“The historical evidence strongly suggests that expected future earnings growth is fastest when current payout ratios are high and slowest when payout ratios are low….Our evidence thus contradicts the views of many who believe that substantial reinvestment of retained earnings will fuel faster future earnings growth. Rather, it is consistent with anecdotal tales about managers signaling their earnings expectations through dividends or engaging, at times, in inefficient empire building.”
— Rob Arnott and Cliff Asness

“The great strategy you can’t stick with is obviously vastly inferior to the very good strategy you can stick with.”
— Cliff Asness

“Having, and sticking to, a true long term perspective is the closest you can come to possessing an investing super power.”
— Cliff Asness

“In investment, there is an activity bias, which creates opportunities for those who resist it.”
— John Authers

“The main purpose of the stock market is to make fools of as many people as possible.”
— Bernard Baruch

“The fundamental law of investing is the uncertainty of the future.”
— Peter Bernstein

“RISK management … should be a process of dealing with the consequences of being wrong. Sometimes, these consequences are minimal — encountering rain after leaving home without an umbrella, for example. But betting the ranch on the assumption that home prices can only go up should tell you the consequences would be much more than minimal if home prices started to fall.”
— Peter Bernstein

“After 28 years at this post and 22 years before this in money management, I can sum up whatever wisdom I have accumulated this way: the trick is not to be the hottest stock-picker, the winning forecaster, or the developer of the neatest model; such victories are transient. The trick is to survive. Performing that trick requires a strong stomach for being wrong, because we are all going to be wrong more often than we expect. The future is not ours to know. But, it helps to know that being wrong is inevitable and normal, not some terrible tragedy, not some awful failing in reasoning, not even bad luck in most instances. Being wrong comes with the franchise of an activity whose outcome depends on an unknown future. Maybe the real trick is persuading clients of that inexorable truth.”
— Peter Bernstein

“There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor — the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends upon appearing to know.”
— William Bernstein

“The balance of power is shifting toward consumers and away from companies…the individual is empowered. The right way to respond to this if you are a company is to put the vast majority of your energy, attention and dollars into building a great product or service and put a smaller amount into shouting about it, marketing it. If I build a great product or service, my customers will tell each other….In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts. Your brand is formed primarily, not by what your company says about itself, but what the company does.”
— Jeff Bezos

“One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.”
— Jeff Bezos

“The difference between a prediction and a probability is the difference between a pundit and a professional. One makes concentrated bets on the belief that they can predict the future and the other diversifies with the understanding that they cannot.”
— Charlie Bilello

“The stock market is a giant distraction to the business of investing.”
— John Bogle

“Time is your friend; impulse is your enemy.”
— Jack Bogle

“The question about selling a really great business is never. Because to sell off something that is a really wonderful business because the price looks a little high or something like that is almost always a mistake. It took me a lot of time to learn that. I haven’t fully learned it yet. It’s rare it makes sense. If you believe the long term economics of the business are terrific, it rarely makes any sense to sell it.”
— Warren Buffett

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
— Warren Buffett

“Time is the friend of the wonderful business, the enemy of the mediocre.”
— Warren Buffett

“If you’re in a lousy business for a long time, you’re going to get a lousy result even if you buy it cheap.”
— Warren Buffett

“If you’re in a wonderful business for a long time, even if you pay a little too much going in, you’re going to get a wonderful result if you stay in it a long time.”
— Warren Buffett

“We want to do business in times of pessimism, not because we like pessimism but because we like the prices it produces. It’s optimism that’s the enemy of the rational buyer.”
— Warren Buffett

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”
— Warren Buffett

“Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it’s the lack of change that appeals to me. I don’t think it is going to be hurt by the Internet. That’s the kind of business I like.”
— Warren Buffett

“Success in investing doesn’t correlate with I.Q. once you’re above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
— Warren Buffett

“Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards – so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.”
— Warren Buffett

“I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard.”
— Warren Buffett

“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.”
— Warren Buffett

“We have usually made our best purchases when apprehensions about some macro event were at a peak. Fear is the foe of the faddist, but the friend of the fundamentalist.”
— Warren Buffett

“The stock market is designed to transfer money from the active to the patient.”
— Warren Buffett

“Periodically, financial markets will become divorced from reality.”
— Warren Buffett

“Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments – far riskier investments – than widely-diversified stock portfolios. … Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray.”
— Warren Buffett

