Words of Wisdom

The first emotion that serves to undermine investors�� efforts is the desire for money, especially as it morphs into greed.

To distinguish yourself from the others, you need to be on the right side of those mistakes.

Those who believe that the pendulum will move in one direction forever �X or reside at an extreme forever �X eventually will lose huge sums. Those who understand the pendulum��s behavior can benefit enormously.

The air goes out of the balloon much faster than it went in.

What the wise man does in the beginning, the fool does in the end.

Major bottoms occur when everyone forgets that the tide also comes in. Those are the times we live for.

Ignoring cycles and extrapolating trends is one of the most dangerous things an investor can do.

There is a right time to argue that things will be better, and that��s when the market is on its backside and everyone else is selling things at giveaway prices.

It��s dangerous when the market��s at record levels to reach for a positive rationalization that has never held true in the past.

The worst loans are made at the best of times. ~ The Economist

Trends create the reasons for their own reversal. Thus, I like to say success carries within itself the seeds of failure, and failure the seeds of success.

We never know what lies ahead, but we can prepare for the possibilities and reduce their sting.

Over a full career, most investors�� results will be determined more by how many losers they have, and how bad they are, than by the greatness of their winners. Skillful risk control is the mark of the superior investor.

You��ve got to go out on a limb sometimes because that��s where the fruit is. ~ Will Rogers

We welcome it at the right time, in the right instances, and at the right price. We could easily avoid all risk, and so could you. But we��d be assured of avoiding returns above the risk-free rate as well.

Risk control is the best route to loss avoidance. Risk avoidance, on the other hand, is likely to lead to return avoidance as well.

Extreme volatility and loss surface only infrequently. And as time passes without that happening, it appears more and more likely that it��ll never happen.

Outstanding investors, are distinguished at least as much for their ability to control risk as they are for gen-erating return.

High quality assets can be risky, and low quality assets can be safe. It��s just a matter of the price paid for them.

The market is not a static arena in which investors operate. It is responsive, shaped by investors�� own behavior.

Risk arises as investor behavior alters the market. Investors bid up assets, accelerating into the present appreciation that oth-erwise would have occurred in the future, and thus lowering prospective returns.

It��s only when the tide goes out that you find out who��s been swimming naked. ~

It all happened because investors believed too much, worried too little and thus took too much risk. In short, they believed they were living in a low-risk world.

The risk-is-gone myth is one of the most dangerous sources of risk, and a major contributor to any bubble.

Risk cannot be eliminated; it just gets transferred and spread.

The most valuable lessons are learned in tough times.

Good times teach only bad lessons: that investing is easy, that you know its secrets, and that you needn��t worry about risk.

Many futures are possible, but only one future occurs.

The fact that something happened doesn��t mean it was bound to happen, and the fact that something didn��t happen doesn��t mean it was unlikely.

A fundamentally weak asset �X a less-than-stellar company��s stock, a speculative-grade bond or a building in the wrong part of town �X can make for a very successful investment if bought at a low-enough price.