“When deciphering economic indicators, it is important to understand that in the Alice-in-Wonderland world of Wall Street, bad news can be good news and good news can be bad news. The economic context in which a report is released is the key to resolving these paradoxes.” Peter Navarro
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” Warren Buffett
“Investing for the long term means judging the distance future, judging how history will be made, how society will change, how the world economy will change. Reaching decisions on such issues cannot proceed from analytical models alone; there has to be a major input of judgment that is essentially personal and intellectual in origin.” Robert Shiller
“Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid.” Warren Buffett
“During a speculative episode, the price of expensive items increases more than the prices of less expensive items. This is referred to as the price multiplier effect.” Bertrand Roehner
“I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.” Warren Buffett
“The basic problem with the efficient markets hypothesis is that it is a half truth. It is useful to present market efficiency is a concept to students and amateur investors lest they come to believe that it is easy to get rich quickly. It is not easy to get rich quickly by trading speculative markets.” Robert Shiller
“Price peaks for stocks and most commodities on average follow a well-defined pattern that we call the sharp peak – flat through pattern; in contrast real estate price peaks follow a flat peak pattern.” Bertrand Roehner
“All investing and speculation is basically an exercise in attempting to beat time. Time is the single most valuable asset you can ever have in your investment arsenal. The problem is that none of us has enough of it.” Richard Russell
“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” Warren Buffett
“The stocks whose prices experience the strongest increase during a bull market, better resist during the subsequent bear market, an effect referred to as resilience pattern.” Bertrand Roehner
“Because most people have run out of time, they spend endless hours and nervous energy trying to beat time, which, by the way, is really what investing is all about. Pick a stock that advances from 3 to 100 and if you’ve put enough money in that stock you’ll have beaten time.” Richard Russell
“If you’re an investor, you’re looking on what the asset is going to do, if you’re a speculator, you’re commonly focusing on what the price of the object is going to do, and that’s not our game. Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid.” Warren Buffett
“In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN’T NEED THE MARKETS. I can’t begin to tell you what a difference that makes, both in one’s mental attitude and in the way one actually handles one’s money. The wealthy investor doesn’t need the markets, because he already has all the income he needs. He has money coming in via bonds, T-bills, money market funds, stocks and real estate. In other words, the wealthy investor never feels pressured to ‘make money’ in the market.” Richard Russell
“In any market there are at least two kinds of buyers and sellers (i) Those who buy or sell for personal use, subsequently referred to as users; (ii) Investors and speculators who make money by buying and selling with a profit. Such a distinction is particularly clear in property markets: the users are the residents who live in the house or apartments they have bought while the investors are property developers, real estate agencies, insurance companies, and so on. The proportion of investors in a given market is an important parameter which will be referred to as the speculative ratio. The speculative ratio is equal to 1 for stock markets and close to 0 for postage-stamp or coin markets which are dominated by collectors; for property markets it is of the order of 0.2” Bertrand Roehner
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Warren Buffett
“The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the ‘give away’ table, he buys art or diamonds or gold. In other words, the wealthy investor puts his money where the great values are. And if no outstanding values are available, the wealthy investor waits. He can afford to wait. He has money coming in daily, weekly, monthly. The wealthy investor knows what he is looking for, and he doesn’t mind waiting months or even years for his next investment (they call that patience).” Richard Russell
“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.” Warren Buffett
“Investing without research is like playing stud poker and never looking at the cards.” Peter Lynch
“If, when making a stock investment, you’re not considering holding it at least ten years, don’t waste more than ten minutes considering it.” Warren Buffett
“But what about the little guy? This fellow always feels pressured to ‘make money.’ And in return he’s always pressuring the market to ‘do something’ for him. But sadly, the market isn’t interested. When the little guy isn’t buying stocks offering 1% or 2% yields, he’s off to Las Vegas or Atlantic City trying to beat the house at roulette. Or he’s spending 20 bucks a week on lottery tickets, or he’s ‘investing’ in some crackpot scheme that his neighbor told him about (in strictest confidence, of course). And because the little guy is trying to force the market to do something for him, he’s a guaranteed loser. The little guy doesn’t understand values so he constantly overpays. He doesn’t comprehend the power of compounding, and he doesn’t understand money. He’s never heard the adage, ‘He who understands interest — earns it. He who doesn’t understand interest — pays it.’ The little guy is the typical American, and he’s deeply in debt.” Richard Russell
