The years ahead will occasionally deliver major market declines – even panics – that will affect virtually all stocks. No one can tell you when these traumas will occur.
From green to red
No one can tell you when these will happen. The light can at any time go from green to red without pausing at yellow.
Efficient
I’d be a bum on the street with a tin cup if the markets were always efficient.
Snoring
We continue to make more money when snoring than when active.
Technical analysis
I realized that technical analysis didn’t work when I turned the chart upside down and didn’t get a different answer.
Buy into a company
Buy into a company because you want to own it, not because you want the stock to go up.
Do something
Those people who can sit quietly for decades when they own a farm or apartment house too often become frantic when they are exposed to a stream of stock quotations and accompanying commentators delivering an implied message of “Don’t just sit there – do something.” For these investors, liquidity is transformed from the unqualified benefit it should be to a curse.
Down days
The lower prices go, as long as you know the company you’re investing in, the better it is for a buyer. Down days always make me feel good.
A bull market is like sex
The “when” is also important. The main danger is that the timid or beginning investor will enter the market at a time of extreme exuberance and then become disillusioned when paper losses occur. (remember the late Barton Biggs’s observation: “A bull market is like sex. It feels best just before it ends.”) The antidote to that kind of mistiming is for an investor to accumulate shares over a long period and never sell when the news is bad and stocks are well off their highs. Following those rules, the “know-nothing” investor who both diversifies and keeps costs minimal is virtually certain to get satisfactory results.
The worst mistake
I think the worst mistake you can make in stocks is to buy or sell based on current headlines.