Quote for the Week
While all the chatter and excitement is taking place about big stocks, big gains, and “three-baggers,” long-term investment success really depends on not losing — not taking major losses.
We all know that a 50 percent loss requires a double the next time up just to get even, but still we strive for the Big Score, even though we also know full well that accidents happen most often to too-fast drivers; that Icarus got too close to the sun; that Enron Corporation, WorldCom, and many dot-coms had very high “new era” multiples before their obliteration.
Large losses are forever — in investing, in teenage driving, and in fidelity. If you avoid large losses with a strong defense, the winnings will have every opportunity to take care of themselves. And large losses are almost always caused by trying to get too much by taking too much risk. — Charley Ellis (source)
From the Archives
Last Call
- In Memoriam – J. Zweig
- When the Fed Cuts: Lessons from Past Cycles for Investors – Enterprising Investor
- Why “Downside Protection” ETFs Don’t Protect Portfolios Like a Stock-Bond Mix – Kitces
- Capital Gains and Capital Pains – R. Huebscher
- The Perils of Concentration – Market Sentiment
- Using Chess to Study Overconfidence – Psychology Today
- Rory Sutherland: Why The Dumbest Ideas Make the Most Money (video) – The Pocket
- The Math of Catastrophe – Quanta
- How Common Is Accidental Invention? – Construction Physics