Competitive advantage

An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.


- Jack Welch

Know whether the gamble is mispriced

You're looking for a mispriced gamble. That's what investing is. And you have to know enough to know whether the gamble is mispriced. That's value investing.

- Charles Munger

Pay attention to other factors as well

The risk among any group of investors is that they only pay attention to what they already agree with. That's limiting in our opinion, and dangerous.

- Michael Mauboussin

Practical test

Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test. The main difference is that the hypothesis that underlies an investment decision is intended to make money and not to establish a universally valid generalization.

- George Soros

Think independently

You can't be a good value investor without being an independent thinker.

- Joel Greenblatt

Forget about 'Option'

You can be highly successful as an investor without having the slightest ability to value an option. What students should be learning is how to value a business. That's what investing is all about.

- Warren Buffett

Securities markets would give a bigger discount than negotiated transactions

Our experience has been that pro-rata portions of truly outstanding businesses sometimes sell in the securities markets at very large discounts from the prices they would command in negotiated transactions involving entire companies.

- Warren Buffett

Economy and the Indexes may not relate very well

During these seventeen years (1964-81), the size of the economy grew fivefold. The sales of the Fortune five hundred companies grew more than fivefold. Yet, during these seventeen years, the stock market went exactly nowhere.

- Warren Buffett

Screen of logic

Even when the underlying motive of purchase (of stocks) is mere speculative greed, human nature desires to conceal this unlovely impulse behind a screen of apparent logic and good sense.

- Benjamin Graham

Excitement: Don't expect

Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.

- Paul Samuelson

Predictions of economists

Economists make predictions because they're asked, not because they know.

- John Kenneth Galbraith

Eager to search

If we become increasingly humble about how little we know, we may be more eager to search.

- John Templeton

Old saying

As the old saying goes, what the wise man does in the beginning, fools do in the end.

- Warren Buffett

Government

A government big enough to give you everything you want is strong enough to take everything you have.

- Thomas Jefferson

Commonality Broker has with the Doctor

Your broker is like a doctor who charges his patients on how often they change medicines, and he is paid more not for what will make you better but rather from the stuff that the street is promoting.

- Warren Buffett

Fully invested at all times theory

When the markets are fairly ebullient, investors tend to hold the least objectionable securities rather than the truly significant bargains. But the inability to hold cash and the pressure to be fully invested at all times meant that when the plug was pulled out of the tub, all boats dropped as the water rushed down the drain.

- Seth Klarman

Public vs Private Investments

At equal returns, public investments are generally superior to private investments not only because they are more liquid but also because amidst distress, public markets are more likely than private ones to offer attractive opportunities to average down.

- Seth Klarman

Buy on the way down

You must buy on the way down. There is far more volume on the way down than on the way back up, and far less competition among buyers. It is almost always better to be too early than too late, but you must be prepared for price markdowns on what you buy.

- Seth Klarman

Never risk short-term cash

Do not accept principal risk while investing short-term cash: the greedy effort to earn a few extra basis points of yields inevitably leads to the incurrence of greater risk, which increases the likelihood of losses and severe illiquidity at precisely the moment when cash is needed to cover expenses, to meet commitments, or to make compelling long-term investments.

- Seth Klarman

Risk: definition

Risk is not inherent in an investment; it is always relative to the price paid. Uncertainty is not the same as risk. Indeed, when great uncertainty - such as the fall of 2008 - drives securities prices to especially low leveles, they often become less risky investments.

- Seth Klarman

Bet on the asset and not on its future price

When you get into buying something where you just betting on whether people will pay a little more for it next year but it doesn’t produce anything, there is nothing illegal about it. It is not illegal, it’s not immoral and probably it isn’t financial fattening either but you are betting on investor attitude or speculator attitude rather than betting on the asset itself.

- Warren Buffett

Tax without legislation

Inflation is taxation without legislation.