“We do not measure the progress of our investments by what their market prices do during any given year. Rather, we evaluate their performance by the two methods we apply to the businesses we own. The first test is improvement in earnings, with our making due allowance for industry conditions. The second test is whether their moats have widened during the year.”
— Warren Buffett

“The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.”
— Warren Buffett

“As an investor, you’re looking at what the asset is going to do. As a speculator, you’re commonly focusing on what the price is going to do, and that’s not our game.”
— Warren Buffett

“Gold gets dug out of the ground. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
— Warren Buffett

“Only for short term investors and market timers is a correction not an opportunity.”
— Warren Buffett

“We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, the intensity with which an investor thinks about a business and its economic characteristics before buying into it.”
— Warren Buffett

“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
— Warren Buffett

“The reason for our conservatism, which may impress some people as extreme, is that it is entirely predictable that people will occasionally panic, but not at all predictable when this will happen.”
— Warren Buffett

“At a healthy business, cash is sometimes thought of as something to be minimized – as an unproductive asset that acts as a drag on such markers as return on equity. Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.”
— Warren Buffett

“I don’t need a stock price to tell me what I already know about value.”
— Warren Buffett

“Over the very long-term the stock market tracks the fundamentals — company earnings, dividends and the growth in the economy to some extent, but over the short-term it’s really just a huge experiment in human behavior and emotions.”
— Ben Carlson

“The real ‘perfect’ portfolio is whatever approach allows you to stick with your investment plan without completely abandoning your strategy at the worst possible times.”
— Ben Carlson

“Expectations matter in the financial markets. It’s not just absolute growth or a single news item that moves stocks. It’s the relative growth in relation to expectations and how much of that good or bad news is already priced into the stocks that matters.”
— Ben Carlson

“Buggy whip manufacturers would have been the greatest investment of all time — except they listened to consultants who told them that dividends were archaic and tax-inefficient, so they kept plowing earnings back into the business. When the companies went belly up and their shares became worthless, the multi-century return to investors was -100%.”
— Jonathan Clements

“Fallible, emotional people determine price; cold, hard cash determines value.”
— Christopher Davis

“Bear markets make people a lot of money, they just don’t know it at the time.”
— Shelby Davis

“More money has been lost reaching for yield than at the point of a gun.”
— Raymond DeVoe

“When it comes to growth rates, do not trust your intuition. You don’t have any.”
— Rolf Dobelli

“Equity is completely different from other classes of investments. It’s the only one that captures human ingenuity, which is the ultimate asset.”
— Eddy Elfenbein

“The big winners in your portfolio won’t be stocks that go from a 13 P/E to a 17 P/E. Rather they’ll be ones that increase their ‘E’ by 10 fold.”
— Eddy Elfenbein

“The Big New Thing is often a terrible, terrible investment. Even if it pans out, there will be gobs of competitors.”
— Eddy Elfenbein

“Be patient and ignore fads. Focus on value. Never panic.”
— Eddy Elfenbein

“The economy is a complex, nonlinear, adaptive system where short run effects are often opposite of long run effects.”
— Eric Falkenstein

“Our desire to impress others causes us to take too much risk.”
— Eric Falkenstein

“When everyone is waiting for a rally to sell into, either you don’t get a rally or, if you do, you shouldn’t sell into it.”
— Bob Farrell

“Paying attention to simple little things that most men neglect makes a few men rich.”
— Henry Ford

“You can get in way more trouble with a good idea than a bad idea, because you forget that the good idea has limits.”
— Benjamin Graham

“Price is what you pay. Value is what you get.”
— Benjamin Graham

“Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble . . . to give way to hope, fear and greed.”
— Benjamin Graham

“The investor’s chief problem – and even his worst enemy – is likely to be himself.”
— Benjamin Graham

“Investment is most intelligent when it is most businesslike.”
— Benjamin Graham

“Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in management.”
— Benjamin Graham

“The essence of investment management is the management of risks, not the management of returns. Well-managed portfolios start with this precept.”
— Benjamin Graham

“To be an investor you must be a believer in a better tomorrow.”
— Benjamin Graham

“The risk of paying too high a price for good-quality stocks – while a real one – is not the chief hazard confronting the average buyer of securities. Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions. The purchasers view the current good earnings as equivalent to ‘earning power’ and assume that prosperity is synonymous with safety.”
— Benjamin Graham

“The market is fond of making mountains out of molehills and exaggerating ordinary vicissitudes into major setbacks.”
— Benjamin Graham

