A Quote by Bernard Madoff
You had a lot of novice investors who got into the market looking for easy money, without any regard to the fundamentals. These stocks were running on fumes.
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The word passive does a disservice to investors considering their options. Indexing provides an effective means of owning the market and allows investors to participate in the returns of a basket of stocks. The basket of stocks changes over time as stocks are added or removed based on its rules.
Fundamentally cheap stocks are often held in low regard by market participants. Something may be tainting their perception in investors' minds.
Near the top of the market, investors are extraordinarily optimistic because they've seen mostly higher prices for a year or two. The sell-offs witnessed during that span were usually brief. Even when they were severe, the market bounced back quickly and always rose to loftier levels. At the top, optimism is king, speculation is running wild, stocks carry high price/earnings ratios, and liquidity has evaporated. A small rise in interest rates can easily be the catalyst for triggering a bear market at that point.
If you hope to have more money tomorrow than you have today, you've got to put a chunk of your assets into stocks. Sooner or later, a portfolio of stocks or stock mutual funds will turn out to be a lot more valuable than a portfolio of bonds or CDs or money-market funds.
To me 'The Big Easy' is shorthand for owning big stocks that are easy for wary investors to buy into. These stocks tend to outperform during the back half of bull markets.
Choosing individual stocks without any idea of what you're looking for is like running through a dynamite factory with a burning match. You may live, but you're still an idiot.
Jazz musicians don't make any money, so I might as well make some on the market. I pick my own stocks - Microsoft, Dell - the tech stocks, the breadwinners.
Many novice real estate investors soon quit the profession and invest in a well-diversified portfolio of bonds. That's because, when you invest in real estate, you often see a side of humanity that stocks, bonds, mutual funds, and saving money shelter you from.
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.
Under pressure from a growing movement of people who want their money out of fossil fuels, universities, pension investors and foundations are looking to exclude coal, oil and gas stocks from their portfolios.
Successful investors like stocks better when they’re going down. When you go to a department store or a supermarket, you like to buy merchandise on sale, but it doesn’t work that way in the stock market. In the stock market, people panic when stocks are going down, so they like them less when they should like them more. When prices go down, you shouldn’t panic, but it’s hard to control your emotions when you’re overextended, when you see your net worth drop in half and you worry that you won’t have enough money to pay for your kids’ college.
My dad had a dream of living in an Irish castle, even when we were in Argentina, and in 1960 he found a place without any heat or running water. We had no money, so it was tough.
In my opinion, the greatest misconception about the market is the idea that if you buy and hold stocks for long periods of time, you'll always make money. Let me give you some specific examples. Anyone who bought the stock market at any time between the 1896 low and the 1932 low would have lost money. In other words, there's a 36 year period in which a buy-and-hold strategy would have lost money. As a more modern example, anyone who bought the market at any time between the 1962 low and the 1974 low would have lost money.
Stocks are at an all-time high today. I don't have any money in the stock market. I don't have the stomach for the ups and downs. So about 20 years ago I put all of my money and liquid assets into videotape rewind machines.
Fundamentals, fundamentals, fundamentals. You’ve got to get the fundamentals down because otherwise the fancy stuff isn’t going to work.
In the stock market (as in much of life), the beginning of wisdom is admitting your ignorance. One of the many things you cannot know about stocks is exactly when they will up or go down. Over the long term, stocks generally rise at a nice pace. History shows they double in value every seven years or so. But in the short term, stocks are just plain wild. Over periods of days, weeks and months, no one has any idea what they will do. Still, nearly all investors think they are smart enough to divine such short-term movements. This hubris frequently gets them into trouble.
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