“We enjoy the process far more than the proceeds.” Warren Buffett
“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.” Warren Buffett
“The little guy is in hock up to his ears. As a result, he’s always sweating — sweating to make payments on his house, his refrigerator, his car or his lawn mower. He’s impatient, and he feels perpetually put upon. He tells himself that he has to make money — fast. And he dreams of those ‘big, juicy mega-bucks.’ In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles it away on senseless schemes. In short, this ‘money-nerd’ spends his life dashing up the financial down-escalator. But here’s the ironic part of it. If, from the beginning, the little guy had adopted a strict policy of never spending more than he made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in due time he’d have money coming in daily, weekly, monthly, just like the rich man. The little guy would have become a financial winner, instead of a pathetic loser.” Richard Russell
“We believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a ‘romantic.’” Warren Buffett
“The only time the average investor should stray outside the basic compounding system is when a given market offers outstanding value. I judge an investment to be a great value when it offers (a) safety; (b) an attractive return; and (c) a good chance of appreciating in price. At all other times, the compounding route is safer and probably a lot more profitable, at least in the long run.” Richard Russell
“Liquidity – A company has to have enough cash or saleable assets to pay bondholders.” Francis Chou
“Before buying a stock I like to be able to give a two-minute monologue that covers the reasons I’m interested in it, what has to happen for the company to succeed, and the pitfalls that stand in its path. The two-minute monologue can be muttered under your breath or repeated out loud to colleagues who happen to be standing within earshot. Once you’re able to tell the story of a stock to your family, your friends, or the dog (and I don’t mean ‘a guy on the bus says Caesars World is a takeover’), and so that even a child could understand it, then you have a proper grasp of the situation.” Peter Lynch
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” Warren Buffett
“Investing Is Not Nearly as Difficult as It Looks. The intelligent investor in mutual funds, using common sense and without extraordinary financial acumen, can perform with the pros. In a world where financial markets are highly efficient, there is absolutely no reason that careful and disciplined novices—those who know the rudiments but lack the experience—cannot hold their own or even surpass the long-term returns earned by professional investors as a group. Successful investing involves doing just a few things right and avoiding serious mistakes.” John Bogle
“When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.” Warren Buffett
“Confidence – Make sure your estimates are accurate.” Francis Chou
“When All Else Fails, Fall Back on Simplicity. There are an infinite number of strategies worse than this one: Commit, over a period of a few years, half of your assets to a stock index fund and half to a bond index fund. Ignore interim fluctuations in their net asset values. Hold your positions for as long as you live, subject only to infrequent and marginal adjustments as your circumstances change. When there are multiple solutions to a problem, choose the simplest one.” John Bogle
“You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.” Warren Buffett
“Time Marches On. Time dramatically enhances capital accumulation as the magic of compounding accelerates. At an annual return of +10%, the total value of the initial $10,000 investment is $108,000, at the end of 25 years, nearly a tenfold increase in value. Give yourself the benefit of all the time you can possibly afford.” John Bogle
“Your premium brand had better be delivering something special, or it’s not going to get the business.” Warren Buffett
“Nothing Ventured, Nothing Gained. It pays to take reasonable interim risks in the search for higher long-term rates of return. The magic of compounding accelerates sharply with even modest increases in annual rate of return. While an investment of $10,000 earning an annual return of +10% grows to a value of $108,000 over 25 years, at +12% the final value is $170,000. The difference of $62,000 is more than six times the initial investment itself.” John Bogle
“Our favorite holding period is forever.” Warren Buffett
“Valuations – Do not ignore risk, even when investors fail to price it into assets.” Francis Chou
“Diversify, Diversify, Diversify. By owning a broadly diversified portfolio of stocks and bonds, specific security risk is eliminated. Only market risk remains. This risk is reflected in the volatility of your portfolio and should take care of itself over time as returns are compounded.” John Bogle
“Price is what you pay. Value is what you get.” Warren Buffett