- Milton Friedman

It isn't probabilities. It is consequences as well.

Investing isn't just about probabilities. It's about consequences, and you've got to be prepared for them.

- John Bogle

Never ending cycles

The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.

- Seth Klarman

'Bet' selectively

To me, it's obvious that the winner has to bet very selectively. It's been obvious to me since very early in life. I don't know why it's not obvious to very many other people.

- Charles Munger

Discontent

Content makes poor men rich; discontent makes rich men poor.

- Benjamin Franklin

Timidity would lead to miss the boat

Timidity prompted by past failures causes investors to miss the most important bull markets.

- Walter Schloss

The crowd

The stock market is a no-called-strike game. You don't have to swing at everything--you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!

- Warren Buffett

Lost money

More money has been lost reaching for yield than at the point of a gun.

- Ray DeVoe

House: Dream vs Affordable

A house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender – often protected by a government guarantee – facilitates his fantasy. Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.

- Warren Buffett

Real Estate: Investment?

All things considered, the third best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks.

- Warren Buffett

Intrinsic value

The challenge, of course, is the calculation of intrinsic value. Present that task to Charlie and me separately, and you will get two different answers. Precision just isn't possible.

- Warren Buffett

The need for business channels

Nearly everyone interested in common stocks wants to be told by someone else what he thinks the market is going to do. The demand being there, it must be supplied.

- Benjamin Graham

The cycle repeats

It is natural to assume that industries which have fared worse than the average are "unfavorably situated" and therefore to be avoided. The converse would be assumed, of course, for those with superior records. But this conclusion may often prove quite erroneous. Abnormally good or abnormally bad conditions do not last forever. This is true not only of general business but of particular industries as well. Corrective forces are often set in motion which tend to restore profits where they have disappeared, or to reduce them where they are excessive in relation to capital.

- Warren Buffett

Stick with predictable

Stick with businesses whose profit picture for decades to come seems reasonably predictable.

- Warren Buffett

What is important

It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.

- George Soros

It is not always easy to do what's not popular

It's not always easy to do what's not popular, but that's where you make your money. Buy stocks that look bad to less careful investors and hang on until their real value is recognized.

- John Neff

Don't be afraid to be a loner

Don't be afraid to be a loner but be sure that you are correct in your judgment. You can't be 100% certain but try to look for the weaknesses in your thinking.

- Walter Schloss

Good is always not good

A good business is not always a good purchase - although it's a good place to look for one.

- Warren Buffett

Keep playing

The important thing is to keep playing, to play against weak opponents and to play for big stakes.

- Warren Buffett

Work like a dog

If inflation continues to soar, you're going to have to work like a dog just to live like one.

- George Gobel

Write down your goals

If people commit, orally or in writing, to an idea or goal, they are more likely to honor that commitment because of establishing that idea or goal as being congruent with their self image. Even if the original incentive or motivation is removed after they have already agreed, they will continue to honor the agreement.

- Robert Cialdini

Simple!

Figure out what something is worth and pay a lot less.

- Joel Greenblatt

Abandon at the wrong time

Investors repeatedly jump ship on a good strategy just because it hasn't worked so well lately, and, almost invariably, abandon it at precisely the wrong time.

- David Dreman

Time to sell

Successful stocks don't tell you when to sell. When you feel like bragging, it's probably time to sell.

- John Neff

Economic forecasts

I don't read economic forecasts. I don't read the funny papers.

- Warren Buffett

Long term asset?

Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.

- Warren Buffett (at the height of 2008 crisis)

Market behaviour

Be aware that the market does not turn when market participants begin to see light at the end of the tunnel. It turns when all looks black, but just a subtle shade less black than the day before.

- Jeremy Grantham

It doesn't change

Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.

- Warren Buffett

Bubbles give back

Bubbles have always given back everything. There have been no exceptions, none.

- Jeremy Grantham

Required: Stomach

Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether.

- Peter Lynch