“If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.”
— Benjamin Graham

“The rise of modern science combined with modern distribution and other processes developed by businesses has resulted in people increasingly encountering nonlinear change. The economist Paul Romer explains one common reaction: ‘People are reasonably good at estimating how things add up, but for compounding, which involves repeated multiplication, we fail to appreciate how quickly things grow. As a result, we often lose sight of how important even small changes in the average rate of growth can be.’ When something is sufficiently nonlinear, a phenomenon can seem almost magical.”
— Tren Griffin

“When we don’t generate cash, the capital markets decide when we have to lay people off. … I don’t know about you, but I do not want to live my life that way. … I want to control my own destiny.”
— Ben Horowitz

“Compounding is not about earning the highest returns. It’s about earning pretty good returns for the longest period of time possible.”
— Morgan Housel

“The investing industry is filled with brilliant people and terrible results. The reason is that the field has less to do with the kind of knowledge that makes a good physicist, and more to do with the rare intellectual flexibility and nimbleness that makes a good flu vaccine researcher.”
— Morgan Housel

“The difference is subtle but helps explain why pessimism sounds smart amid a backdrop of general improvement. Anything competitive – markets, businesses, countries, careers – moves toward improvement by breaking down what isn’t working and exposing weaknesses. Which means improvement over the long term has to be interrupted by short-term adversity. Pain, regret, trudge, and bullshit is the fuel for advancing and the cost of admission you have to pay to enjoy the benefits of any long-term improvements. The difference between pessimism and optimism often comes down to time horizon. If a recession or downturn is the end of your show, you should be pessimistic. If it’s a bad commercial during an otherwise great episode, you should be optimistic.”
— Morgan Housel

“Peak oil became a default assumption. Four-dollar gas was seen as the new floor. But we adapted again. Hybrid sales surged. Oil producers used high prices as an incentive to discover new drilling techniques. Prices eventually fell and the pessimists went quiet. Despite an awareness of how powerfully we’ve changed in the past, it’s too easy to underestimate our ability to change in the future. Psychologists call this the end of history illusion. … It’s a reason pessimism is so seductive.”
— Morgan Housel

“The gambling nature of Wall Street has little or no interest in the serious, underlying nature of businesses.”
— Irving Kahn

“You gain much more by slow investing and concentrating on what you know than on fast investing, which is nothing more than gambling.”
— Irving Kahn

“Investing is the intersection of economics and psychology.”
— Seth Klarman

“The best investors do not target return; they focus first on risk, and only then decide whether the projected return justifies taking each particular risk.”
— Seth Klarman

“Risk is how much can I lose and what is the probability I lose it?”
— Seth Klarman

“My firm’s approach is to seek situations where there is urgent, panicked or mindless selling. As Warren Buffett has said, ‘If you are at a poker table and can’t figure out who the patsy is, it’s you.’ In investing, we never want to be the patsy. So rather than buy from smart, informed sellers, we want to buy from urgent, distressed or emotional sellers.”
— Seth Klarman

“As the father of value investing, Benjamin Graham, advised in 1934, smart investors look to the market not as a guide for what to do but as a creator of opportunity. The excessive exuberance and panic of others generates mispricings that can be exploited by those who are able to keep their wits about them.”
— Seth Klarman

“Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.”
— Seth Klarman

“Why does an inverted yield curve signal a major peak for the stock market? Every recession in the United States — and accompanying global economic recession over the past 50 years — was preceded by an inverted yield curve. The yield curve inversion usually takes place about 12 months before the start of the recession, but the lead time ranges from about five to 16 months. The peak in the stock market comes around the time of the yield curve inversion, ahead of the recession and accompanying downturn in corporate profits.”
— Jeffrey Kleintop

“The natural-born investor is a myth.”
— Peter Lynch

“The key to making money in stocks is not to get scared out of them.”
— Peter Lynch

“In investing if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.”
— Peter Lynch

“Whatever method you use to pick stocks . . . your ultimate success or failure will depend on your ability to ignore the worries of the world long enough to allow your investments to succeed. It isn’t the head but the stomach that determines the fate of the stockpicker.”
— Peter Lynch

“There’s no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating.”
— Peter Lynch

“There are 60,000 economists in the U.S., many of them employed fulltime trying to forecast recessions and interest rates. If they could do it successfully twice in a row, they’d all be millionaires by now. As far as I know, most of them are still gainfully employed, which ought to tell us something.”
— Peter Lynch

“My best stocks have been the third year, the fourth year, the fifth year I’ve owned them. It’s not the third week, the fourth week. People want their money very rapidly, it doesn’t happen.”
— Peter Lynch

