The two most powerful and underused words in investing

“"Do nothing" are the two most powerful and underused words in investing. The urge to act has transferred an inconceivable amount of wealth from investors to brokers.”

The two most powerful and underused words in investing

Expertise tends to create the inability to accept new ideas

“Investor Dean Williams once noted, "Expertise is great, but it has a bad side effect: It tends to create the inability to accept new ideas." Some of the world's best investors have no formal backgrounds in finance, which helps them tremendously.”

Expertise tends to create the inability to accept new ideas

You can control your investing decisions

“You can control your investing decisions, your own education, who you choose to listen to, what you choose to read, what evidence you choose to pay attention to, and how you respond to certain events. You cannot control what the Fed does, laws Congress sets, the next jobs report, or whether a company will beat earnings estimates. Focus on the former; try to ignore the latter.”

You can control your investing decisions

Companies that focus on boosting their stock price…

“Companies that focus on boosting their stock price will eventually lose their customers (Lehman Brothers, Enron). Companies that focus on their customers will eventually boost their stock price (Amazon, Facebook). This is an oversimplification but helps explain the difference between short- and long-term management styles. “

Companies that focus on boosting their stock price…

They get what they deserve

“Investors anchor to the idea that a fair price for a stock must be more than they paid for it. It's one of the most common, and dangerous, biases that exists. "People do not get what they want or what they expect from the markets; they get what they deserve," writes Bill Bonner.”

They get what they deserve

Timing the market is a fool's game

“Investor Nick Murray once said, "Timing the market is a fool's game, whereas time in the market is your greatest natural advantage." I would nominate this in the top 10 most important investing maxims ever spoken.”

Timing the market is a fool's game

Noah did not start building the Ark when it was raining

“Noah did not start building the Ark when it was raining.”

~ Warren Buffet

Noah did not start building the Ark when it was raining

The rearview mirror is always clearer than the windshield

"In the business world, the rearview mirror is always clearer than the windshield.

- Warren Buffett"

The rearview mirror is always clearer than the windshield

Individuals who know the price of everything

The stock market is filled with individuals who know the price of everything, but the value of nothing.
- Philip Fisher

Individuals who know the price of everything

People listened with avidity to the predictions of quacks and fanatics

 

"During the Great Plague of London in 1665, the people listened with avidity to the predictions of quacks and fanatics. Defoe says that at that time the people were more addicted to prophecies and astronomical conjurations, dreams, and old wives' tales than they were before or since." -- Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds

People listened with avidity to the predictions of quacks and fanatics

Men think in herds!

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they recover their senses slowly, and one by one.”
Charles MacKay

Men think in herds!

Things that people would see for themselves if they were willing to see!

Things that people would see for themselves if they were willing to see!

...human beings become demonstrably less able to cope!

It has become evident time and again that when events become too complex and move too rapidly as appears to be the case today, human beings become demonstrably less able to cope.
—Alan Greenspan,

...human beings become demonstrably less able to cope!

In the real world there is no “easy way” to assure a financial profit!

In the real world there is no “easy way” to assure a financial profit. At least, it is gratifying to rationalize that we would rather lose intelligently than win ignorantly.
—Richard A. Epstein, The Theory of Gambling and Statistical Logic

In the real world there is no “easy way” to assure a financial profit!

Experience!

Experience is a dear teacher– Benjamin Franklin
Experience is a good teacher, but she sends in terrific bills– Minna Antrim
Experience is the name that everyone gives their mistakes– Oscar Wilde

Experience!

When disillusion falls upon an overoptimistic and overbought market...!

It is of the nature of organized investment markets, under the influence of purchasers largely ignorant of what they are buying and of speculators who are more concerned with forecasting the next shift of market sentiment than with a reasonable estimate of the future yield of capital-assets,that, when disillusion falls upon an overoptimistic and overbought market, it should fall with sudden and even catastrophic force.
~ John Maynard Keynes, Chapter 22,The General Theory

When disillusion falls upon an overoptimistic and overbought market...!

Formulate your own conclusions!

 'The backlash against analysts is in full swing.  Don't be diverted by the spectacle, however enjoyable it might appear. Use the research available dispassionately . As in all human  life, you'll find there's good and bad there . Just be sure, once you've digested, to formulate your own conclusions.'

    ​Edmond Warner

Formulate your own conclusions!

I recommend index ing such sectors!

 'Market sectors vary in how quickly they respond to information.  Large cap U.S . stocks, for example, are followed by so many analysts and reflect company fundamentals so quickly, that it is nearly impossible to add value through active strategies. I recommend index ing such sectors.'

    ​Ben Warwick

I recommend index ing such sectors!

There are two kinds of people who lose money!

We have two classes of forecasters: Those who don’t know— and those who don’t know they don’t know.
JOHN KENNETH GALBRAITH

It’s frightening to think that you might not know something, but more frightening to think that, by and large,
the world is run by people who have faith that they know exactly what’s going on.
AMOS TVERSKY

There are two kinds of people who lose money: those who know nothing and those who know everything.
HENRY KAUFMAN

There are two kinds of people who lose money!

The market’s not a very accommodating machine!

The market’s not a very accommodating machine; it won’t provide high returns just because you need them.
PETER BERNSTEIN

The market’s not a very accommodating machine!