“The dead outnumber the living fourteen to one, and we ignore the accumulated experience of such a huge majority of mankind at our peril.” —Niall Ferguson, Scottish historian

Investing can make a person feel brilliant.

Investing can make a person feel foolish.

Tis the fickle, random nature of financial markets.

I set about to study world class investors of past and present to find commonalities that make them revered.

I’m less interested in their 100x stock picks and more interested in their process, beliefs, and principles.

There is a sense among novice investors that investment strategy should ebb and flow with market conditions. We should change our approach based on what’s happening today.

I found these savvy investors did the opposite. Staying true to their framework regardless of what was happening around them. That doesn’t mean they didn’t adapt, quite the contrary, but it was done while staying true to their core belief system.

Here is a collection of quotes that reflect my favorite investors approaches to navigating financial markets… (note: some of the quotes are not directly attributed to an investor but are part of the investors principles).

Avoiding Stupidity

“The border between brilliance and stupidity is hard to discern.” – Guy Spier, author and investor

“Avoiding stupidity is better than seeking brilliance.” – Charlie Munger, Berkshire Hathaway

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” – Charlie Munger, Berkshire Hathaway

“In a world where nothing is stable or dependable and almost anything can happen, the first rule of the road is to be honest with ourselves about our limitations and vulnerabilities.” – William P. Green, author of Richer, Wiser, Happier

Living to Fight Another Day

“How can you think yourself a great person when the first accident that comes along can wipe you out completely?” – Euripides, classical Greek actor

“Our goal is not to try to become rich quickly. It’s resilient wealth creation. For almost all of us, this is a much wiser goal than trying to trounce the market.” – Matthew McLennan, First Eagle Investments

“It is far easier to figure out if something is fragile than to predict the occurrence of an event that may harm it.” – Nassim Taleb, author of The Black Swan

“Instead of fixating on short-term gains or beating benchmarks, we should place greater emphasis on becoming shock resistant, avoiding ruin, and staying in the game.” – William P. Green, author of Richer, Wiser, Happier

Human Fear & Greed

“The economy expands and contracts; consumer spending waxes and wanes; corporate profitability rises and falls; the availability of credit eases and tightens; asset valuations soar and sink.” – William P. Green, author of Richer, Wiser, Happier

“Humans get carried away, so the trend always overshoots in one direction or the other.” Howard Marks, Oaktree Capital

“When things or people are successful, it usually brings in hubris, overexpansion, a belief that we can’t miss, which is very dangerous.” – Howard Marks, Oaktree Capital

“Times of laxness have always been followed eventually by corrections in which penalties are imposed.” – Howard Marks, Oaktree Capital

Forecasting is Completely Useless

“We have two classes of forecasters: Those who don’t know—and those who don’t know they don’t know.” – John Kenneth Galbraith, famous economist

“The future is influenced by an almost infinite number of factors, and so much randomness is involved that it’s impossible to predict future events with any consistency.” – Howard Marks, Oaktree Capital

“The future may be unpredictable, but this recurring process of boom and bust is remarkably predictable.” – Howard Marks, Oaktree Capital

I created a summary of these principles, which I review with regularity. Many of these are woven into the Pure Portfolios’ investment process…

• Be anti-fragile. Staying in the game beats swinging for the fences.
• Forecasting is a fool’s errand. Preparation beats prediction.
• Randomness and change are inevitable. Be adaptable.
• Markets move in cycles. Boom turns to bust. Bust turns to boom. It’s never as good or as bad as it seems.
• Avoid the extremes of overconfidence and pessimism.

While our focus is on investing, many of these principles are evergreen and apply to other aspects of life.

What are some of your favorite life or investing quotes?

Shoot us a note at insight@pureportfolios.com