Quote for the Week
In those early Wall Street days, it wasn’t too difficult to figure out what I was doing that was wrong. There are two principal mistakes that nearly all amateurs in the stock market make. The first is to have an inexact knowledge of the securities in which one is dealing, to know too little about a company’s management, its earnings, and prospects for future growth. The second mistake is to trade beyond one’s financial resources, to try to run up a fortune on a shoestring.
This was my main error at the outset. I had virtually no capital to start with. When I bought stocks I put up so small a margin that a change of a few points could wipe out my equity. What I really was doing, in fact, was little more than betting whether a stock would go up or down. I might be right sometimes, but any sizable fluctuation would wipe me out.
Only after I had been wiped out repeatedly did I learn the lesson of not overplaying my hand and of always holding back some part of my capital as a reserve. Had I learned this earlier I would have saved myself many a heartache, and avoided going broke again and again. What I was fighting out inside of myself was the age-old conflict that every ambitious youth experiences — of choosing between a reckless impulse to shoot the works and the cautious massing of one’s resources for the morrow. — Bernard Baruch (source)
From the Archives
Last Call
- What are We Forgetting? – T. Lamade
- Behavioural Lessons From the World Cup – Behavioural Investment
- Charlie Munger & Envy – Kingswell
- What I Learned About Wealthy People as a Private Banker – Use Your Wealth
- Masters in Business: Seth Klarman (podcast) – MiB
- The Surprising Power of Simple Predictions – T. Harford
- Do AIs Make Good Traders, and Do They Make Good Traders Better? – Elm
- Ergodicity and the Tales of Two Skiers – L. Dellanna
- The Kong: On Accidental Design, Incessant Chewing, and the VW Axle Stop – WITI
- How Did M.C. Escher Develop His Mind-Bending, Paradoxical World? – Artnet