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”
— Peter Lynch

“An investor should think like a business owner, not a renter. Most businesspeople don’t get up in the morning and ask whether they should sell their business that day. If they own a pizza shop, they don’t think about whether what they really should own is a shoe store instead. They show patience and persistence and try to understand their underlying business better so they can earn the greatest return for the longest period of time.”
— Joe Mansueto

“So investors are in many ways misled by stock-market volatility. The values of the underlying businesses just don’t change as quickly as stock prices do. You really don’t have to watch those changes hawklike day after day.”
— Joe Mansueto

“It is in a lot of people’s interests to get you to do something. Advisers and brokers earn commissions, fund companies want you to bring your assets to them. There are a lot of forces at work in the investment industry to get people to move, and there’s not really a countervailing force to encourage you to do nothing. But you should.”
— Joe Mansueto

“The job of a good investor is to always be skeptical, but not too skeptical, because if you have no limits to your pessimism you’ll never spot opportunity.”
— Howard Marks

“Success in investing is not a function of what you buy. It’s a function of what you pay.”
— Howard Marks

“Risk control is the best route to loss avoidance. Risk avoidance, on the other hand, is likely to lead to return avoidance as well.”
— Howard Marks

“It’s not sufficient to survive on average. We have to survive on the bad days.”
— Howard Marks

“The future should be viewed not as a fixed outcome that’s destined to happen and capable of being predicted, but as a range of possibilities and, hopefully on the basis of insight into their respective likelihoods, as a probability distribution.”
— Howard Marks

“In order to achieve superior results, an investor must be able — with some regularity — to find asymmetries: instances when the upside potential exceeds the downside risk. That’s what successful investing is all about.”
— Howard Marks

“Bearing higher risk generally produces higher returns. The market has to set things up to look like that’ll be the case; if it didn’t, people wouldn’t make risky investments. But it can’t always work that way, or else risky investments wouldn’t be risky. And when risk bearing doesn’t work, it really doesn’t work, and people are reminded what risk’s all about.”
— Howard Marks

“Investments that seem riskier have to appear likely to deliver higher returns, or else people won’t make them.”
— Howard Marks

“Risk shows up lumpily.”
— Howard Marks

“Risk exists only in the future.”
— Howard Marks

“Risk can be nothing more than the subject of estimation . . . and certainly not reliably quantified.”
— Howard Marks

“Liquidity can be transient and paradoxical. It’s plentiful when you don’t care about it and scarce when you need it most.”
— Howard Marks

“When you look at the chart for something that’s gone up and to the right for 20 years, think about all the times a holder would have had to convince himself not to sell. An abundance of liquidity can be a handicap in this regard.”
— Howard Marks

“If I ask you what’s the risk in investing, you would answer the risk of losing money. But there actually are two risks in investing: One is to lose money and the other is to miss opportunity. You can eliminate either one, but you can’t eliminate both at the same time. So the question is how you’re going to position yourself versus these two risks: straight down the middle, more aggressive or more defensive. I think of it like a comedy movie where a guy is considering some activity. On his right shoulder is sitting an angel in a white robe. He says: ‘No, don’t do it! It’s not prudent, it’s not a good idea, it’s not proper and you’ll get in trouble.’ On the other shoulder is the devil in a red robe with his pitchfork. He whispers: ‘Do it, you’ll get rich.’ In the end, the devil usually wins. Caution, maturity and doing the right thing are old-fashioned ideas. And when they do battle against the desire to get rich, other than in panic times the desire to get rich usually wins. That’s why bubbles are created and frauds like Bernie Madoff get money.”
— Howard Marks

“How do good companies become financially distressed? The answer is they take on more debt than it turns out they can service in tougher times.”
— Howard Marks

“I can say categorically that the single greatest error I have observed among investment professionals is the failure to distinguish between knowledge of a company’s fundamentals and the expectations implied by a stock price.”
— Michael Mauboussin

“The goal of an investment process is unambiguous: to identify gaps between a company’s stock price and its expected value. Expected value, in turn, is the weighted-average value for a distribution of possible outcomes. You calculate it by multiplying the payoff (i.e., stock price) for a given outcome by the probability that the outcome materializes. Perhaps the single greatest error in the investment business is a failure to distinguish between the knowledge of a company’s fundamentals and the expectations implied by the market price.”
— Michael Mauboussin

“A third thing that is important is something Warren Buffett calls the circle of competence: Stay within what you know you can do and avoid things that you don’t know much about. I think when we see others succeed wildly with something, we are tempted to wade a bit beyond what we’re comfortable with. And that typically doesn’t work out very well.”
— Michael Mauboussin

