Quote for the Week
I begin with something different from the probabilities or that range of outcomes, but really saying if I do this or I don’t do this, and I’m wrong, what are the consequences. This is a way to begin. If I decide I’m scared of the market and I don’t go in, and it goes up through the roof, how much difference is that going to make to me? Or if I do go in the market, and it goes down, what is that going to mean to me? And so — because you know it’s going to do one or the other. And what difference does it make? The first thing is to think about consequences of being wrong because all of us, every day, are faced with the possibility that the decision we make, no matter how carefully reasoned, can turn out to be wrong. And then what does that mean to me?
Often, not much. Often a whole lot. And so they kind of gray the decisions that way…
I think there’s a time when you have a kernel of securities based on optimistic expectations. By and large, the most awful things don’t happen, and then some investments on the outside to cover those extreme outcomes. This is kind of the structure that you use. I don’t think you make disaster the core of your investing because if you — that’s a very expensive decision to make if you’re wrong. — Peter Bernstein (source)
From the Archives
Last Call
- Marks Memo: Nobody Knows (Yet Again) – Oaktree
- What Now? An Investor’s To-Do List for Chaotic Markets – C. Benz
- Anatomy of a Market Crisis: Tariffs, Markets and the Economy! – Musings on Markets
- Stock Market Recovery Time, a Long-Term Perspective – Flowing Data
- Why Do Domestic Prices Rise with Tariffs? – Marginal Revolution
- American Disruption – Stratechery
- The Evolution of Overconfidence – Klement on Investing
- Does Financial Literacy Decline with Age? – Wharton
- The Seth Godin Interview: What I learned About the Long View from Sci-Fi Legends – Big Think