Remember that history always repeats itself. Every great bubble in history has broken. There are no exceptions.
You don't get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then you are not going to be rewarded for taking a risk; you are going to be punished for it.
Volatility is a symptom that people have no idea of the underlying value-that they have stopped playing the asset game. They're not buying because it's a company with certain attributes. They're buying because the price is rising. People are playing games not related to any concept at all of what the long-term value of the enterprise is. And they know it.
The individual is far better-positioned to wait patiently for the right pitch while paying no regard to what others are doing, which is almost impossible for professionals.
I believe the only things that really matter in investing are the bubbles and the busts
Market timing, by the way, is a tag some buy-and-hold investors use to put down anything that involves using your brain. These are the same people who like to watch the locomotive coming and get run down in the name of discipline.
Investment bubbles and high animal spirits do not materialize out of thin air. They need extremely favorable economic fundamentals together with free and easy, cheap credit, and they need it for at least two or three years. Importantly, they also need serial pleasant surprises in such critical variables as global GNP growth.
Although value is a weak force in any single year, it becomes a monster over several years. Like gravity, it slowly wears down the opposition.
The investment business has taught me – increasingly as the years have passed – that people, especially investors (and, I believe, Americans), prefer good news and wishful thinking to bad news; and that there are always vested interests to offer facile, optimistic alternatives to the bad news.
I would say that financial markets are very inefficient, and capable of extremes of being completely dysfunctional.
If stocks are attractive and you don't buy, you don't just look like an idiot, you are an idiot.
Ridiculous as our market volatility might seem to an intelligent Martian, it is our reality and everyone loves to trot out the 'quote' attributed to Keynes (but never documented): 'The market can stay irrational longer than the investor can stay solvent.' For us agents, he might better have said 'The market can stay irrational longer than the client can stay patient.'
Everyone asks about gold. This is the irony: just as Jim Grant tells us (correctly) that we all have faith-based paper currencies backed by nothing, it is equally fair to say that gold is a faith-based metal. It pays no dividend, cannot be eaten, and is mostly used for nothing more useful than jewelry. I would say that anything of which 75% sits idly and expensively in bank vaults is, as a measure of value, only one step up from the Polynesian islands that attached value to certain well-known large rocks that were traded.
Volatility is a symptom that people have no idea of the underlying value.
I hate gold. It does not pay a dividend, it has no value, and you can't work out what it should or shouldn't be worth," he said. "It is the last refuge of the desperate.
There is no single theory that is used in economics that considers the finite nature of resources. It's shocking.
I find the parallels between how some investors refuse to recognise the trends and our reaction to some of our environmental challenges very powerful. There is an unwillingness to process unpleasant data.
Capitalism believes that its remit is exclusively to make maximum short-term profits.
Americans are just about the worst at dealing with long-term problems, down there with Uzbekistan, but they respond to a market signal better than almost anyone. They roll the dice bigger and quicker than most.
You don't actually find a strong correlation between- top-line GDP growth and making money in the market. It- it seems like you should. The fastest-growing countries should give you the highest return. They simply don't. But, there's only four of us- that- that believe that story. Everyone else in the world believes that if you grow fast like China, you'll outperform in the stock market.
Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.
It is better to be lucky than good, but of course appropriate to aspire to both.
At least us old men remember what a real bear market is like, and the young men haven't got a clue.
Equities are boring; bonds are disgusting.
...how little our side of the industry did to move its business to the more ethical firms and to make a fuss about conflicted or unethical behavior. Had a number of us moved our business, we might have slowed or even stopped the 30-year slide in conflicted, unethical behavior that we have experienced. I, for one, regret the modest nature of our moves. We all could have done more. We have tolerated a pretty nasty decline in standards. Shame on us.