“Before I comment on downside risks, a quick comment on forecasts: I think a reasonably intelligent person can always make a compelling bearish argument for the economy, and yet most of the time the economy grows and employment increases. Just something I like to remember. And although I enjoy being a contrarian at times . . . I try to avoid the mistake of being a contrarian just to be contrary.”
— Bill McBride

“If it doesn’t generate cash, it’s not really a business.”
— Paul Meeks

“Those that insist on returns in the short run don’t get them, while those that wait for returns in the long run do.”
— David Merkel

“Real risk and perceived risk are two different things. People perceive risk to be high when prices are low, and they perceive risk to be low when prices are high. That is the psychological problem that people have.”
— Bill Miller

“Each state nurtures forces that lead to its own destruction.”
— Hyman Minsky

“In studying the common traits of those most successful at games of skill researchers have found a clear tendency to focus more on process than individual outcomes.”
— James Montier

“People calculate too much and think too little.”
— Charlie Munger

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
— Charlie Munger

“I think part of the popularity of Berkshire Hathaway is that we look like people who have found a trick. It’s not brilliance. It’s just avoiding stupidity.”
— Charlie Munger

“The great lesson in microeconomics is to discriminate between when technology is going to help you and when it’s going to kill you . . . there are all kinds of wonderful new inventions that give you nothing as owners except the opportunity to spend a lot more money in a business that’s still going to be lousy. The money still won’t come to you. All of the advantages from great improvements are going to flow through to the customers.”
— Charlie Munger

“So there are risks. Nothing is automatic and easy. But if you can find some fairly-priced great company and buy it and sit, that tends to work out very, very well indeed especially for an individual.”
— Charlie Munger

“There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested — there’s never any cash. It reminds me of the guy who looks at all of his equipment and says, ‘There’s all of my profit.’ We hate that kind of business.”
— Charlie Munger

“It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait.”
— Charlie Munger

“It takes character to sit there with all that cash and do nothing. I didn’t get to where I am by going after mediocre opportunities.”
— Charlie Munger

“Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.”
— Charlie Munger

“It makes sense to load up on the very few good insights you have instead of pretending to know everything about everything at all times. You’re much more likely to do well if you start out to do something feasible instead of something that isn’t feasible.”
— Charlie Munger

“Intelligent people make decisions based on opportunity costs. It’s your alternatives that matter.”
— Charlie Munger

“Never think about something else when you should be thinking about the power of incentives.”
— Charlie Munger

“Investing is where you find a few great companies and then sit on your ass.”
— Charlie Munger

“Personally, I’ve gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically doing these things — which by and large are useful, but often misfunction?”
— Charlie Munger

“Playing poker in the Army and as a young lawyer honed my business skills . . . What you have to learn is to fold early when the odds are against you, or if you have a big edge, back it heavily because you don’t get a big edge often.”
— Charlie Munger

“If a business earns 6% on capital over forty years, you’re not going to make much different than a 6% return, even if you buy it at a huge discount. Conversely, if a business earns 18% on capital, you’ll end up with one hell of a return long term, even if you pay an expensive looking price.”
— Charlie Munger

“99% of the troubles that threaten our civilization come from too optimistic accounting.”
— Charlie Munger

“The liabilities are always 100% good. It’s the assets you have to worry about.”
— Charlie Munger

“Necessity never made a good bargain.”
— Charlie Munger

“So you have to adapt your strategy to your own nature and your own talents. I don’t think there’s a one-size-fits-all investment strategy that I can give you.”
— Charlie Munger

“The idea of excessive diversification is madness.”
— Charlie Munger

“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.”
— Charlie Munger

“Most people are too fretful, they worry too much. Success means being very patient, but aggressive when it’s time.”
— Charlie Munger

“If you took out our top fifteen decisions, we would have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor.”
— Charlie Munger

“I can calculate the motion of heavenly bodies but not the madness of people.”
— Isaac Newton

“To speak of day traders in any investment context is silly. These people are fulfilling a need for entertainment and are using the stock market for that.”
— Bill Nygren

“In the real world, risk = probability of failure x consequences.”
— Shane Parrish

“Our best results have been from high-quality companies — sometimes where we paid nearly fair prices, not bargain prices — that have created a tremendous amount of value for shareholders just because they have good management and good assets. Let those companies do the work. Let your winners run. It doesn’t mean you take your eye off the ball in terms of valuation; but the best dividend investing, the best management of a stream of income for total return turns out to be very much that buy-and-hold strategy that a lot of people look down on and have some concerns or qualms about these days. Let the companies do the work.”
— Josh Peters

