A Random Walk Down Wall Street: The Time-Tested Strategy For Successful Investing Quotes
"What is a cynic? A man who knows the price of everything, and the value of nothing." - Oscar Wilde
"The genius of financial markets is that when there is a real demand for a method to enhance speculative opportunities, the market will surely provide it."
"Investment advisory services, earnings forecasts, and chart patterns are useless."
"It is not hard to make money in the market. What is hard to avoid is the alluring temptation to throw your money away on short, get-rich-quick speculative binges."
"In the end, you had to talk about the stock market, and that was when the conversation became serious."
"By an easy bit of legerdemain, they could put together a group of companies with no basic potential at all and produce steadily rising per-share earnings."
"The consistent losers in the market are those who are unable to resist being swept up in some kind of tulip-bulb craze."
"Every speculative craze meets a tragic end when people come to the realization that they have been chasing illusions."
"Synergism is the quality of having 2 plus 2 equal 5."
"Investors should be very wary of purchasing today’s hot 'new issue.' Most initial public offerings underperform the stock market as a whole."
"The key to investing is not how much an industry will affect society or even how much it will grow, but rather its ability to make and sustain profits."
"The stock market at times conforms well to the castle-in-the-air theory. For this reason, the game of investing can be extremely dangerous."
"An investor who simply buys and holds a broad-based portfolio of stocks can make reasonably generous long-run returns."
"The best and the brightest on Wall Street cannot consistently distinguish correct valuations from incorrect ones."
"The consistent winners are those who understand that investing is not a game of beating others at their game, but rather a game of controlling yourself at your own game."
"The lesson of market history is clear: Styles and fashions in investors’ evaluations of securities can and often do play a critical role in the pricing of securities."
"Markets are not always or even usually correct. But no one person or institution consistently knows more than the market."
"What is hard to avoid is the alluring temptation to throw your money away on short, get-rich-quick speculative binges."
"Each time the resistance area is reached and the stock turns down, the resistance level becomes harder to cross."
"No buy or sell signal can be worthwhile if everyone tries to act on it simultaneously."
"If some people know that the price will go to 40 tomorrow, it will go to 40 today."
"The fundamentalist’s primary concern is with what a stock is really worth."
"Sometimes he reminds us a bit of the erudite major general in ‘The Pirates of Penzance,’ with his ‘many cheerful facts about the square of the hypotenuse.’"
"A rational investor should be willing to pay a higher price for a share the larger the growth rate of dividends and earnings."
"The stock market does not exist as a world unto itself."
"Forecasts are difficult to make—particularly those about the future."
"It is intrinsically impossible to calculate the intrinsic value of a share."
"Investors are emotional human beings—driven by greed, gambling instincts, hope, and fear in their stock-market decisions."
"The history of stock price movements contains no useful information that will enable an investor consistently to outperform a buy-and-hold strategy."
"To predict future directions, analysts generally start by looking at past wanderings."
"Many of the best-respected security analysts do not remain long in their jobs."
"The fullest cash registers for the major brokers are to be found in the investment banking division."
"Analyst recommendations are tainted by profitable investment banking relationships of the brokerage firms."
"The analysts’ strong buy recommendations underperformed the market as a whole by 3 percent per month."
"Stock recommendations of firms without investment banking relationships did much better than those of brokerage firms involved in profitable investment banking relationships."
"Investors lost over 50 percent when they followed the advice of an analyst employed by a Wall Street firm that managed the initial public offering of the recommended stock."
"Research analysts were basically paid to tout the stocks of the firm’s underwriting clients."
"The situation today is somewhat improved, but the bias to 'buy' advice remains."
"Conflicts of interest and analysts’ lack of independent questioning did not disappear after Sarbanes-Oxley."
"The pervasiveness of the error indicates that conflicts of interest have not been eliminated."
"The ability of professional fund managers to make correct decisions has been egregiously poor."
"Investors have done no better with the average mutual fund than they could have done by purchasing and holding an unmanaged broad stock index."
"Simply buying and holding the stocks in a broad market index is a strategy that is very hard for the professional portfolio manager to beat."
"A combination of luck and sloth beats brains."
"Past fund performance cannot predict future results."
"The great publicity given occasional success reminds me of the story of the doctor who claimed he had developed a cure for cancer in chickens."
