28 February 2016
Great investing quotes you’ve probably never heard
“Risk is what’s left over when you think you’ve thought of everything.“ — Carl Richards
Financial advisors say you should have six months of expenses saved as an emergency fund. That’s planning. The average duration of unemployment today is 10 months. That’s risk.
“In investing, what is comfortable is rarely profitable.” — Robert Arnott
Think about this: Three years after the book Dow 36,000 was published, stocks were down 40%. Three years after The Great Depression Ahead was published, stocks had doubled.
“When a possibility is unfamiliar to us, we do not even think about it.” — Nate Silver
The two biggest financial stories of the last 12 years were 9/11, and the financial crisis. Be honest with yourself: How often did you think about the possibility of these two things happening before they actually happened? If you’re like 99.9% of people, the answer is never.
“People focus on role models; it is more effective to find anti models — people you don’t want to resemble when you grow up.” — Nassim Taleb
You want to study the greats — great investors like Buffett and Lynch, and great companies like Apple and IBM. But you also want to study the failures. Kodak, ABC Learning, Enron, Long-term Capital Management, HIH. You’ll probably learn more from the failures than you will from the greats.
“Pundits forecast not because they know, but because they are asked.” — John Kenneth Galbraith
There’s zero accountability of financial pundits. In fact, the most popular media faces are almost never right, as websites like PunditTracker.com are showing. Keep that in mind when sifting through financial news.
“Being slow and steady means that you’re willing to exchange the opportunity of making a killing for the assurance of never getting killed.“ — Carl Richards
I recently interviewed value investor Mohnish Pabrai, who had dinner a few years ago with Buffett. Pabrai asked Buffett what happened to a former business partner he used to pick stocks with. (I don’t want to name him because he’s still in business today.) Buffett said they went their separate ways because the former partner was too eager to get rich, which meant leverage and, eventually, margin calls. Meanwhile, Buffett and partner Charlie Munger “always knew they were going to be rich and were in no hurry.” Look who came out ahead.
“If you look carefully, almost all old Money secrets can be traced to a single source: a longer-term outlook.“ — Bill Bonner
It’s well known that markets have become more short term. So what? No one said you have to become short term. My colleague Jeremy Phillips calls this “time arbitrage,” or “the concept of buying a stock from those with a different time horizon, and selling on our own terms.”
“No one can foresee the consequences of trivia and accident, and for that reason alone, the future will forever be filled with surprises.“ — Dan Gardner
Speaks for itself. Some of the best investors have succeeded not because they’ve predicted the future, but because they’ve dealt with surprises better than most. That usually means having more cash and less debt than seems reasonable.
“The stock market is a giant distraction to the business of investing.” — John Bogle
Here’s a good example: On May 10, 2010, the Dow Jones briefly fell almost 1,000 points, as high-frequency traders tripped over themselves. But it’s safe to say that not a single non-financial business in the world was affected in any measureable way. That’s the difference between a company market and a stock market.
“In the corporate world, if you have analysts, due diligence, and no horse sense, you’ve just described hell.” — Charlie Munger
Really smart people with PhDs used sophisticated math models to conclude that mortgage lending was sound in 2005. They failed miserably. Country bumpkins who didn’t know what a balance sheet was said, “Hey, my brother is broke and just got a $500,000 mortgage. That ain’t right.” They won.
Foolish Takeaway
There are no points for originality or degree of difficulty in investing – even if others tell you otherwise. The only thing you need to do is select great companies at good prices. Learning from others’ experience is a great advantage – and much less painful than learning all of those lessons yourself.
Financial advisors say you should have six months of expenses saved as an emergency fund. That’s planning. The average duration of unemployment today is 10 months. That’s risk.
“In investing, what is comfortable is rarely profitable.” — Robert Arnott
Think about this: Three years after the book Dow 36,000 was published, stocks were down 40%. Three years after The Great Depression Ahead was published, stocks had doubled.
“When a possibility is unfamiliar to us, we do not even think about it.” — Nate Silver
The two biggest financial stories of the last 12 years were 9/11, and the financial crisis. Be honest with yourself: How often did you think about the possibility of these two things happening before they actually happened? If you’re like 99.9% of people, the answer is never.
“People focus on role models; it is more effective to find anti models — people you don’t want to resemble when you grow up.” — Nassim Taleb
You want to study the greats — great investors like Buffett and Lynch, and great companies like Apple and IBM. But you also want to study the failures. Kodak, ABC Learning, Enron, Long-term Capital Management, HIH. You’ll probably learn more from the failures than you will from the greats.
“Pundits forecast not because they know, but because they are asked.” — John Kenneth Galbraith
There’s zero accountability of financial pundits. In fact, the most popular media faces are almost never right, as websites like PunditTracker.com are showing. Keep that in mind when sifting through financial news.
“Being slow and steady means that you’re willing to exchange the opportunity of making a killing for the assurance of never getting killed.“ — Carl Richards
I recently interviewed value investor Mohnish Pabrai, who had dinner a few years ago with Buffett. Pabrai asked Buffett what happened to a former business partner he used to pick stocks with. (I don’t want to name him because he’s still in business today.) Buffett said they went their separate ways because the former partner was too eager to get rich, which meant leverage and, eventually, margin calls. Meanwhile, Buffett and partner Charlie Munger “always knew they were going to be rich and were in no hurry.” Look who came out ahead.
“If you look carefully, almost all old Money secrets can be traced to a single source: a longer-term outlook.“ — Bill Bonner
It’s well known that markets have become more short term. So what? No one said you have to become short term. My colleague Jeremy Phillips calls this “time arbitrage,” or “the concept of buying a stock from those with a different time horizon, and selling on our own terms.”
“No one can foresee the consequences of trivia and accident, and for that reason alone, the future will forever be filled with surprises.“ — Dan Gardner
Speaks for itself. Some of the best investors have succeeded not because they’ve predicted the future, but because they’ve dealt with surprises better than most. That usually means having more cash and less debt than seems reasonable.
“The stock market is a giant distraction to the business of investing.” — John Bogle
Here’s a good example: On May 10, 2010, the Dow Jones briefly fell almost 1,000 points, as high-frequency traders tripped over themselves. But it’s safe to say that not a single non-financial business in the world was affected in any measureable way. That’s the difference between a company market and a stock market.
“In the corporate world, if you have analysts, due diligence, and no horse sense, you’ve just described hell.” — Charlie Munger
Really smart people with PhDs used sophisticated math models to conclude that mortgage lending was sound in 2005. They failed miserably. Country bumpkins who didn’t know what a balance sheet was said, “Hey, my brother is broke and just got a $500,000 mortgage. That ain’t right.” They won.
Foolish Takeaway
There are no points for originality or degree of difficulty in investing – even if others tell you otherwise. The only thing you need to do is select great companies at good prices. Learning from others’ experience is a great advantage – and much less painful than learning all of those lessons yourself.
Labels: Investment Quote
