Market Wisdom II

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

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

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

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

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

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

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

Our mantra is ‘good company, bad balance sheet,’ which is different from a bad company; those can be challenging to turn around. But if you have a good company with the wrong balance sheet, that’s easier to fix. 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

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

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

The Internet has brought changes to investing which may bolster the overconfidence of on-line investors by providing an illusion of knowledge and an illusion of control. When people are given more information on which to base a forecast or assessment, their confidence in the accuracy of their forecasts tends to increase more quickly … than the accuracy of the forecasts.
— Terence Odean and Brad Barber

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 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

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

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

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

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