in essence mathematical, it does not soar into the realms of calculus — in fact, it rarely gets as far as algebra.
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If you’re investing with a long time horizon, having an equity bias makes sense; stocks go up in the long run.
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The underlying driving force behind market timing decisions seems to be emotional — fear, greed, chasing performance — buying something after it has gone up, disappointment, and sales after something has declined.
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If you talk to a businessman, a businessman is going to feed the winners and kill the losers. But in the investment world, when you’ve got a winner you should be suspicious about what’s next. And if you’ve got a loser, you should be hopeful — although not naively hopeful.
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The mutual fund industry is not an investment management industry. It’s a marketing industry.
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Quotations fluctuate constantly, reacting often illogically to all sorts of temporary and even trivial influences.
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You always need to be cognizant of six sigma events that can have ugly impacts on your portfolio and account for the approximate probabilities.
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Investing is not a discipline based on absolutes or precise mathematics. There simply aren’t enough data points available to work out the exact odds.
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When you look carefully at the economics of shorting, it makes no sense to take the bet. The lowest price a company’s stock can go to is zero, but there’s an unlimited upside. An unleveraged short position has a maximum payoff of 2:1.
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With stocks, you have to worry about the market. With debt, I just have to understand the contract. If my analysis is right, I’ll make money.
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We think diversification is only a surrogate, and usually a poor surrogate, for knowledge, control, and price consciousness.
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Good ideas and good products are a dime a dozen. Good execution and good management — in a word, good people — are rare.
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Many business success stories are due at least in part to simple good luck.
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The biggest problem in starting high-tech businesses is the shortage of superior managers. There is too much money chasing too few good managers.
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Shorting is difficult. If you short, you are not only making an investment decision, you are making a market decision.
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We get protection by being price-conscious and by being extremely knowledgeable about our holdings.
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We don’t get involved in all the analytical baggage of trying to figure out where a stock is going to sell. Just try to figure out what it’s worth. And I dare say all the really great investors do it the same way.
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We don’t pay attention to quarterly earnings or consensus forecasts. That’s performance investing, not value investing.
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You have to really understand the businesses that you’re buying through the medium of stocks. And unless you’re willing to put a lot into that, you shouldn’t expect to get much out of it.
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When people are looking for performance they sharpen their pencils and find reasons to buy.
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