Equities are a claim on uncertain future earnings.
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So long as a capitalist system persists and the financial markets hold together, equities do have a built-in long-term rate of return. That rate of return is a nominal measure of the economy.
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In all my 55 years on Wall Street, before I retired to do something vastly more important, I was never able to say when the market would go up or down. Nor was I able to find anybody on Earth whose opinion I would value on the subject of when it would go up and down.
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Rational investors will part with their cash only when they believe they are properly compensated for the loss of liquidity and the pain of disquietude.
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Perhaps nothing is more indicative of the quality of a company’s management than its accounting methods.
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I think there’s a tendency in the modern world of people wanting their money to be working hard, and I joke that our money is like a couch potato by comparison.
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In my opinion, the market tells you when to buy things. And when things are really cheap, on a Graham and Dodd valuation basis, you should like them more. And when they’re really expensive, you should like them less.
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If you’re early on in your career and they give you a choice between a great mentor or higher pay, take the mentor every time. It’s not even close.
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Real life is not a random draw but a connected sequence of events in which each event is the consequence of the preceding event.
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Investors who find an overly narrow niche to inhabit, prosper for a time but then usually stagnate. Those who move on when the world changes at least have the chance to adapt successfully.
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Prices change when events are different from what the market has expected them to be.
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Our expectations of the future are not unbiased and do not reflect all available information.
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Your wealth is in many ways dependent on what other people will pay for your assets.
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Job insecurity has been a problem for as long as people have depended on a paycheck.
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Despite the advantages of size, wealth, a good name and a long tradition, a large enterprise will cease to be profitable if the men at the head get hardening of the arteries or atrophy of the brain tissue or if their heirs prove unequal to inherited responsibilities. Momentum alone will not carry a business forward under such circumstances. Some younger and more aggressive group will assume the leadership of the industry.
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In speaking of future prospects it is often difficult to make the distinction clear between what one considers the most desirable in the public interest and what one reckons to be the most probable in the actual circumstances. For unfortunately the course of events which is the most desirable is not always the most probable!
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Every basis point of return — let alone every 100 basis points — has a staggering difference in outcomes in the long run. That’s why you stay focused on the long term and the rate of return; that is where the difference is, that is what you want and need to capture.
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The first thing I heard when I got in the business, not from my mentor, was bulls make money, bears make money, and pigs get slaughtered. I’m here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig.
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Discrepancies — and hence opportunities — in securities originate most often when events move faster than quotations.
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I am convinced that an individual investor with sound principles, and soundly advised, can do distinctly better over the long pull than a large institution.
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I find that retirement savings is individual specific. There’s not one cookie-cutter answer for everybody.
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It’s not earnings changes that cause stock price changes, but earnings changes that come as a surprise.
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One of my life principles is that the only way you can live life is by dealing with what is, and not with what might have been. So that’s the way I’ve tried to deal with setbacks.
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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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