“Modesty – Know what you do not know.” Francis Chou
“The Eternal Triangle. Never forget that risk, return, and cost are the three sides of the eternal triangle of investing. Remember also that the cost penalty may sharply erode the risk premium to which an investor is entitled. You should understand unequivocally that investing in a fund with a relatively high expense ratio—more than 0.50% per year for a money market fund, 0.75% for a bond fund, 1.00% for a regular equity fund—bears careful examination. Unless you are confident that the higher costs you incur are justified by higher expected returns, select your investments from among the lower-cost no-load funds.” John Bogle
“Position – When you buy into a bad situation, buy the most senior debt you can find.” Francis Chou
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.” Warren Buffett
“The Powerful Magnetism of the Mean. In the world of investing, the mean is a powerful magnet that pulls financial market returns toward it, causing returns to deteriorate after they exceed historical norms by substantial margins and to improve after they fall short. Reversion to the mean is a manifestation of the immutable law of averages that prevails, sooner or later, in the financial jungle.” John Bogle
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” Warren Buffett
“Do Not Overestimate Your Ability to Pick Superior Equity Mutual Funds, nor Underestimate Your Ability to Pick Superior Bond and Money Market Funds. In selecting equity funds, no analysis of the past, no matter how painstaking, assures future superiority. In general, you should settle for a solid mainstream equity fund in which the action of the stock market itself explains about 85% or more of the fund’s return, or a low-cost index fund (100% explained by the market). But do not approach the selection of bond and money market funds with the same skepticism. Selecting the better funds in these categories on the basis of their comparative costs holds remarkably favorable prospects for success.” John Bogle
“The investor of today does not profit from yesterday’s growth.” Warren Buffett
“Patience – It can take two or three years for companies to be fixed or restructured.” Francis Chou
“You May Have a Stable Principal Value or a Stable Income Stream, But You May Not Have Both. Contrast a money market fund – with its volatile income stream and fixed value – and a long-term government bond fund – with its relatively fixed income stream and extraordinarily volatile market value. Intelligent investing involves choices, compromises, and trade-offs, and your own financial position should determine the most suitable combination for your portfolio.” John Bogle
“There seems to be some perverse human characteristic that likes to make easy things difficult.” Warren Buffett
“Beware of ‘Fighting the Last War.’ Too many investors—individuals and institutions alike—are constantly making investment decisions based on the lessons of the recent, or even the extended, past. They seek stocks after stocks have emerged victorious from the last war, bonds after bonds have won. They worry about the impact of inflation after inflation, having turned high real returns into so-so nominal returns, has become the accepted bogeyman. You should not ignore the past, but neither should you assume that a particular cyclical trend will last forever. None does.” John Bogle
“Time is the friend of the wonderful company, the enemy of the mediocre.” Warren Buffett
“You Rarely, If Ever, Know Something The Market Does Not. If you are worried about the coming bear market, excited about the coming bull market, fearful about the prospect of war, or concerned about the economy, the election, or indeed the state of mankind, in all probability your opinions are already reflected in the market. The financial markets reflect the knowledge, the hopes, the fears, even the greed, of all investors everywhere. It is nearly always unwise to act on insights that you think are your own but are in fact shared by millions of others.” John Bogle
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” Warren Buffett
“Think Long-Term. Do not let transitory changes in stock prices alter your investment program. There is a lot of noise in the daily volatility of the stock market, which too often is ‘a tale told by an idiot, full of sound and fury, signifying nothing.’ Stocks may remain overvalued, or undervalued, for years. Patience and consistency are valuable assets for the intelligent investor. The best rule: Stay the Course.” John Bogle
“A public-opinion poll is no substitute for thought.” Warren Buffett
“Homework – It can take as much as a month of study to understand a company’s accounts, management and problems.” Francis Chou
“I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.” Warren Buffett
“Safety – Don’t pay more than 60 to 65 cents on the dollar for any risky debt.” Francis Chou
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” Warren Buffett
“Diversification – Have at least 10 to 15 high yield or distressed bonds in the portfolio.” Francis Chou
“If a business does well, the stock eventually follows.” Warren Buffett
“Friends – The company should have the ability to go to the market to raise fresh capital that will at least indirectly benefit bondholders.” Francis Chou
“All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies” Warren Buffett
