1. Believe in history: “history repeats and repeats, and forget it at your peril. All bubbles break, all investment frenzies pass away.”
2. Neither a lender nor a borrower be: “Unleveraged portfolios cannot be stopped out, leveraged portfolios can. Leverage reduces the investor’s critical asset: patience.”
3. Don’t put all your treasure in one boat: “This is about as obvious as any investment advice could be … Several different investments, the more the merrier, will give your portfolio resilience, the ability to withstand shocks.”
4. Be patient and focus on the long term: Wait for the good cards. If you’ve waited and waited some more until finally a very cheap market appears, this will be your margin of safety.”
5. Recognize your advantages over the professionals: “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.”
6. Try to contain natural optimism: “optimism comes with a downside, especially for investors: optimists don’t like to hear bad news.”
7. But on rare occasions, try hard to be brave: “You can make bigger bets than professionals can when extreme opportunities present themselves because, for them, the biggest risk that comes from temporary setbacks – extreme loss of clients and business – does not exist for you.”
8. Resist the crowd, cherish numbers only: “this is the hardest advice to take: the enthusiasm of a crowd is hard to resist. The best way to resist is to do your own simple measurements of value, or find a reliable source (and check their calculations from time to time) … and try to ignore everything else.”
9. In the end it’s quite simple, really: “GMO predicts asset class returns in a simple and apparently robust way: we assume profit margins and price earnings ratios will move back to long-term average in 7 years from whatever level they are today. We have done this since 1994 and have completed 40 quarterly forecasts … Well, we have won all 40.”
10. This above all, to thine own self be true: “To be at all effective investing as an individual, it is utterly imperative that you know your limitations as well as your strengths and weaknesses … you must know your pain and patience thresholds accurately and not play over your head. If you cannot resist temptation, you absolutely must not manage your own money.”
2. Neither a lender nor a borrower be: “Unleveraged portfolios cannot be stopped out, leveraged portfolios can. Leverage reduces the investor’s critical asset: patience.”
3. Don’t put all your treasure in one boat: “This is about as obvious as any investment advice could be … Several different investments, the more the merrier, will give your portfolio resilience, the ability to withstand shocks.”
4. Be patient and focus on the long term: Wait for the good cards. If you’ve waited and waited some more until finally a very cheap market appears, this will be your margin of safety.”
5. Recognize your advantages over the professionals: “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.”
6. Try to contain natural optimism: “optimism comes with a downside, especially for investors: optimists don’t like to hear bad news.”
7. But on rare occasions, try hard to be brave: “You can make bigger bets than professionals can when extreme opportunities present themselves because, for them, the biggest risk that comes from temporary setbacks – extreme loss of clients and business – does not exist for you.”
8. Resist the crowd, cherish numbers only: “this is the hardest advice to take: the enthusiasm of a crowd is hard to resist. The best way to resist is to do your own simple measurements of value, or find a reliable source (and check their calculations from time to time) … and try to ignore everything else.”
9. In the end it’s quite simple, really: “GMO predicts asset class returns in a simple and apparently robust way: we assume profit margins and price earnings ratios will move back to long-term average in 7 years from whatever level they are today. We have done this since 1994 and have completed 40 quarterly forecasts … Well, we have won all 40.”
10. This above all, to thine own self be true: “To be at all effective investing as an individual, it is utterly imperative that you know your limitations as well as your strengths and weaknesses … you must know your pain and patience thresholds accurately and not play over your head. If you cannot resist temptation, you absolutely must not manage your own money.”
No comments:
Post a Comment