"It is highly unlikely you can beat the market."
"The evidence in favor of index investing grows stronger over time."
"To be sure, some funds have recorded above-average returns for two decades in a row. But they are few and far between."
"The investment performance of professionally managed portfolios as a group has been worse than that of a broad-based index."
"All that is known concerning the expected growth of the company’s earnings and dividends is already reflected in the price of the company’s stock."
"To the passive investor, chance alone would be as good a method of selection as anything else."
"Even the legendary Benjamin Graham reluctantly concluded that fundamental security analysis could no longer be counted on to produce superior investment returns."
"Each year a statistics professor begins her class by asking each student to write down the sequential outcome of a series of one hundred imaginary coin tosses."
"Psychologists have long identified a tendency for individuals to be fooled by the illusion that they have some control over situations where, in fact, none exists."
"It is this illusion of control that can lead investors to see trends that do not exist or to believe that they can spot a stock-price pattern that will predict future prices."
"Biases in judgments are compounded by the tendency of people mistakenly to use 'similarity' or 'representativeness' as a proxy for sound probabilistic thinking."
"In general, research shows that groups tend to make better decisions than individuals."
"The wisdom of crowd behavior is perhaps best illustrated in the economy as a whole by the free-market price system."
"One widely recognized phenomenon in the study of crowd behavior is the existence of 'group think.'"
"In another study, social psychologists put a single person on a street corner and asked him to look up at an empty sky for sixty seconds."
"Invariably, the hottest stocks or funds in one period are the worst performers in the next."
"Kahneman and Tversky concluded that losses were 2½ times as undesirable as equivalent gains were desirable."
"The harsh truth is that the most important driver in the growth of your assets is how much you save, and saving requires discipline."
"The secret of getting rich slowly (but surely) is the miracle of compound interest, described by Albert Einstein as the 'greatest mathematical discovery of all time.'"
"If you want a get-rich-quick investment strategy, this is not the book for you."
"Remember Murphy’s Law: What can go wrong will go wrong."
"The only reliable route to a comfortable retirement is to build up a nest egg slowly and steadily."
"Every investor must decide the trade-off he or she is willing to make between eating well and sleeping well."
"No one can say for sure what the returns on common stocks will be."
"Finding your sleeping point is one of the most important investment steps you must take."
"In investing money, the amount of interest you want should depend on whether you want to eat well or sleep well."
"If forced to choose between the stock market and the economics profession, I’d put my money on the stock market every time."
"In the mid-1960s, inflation was so modest as to be almost unnoticeable, and investors were convinced that economists had found the cure for serious recessions."
"The market provides higher risk premiums through a drop in prices relative to earnings and dividends; this produces larger returns in the future."
"The initial yield of 13 percent in the bond market guaranteed that long-term holders would achieve double-digit returns."
"The Age of Exuberance was followed by one of the worst decades for the stock market ever recorded."
"An interesting way of presenting the results is shown in the diagram on page 342."
"Depending on the forecast horizon involved, as much as 40 percent of the variability of future market returns can be predicted on the basis of the initial P/E multiple."
"There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can."
"The most important investment decision you will probably ever make concerns the balancing of asset categories."
"Annuities are contracts made with an insurance company where the investor pays a sum of money to guarantee a series of periodic payments that will last as long as the annuitant lives."
"The key to success is being where other investors will be, several months before they get there."
"Frequent switching accomplishes nothing but subsidizing your broker and increasing your tax burden."
"The clear implication of these tests... is that you cannot depend on an excellent record continuing persistently in the future."
"If you follow the recommendations in this book carefully, you really don’t need an investment adviser."
"The best-performing actively managed funds have moderate expense ratios and low turnover."
"By simplifying the channel through which investment management is offered, the automated investment services are able to drastically reduce fees."
"Investing is a bit like lovemaking. Ultimately, it is really an art requiring a certain talent and the presence of a mysterious force called luck."
"Even if you are not so lucky, my rules will help you limit your risks and avoid much of the pain that is sometimes involved in the playing."
"The paradox of index investing is that the stock market needs some active traders who analyze and act on new information so that stocks are efficiently priced."
"In a free-market system we can expect that advantageous arbitrage opportunities are exploited by profit-seeking market participants no matter how many investors index."