Two of my favorite investment quotes are as follows:
1) John Maynard Keynes: "The market can stay irrational longer than you can stay solvent."
2) Baron Rothschild: "The time to buy is when there is blood in the streets."
Keynes, of course, is the most well-known economist of the 20th century. In "The General Theory of Employment, Interest, and Money" published in 1936, he proposed a new theory on how the macroeconomy worked, which provided a policy to lead the nation out of the Great Depression. What many don't know is that Keynes was a remarkable investor (the Warren Buffet of his day) and also a speculator who made and lost enormous fortunes. To me, the quote applies very well to today's bond yields. Many investors are scratching their heads wondering how yields can be so low given the humongous supply coming over the next few years. Furthermore, the low yields can be said to be a bubble, which is another way to say that the market is severely irrational.
Baron Rothschild is the figurehead of the contrarian school of investing. One can imagine that, if he was around today, he would view the present negative environment as a potential great opportunity. He made a killing by buying British bonds after Napoleon's defeat at Waterloo. It is ironic that he bought them because he had inside information - he knew ahead of everyone else that Wellington had won the battle.
What is your favorite investment quote?
A couple of Buffett quotes for you:
ReplyDeleteOnly when the tide goes out do you discover who's been swimming naked.
We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'
Over the years, Charlie and I have observed many accounting-based frauds of staggering size. Few of the perpetrators have been punished; many have not even been censured. It has been far safer to steal large sums with pen than small sums with a gun.
Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.
The Buffett quotes are always good. Th one about stealing with a pen reminds me of a line from an old Woody Guthrie song.
ReplyDeleteI like Newton's 4th law. Did you make that up or read that somewhere?
Newton's 4th law came from the 2005 Chairman's letter.
ReplyDeleteGood post Robert! :)
ReplyDeleteI have these lines from "The Snowball" which I enjoyed:
When (Buffett) was speaking at a "big-whig/elephant" conference in Sun Valley in 1999; talking about the technology boom and what he thought of it and the dot-com companies driving the boom and major market gains...
“In the short run, the market is a voting machine. In the long run, it’s a weighing machine. Weight counts eventually. But votes count in the short term... Unfortunately, they have no literacy tests in terms of voting qualifications, as you’ve all learned.”
Brilliant!
Hey...great quotes...love the literacy thing...just picked up "Snowball" at a yard sale...book is thick! I plan to start it soon. I read Lowenstein's book on Buffett a few years ago and really liked it.
ReplyDeleteThanks for the quotes guys.
Nice Post Robert,
ReplyDeleteI particularly subscribe to Baron Rothschild's quote. However, the execution part requires nerves of steel!
It definitely is not easy to do.
ReplyDeleteLet me know what you think of the book Robert, I would be interested to read your "book report" on it. It was good reading material but it took me awhile to get through it!
ReplyDeleteI like this post:
ReplyDeleteBaron Rothschild: "The time to buy is when there is blood in the streets."
This seems like the ideal way to invest but since it is so counter intuitive to our feelings, it is difficult to execute. Also, during a blood bath, it is very difficult to know where the true bottom is. I don't have a favorite investment quote that offers anything more than superficial insight.
re: Financial Cents It will be a while before I get to it but I'll definitely let you know my thoughts on "Snowball".
ReplyDeletere: Shawn: Investors do well if they can hang in when there is "blood in the streets". It is the rare individual who can step up and buy. For example, after 9/11 it seemed that people would never fly again. In late 2008 it looked like the banking system might completely unravel. Those who stepped up and bought in those environments deserve the profits they made, in my opinion.
Interesting that you mention 9/11.... John Templeton's investment philosophy was to invest at times of maximum pessimism and to sell at times of maximum optimism. So, of course, he bought airline stocks after 9/11. I think if he would have been alive in 2008, he would have bought a basket of diversified financial stocks.
ReplyDeleteHey Grouch,
ReplyDeleteI think you're bang on with that one.