“It’s very difficult for companies to earn the same kind of ROEs on acquisitions that they can harvest from their existing operations. The sellers of the acquired company generally have a good idea of what it is worth — and they want to be compensated properly for the profitability and growth potential of their business. Instead of buying growth wholesale (the investment opportunities within a firm’s existing operations), acquisitions carry full retail prices.”
— Josh Peters

“The optimal payout ratio for a corporation is one that provides for a realistic rate of growth at a high return on equity, with the rest of profits returned to shareholders.”
— Josh Peters

“The error of optimism dies in the crisis, but in dying it gives birth to an error of pessimism. This new error is born, not an infant, but a giant.”
— A. C. Pigou

“A value hypothesis is an attempt to articulate the key assumption that underlies why a customer is likely to use your product. Identifying a compelling value hypothesis is what I call finding product/market fit. A value hypothesis identifies the features you need to build, the audience that’s likely to care, and the business model required to entice a customer to buy your product. Companies often go through many iterations before they find product/market fit, if they ever do.”
— Andy Rachleff, who invented the terms “growth hypothesis” and “value hypothesis”

“Remember, the end of the world bet has been a money loser since the beginning of time.”
— Barry Ritholtz

“With television, the sentiment virus will infect you. What television does best is pass along the emotions of the market.”
— Barry Ritholtz

“You can either have good news or cheap stocks, but not both.”
— Joe Rosenberg

“A bull market tends to bail you out of all your mistakes. Conversely, bear markets make you pay for your mistakes.”
— Richard Russell

“Instruct regulators to look for the newest fad in the [banking] industry and examine it with great care. The next mistake will be a new way to make a loan that will not be repaid.”
— William Seidman, Full Faith and Credit, 1993

“The most bullish thing a market can do is get overbought and stay that way.”
— Alan Shaw

“Think of a stock as a machine that generates cash every few months — cash that happens to be called dividends. The key question is how much you would pay to own the machine in order to get the cash.”
— Gary Smith

“If there is no underlying reason for the discovered pattern, there is no reason for deviations from the pattern to self-correct. The moral is simple: Don’t bet the bank on historical patterns that have no logical basis.”
— Gary Smith

“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
— George Soros

“The financial markets generally are unpredictable. So that one has to have different scenarios. The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.”
— George Soros

“Stock market bubbles don’t grow out of thin air. They have a solid basis in reality — but reality as distorted by a misconception.”
— George Soros

“When markets are happy, think about what could go wrong. When markets are in despair, think about what could go right.”
— Dennis Stattman

“Confidence when losing, humility when winning: a formula for long-term success in the markets.”
— Dr. Brett Steenbarger

“When we become negative in the face of disappointing returns, we can unwittingly create a downward spiral, where we limit our insight and productivity just when we need them most.”
— Dr. Brett Steenbarger

“Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”
— Sir John Templeton

“The most important lesson in investing is humility.”
— Sir John Templeton

“The main thing that people need to learn is that selecting assets is totally different from almost every other activity. If you go to 10 doctors and they tell you the same medicine that’s the thing to take, if you go to 10 engineers to build a bridge that’s the bridge but if you go to ten investment advisors and they pick out the same asset you better stay away from it.”
— Sir John Templeton

“The low volatility portfolio wins by losing less during times of stress.”
— Pim Van Vliet

“You can like the debt and hate the equity, but you can’t like the equity and hate the debt.”
— Wall Street Maxim

“Investing Success = Good Company + Right Price + Investment + Patience”
— Todd Wenning

“Patience is the individual investor’s greatest advantage over the market.”
— Todd Wenning

“The value of any stock, bond or business is determined by the cash inflows and outflows, discounted at an appropriate interest rate, which can be expected to occur during the remaining life of the asset.”
— John Burr Williams

“3% inflation for 100 years turns a dollar into a nickel.”
— Donald Yacktman

“The intelligent investor is a realist who sells to optimists and buys from pessimists.”
— Jason Zweig

“The challenge for all investors is to consume the news without being consumed by it. Probably the single most important step you can take is to filter it wisely, taking in the news through intermediaries whose judgment you can trust.”
— Jason Zweig

“Try to socialize — in the real world and in online social media — only with investors who are calm and methodical. After all, whatever your peers pay attention to, you will also concentrate on — so following more-sensible people will help inoculate you against panic.”
— Jason Zweig