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