Top 106 Quotes & Sayings by Barry Ritholtz - Page 2

Yearly data put the rest of the noise into perspective. Most of the weekly or monthly random up-and-down movements get smoothed out. Ultimately, this is where long-term investors should be focused.

Narrative drives most of economics. Everything seems to be part of a story, and how that story is told often leads to critical error.

Truth be told, most financial television bores me. Two or more people discussing the latest economic trends or hot stocks is not especially entertaining.

Markets are frequently ahead of, and often out of sync with, the economy.

If your investing approach requires that you become Nostradamus to succeed, then you are destined to fail.

What you pay for an investment is the single biggest determinant for how successful that investment will be. When equity prices are high, your returns will be lower. When they are cheap, your returns will be higher.

One thing I detest most about the financial press is the lack of accountability. All sorts of nonsense is said without penalty.

Amongst the financial Twitterati, the term 'muppets' has come to describe any client used and abused by some financial predator. I've adopted the term to describe portfolios that have been assembled for purposes other than serving the clients' best interests.

Here is a dirty little secret: Stock-picking is wildly overrated. Sure, it makes for great cocktail party chatter, and what is more fun than delving into a company's new products? But the truth is that individual stocks are riskier than broad indices.

'Returnless risk' is not how you prepare for a decent retirement.

In the investment business, you must expect to be wrong.

Even when you are right, there are costs and taxes associated with being tactical. When you are wrong, there are opportunity costs.

You have a natural tendency to want an emotionally satisfying tale - and to make investments based on that - despite times when the actual data may be telling you something different.

Whenever you try to pick market tops and bottoms, you are making a prediction. Guessing what stock is going to outperform the market is forecasting, as is selling a stock for no apparent reason. Indeed, nearly all capital decisions made by most people are unconscious predictions.

As investors, we want to believe we are smart, insightful and uniquely talented - even though we often fail to do the heavy lifting, put in the long hours, and make the uncomfortable but necessary decisions to achieve success.

Whenever you hear a discussion about the short-term swings in any given stock's price, your immediate thought should be whether it matters to why you are investing.

The simple reality of life is that everyone is wrong on a regular basis. By confronting these inevitable errors, you allow yourself to make corrections before it is too late.

The good news is that economists are intelligent, engaging and often charming folks. The bad news is their work is often of little use to investors.

Many hedge fund managers have become billionaires; perhaps this - plus their reputations as the smartest guys in the room - is why they have captured the investing public's imagination.

Hedge funds are not especially liquid. Many are 'gated' - meaning there are only small windows when you can withdraw your money. They typically have a high minimum investment and often require investors keep their money in the fund for at least one year.

If you are not making any mistakes, you are being excessively risk-averse. Investing involves risk, and that means you will occasionally be wrong. And although it is okay to be wrong, it is not okay to stay wrong.

With Twitter, you can build your own virtual trading floor and research department, populated by the smartest people on earth. Almost any subject or sector has you can think of, you can find a few people with an expertise in that area.

Twitter has become a group conversation of that type that used to take place on trading floors.

Getting more and more of our news from the social network is having significant repercussions for markets - and your money.

Investors tend to discover 'hot' mutual fund managers just after a successful run and just before the inescapable force of mean reversion is about to kick in.

In social media, people cannot build big followings organically unless what they are putting out to the world has value.

If you have read me for any length of time, you know I am less than enthralled with much of what passes for financial news.

Asset managers have different approaches, and I don't wish to suggest there is only one way to run money. There are many ways one can attempt to reduce risk, improve performance, lower drawdowns and reduce volatility.

Despite all the media coverage, glitz and glam of hedge funds, they have not done well for their investors. They have high - some say excessively high - fees; their short- and long-term performance has been poor.

Footage of people camped out at Best Buy or elsewhere is not remotely a celebration. Rather, it's a reminder of just how economically distressed a large percentage of our populace is.

If you think too-big-to-fail banks are not worthy of investment because of their impossible-to-read balance sheets, well then, don't buy them.

Most of the time, economic data is fairly benign. I don't wish to imply it is meaningless, but it is not a driver of stock markets. Indeed, the correlation between economic noise and how equity markets perform has been wildly overemphasized.

We must recognize our own behavioral errors. To be blunt, you are not likely to become a cognitive Zen master anytime soon. But a little enlightenment could keep you from making some common investing errors.

Owning a variety of asset classes means that some part of your portfolio will be doing well when the cyclical turmoil arises. A broadly diversified portfolio includes large capitalization stocks, small cap, emerging markets, fixed income, real estate and commodities.

If I am going to trash others for their dumb predictions, I must at least hold myself to the same sort of accountability.

Good investors must learn to contextualize the daily background noise.

Unlike cheap stocks, inexpensive asset classes have a lower chance of big drawdowns (broad asset classes don't go to zero) and a higher probability of average or better returns.

'Excessive regulation in the banking reform bill will destroy a substantial part of our bond-distributing machinery. Can anyone expect that a step of this kind will improve the quality of our long-term investments?'

Rather than engage in the sort of selective retention that so many investors tend to do and pretend mistakes never happened, I prefer to own them. This allows me to learn from them and, with any luck, avoid making the same errors again.

I find it funny that people who didn't think there was any inflation in the pipeline are now talking about stagflation. This is nothing like the 1970's, which was a pretty dismal period and not just because of polyester and disco.

The market is going to love it. The market always seems to applaud major mergers, even though the vast majority of them don't work out and don't increase shareholder value.

Keynes vs Hayek? Friedman vs Krugman? Those are the wrong intellectual debates. Its you vs. Tony Hayward, BP CEO, You vs. Lloyd Blankfein, Goldman Sachs CEO. And you are losing...

You can blow on the dice all you want, but whether they come up seven is still a function of random luck.

This ugly duckling investment will likely need time - quarters, or even years - to blossom into a beautiful swan.

For those of you who may be unaware, [Michael] Boskin is the economist/weasel/fraud who helped to officially distort the CPI, making it more or less worthless as a measure of inflation. The Boskin Commission... was an act of cowardice. Rather than man up and say fix this, its broken, we can't afford it.

Returnless risk is not how you prepare for a decent retirement.