Quotes

“The only valid purpose of a firm is to create a customer.” – Peter Drucker

“It is a capital mistake to theorize before one has data.” – Sherlock Holmes

“While we were writing, we had to combat a widespread conviction that financial debacle was to be the permanent order” – Graham and Dodd, in 1934, on Security Analysis.

“If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes.” – Peter Lynch

“We see change as the enemy of investments … so we look for the absence of change. We don’t like to lose money. Capitalism is pretty brutal. We look for mundane products that everyone needs.” —Warren Buffett (On its face, this seems rather simple. I remember meeting a hedge fund PM who said that their team’s key focus to look for changes and to profit from change, which implies that they can see the change before other hoi polloi investors. But I have to agree that the hedge fund manager’s comment does sound comforting and makes his team sound like a genius. This where it can be useful to remember Einstein’s levels of intellect – Smart, Intelligent, Brilliant, Genius, Simple).

“…speculative techniques for conservative ends” – A. W. Jones on short-selling.

“The philosophy of Charles Dow always gave first consideration to values, then to economic conditions and third to the action of both the Industrial and Rail Averages. When the low point of a bear market is reached, values will be the first indication of a change in trend. ” – George Schaefer

“… since 1981, every cyclical peak and every cyclical low in interest rates was lower than the one before until short-term interest rates hit 0%… so central banks printed money and bought bonds…” – Ray Dalio

“Monetary policy works with a lag of 3 to 4 quarters. So in deciding policy today, we need to predict how inflation will look approximately a year ahead.” – Raghuram Rajan

“I trade my positions, I don’t trade my equity.” – Peter Brandt (lot of wisdom in that quote–it is implying that one should focus on the fundamentals of the trade/position and not how much it has cost/made for the trader)

“We missed the financial crisis because we didn’t realize it was a asset value based crisis and not a liquidity crisis. So we got involved when the Fed provided liquidity and market went up slightly (before crashing down). The time to be involved was after TARP, when asset values were stabilized, addressing the asset-value crisis.” – Bill Miller

“When value departs from reality, that is not the end of bull market, that is the beginning of the bull market” – anonymous

“Often you make more money when things go from horrible to bad vs. when they go from good to great.” – Jason Trennert