Barry Ritholtz Quotes

Historically, we have always seen reversion to the mean. After stocks have had an unusually great 10 or 20 years, they typically turn in subpar results over the next 10 or 20, and after bad 10- to 20-year stretches, the next 10 to 20 tend to be above average.

There is general agreement among researchers that nearly all stock pickers, whether they know it or not-and few of them do-are playing a game of chance.

Don't bottom fish.

Many investors make the mistake of buying high and selling low while the exact opposite is the right strategy.

Part of the game of investing is to come into your own. You must find some way that perfectly fits your personality because there is some element of a zero sum game in investing. If you buy, somebody else has to sell. And when you sell, somebody has to buy. You can't both be right.

Have rational expectations for future returns and avoid changing those expectations in response to the ephemeral noise coming from Wall Street.

Investing is a probabilistic business. Every once in a while, it's sort of like you're throwing six-sided dice, and anything except a one or a two, you're doing well. Statistically speaking, you throw the dice enough times, you're going to throw a one or a two five times in a row, and you're going to look pretty foolish, right?

What's both fascinating and challenging about investing is that the changing nature of business and finance means you can never have it all figured out.

Losing some money is an inevitable part of investing, and there's nothing you can do to prevent it. But to be an intelligent investor, you must take responsibility for ensuring that you never lose most or all of your money.

The individual investor should act consistently as an investor and not as a speculator. This means ... that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase.

You must never delude yourself into thinking that you're investing when you're speculating.

Diversify your investments.

Diversification is protection against ignorance. It makes little sense if you know what you are doing.

Reversion to the mean is the iron rule of the financial markets.

The only intelligence investing is value investing...to acquire more than one is paying for.

There's no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating.

If you hope to have more money tomorrow than you have today, you've got to put a chunk of your assets into stocks. Sooner or later, a portfolio of stocks or stock mutual funds will turn out to be a lot more valuable than a portfolio of bonds or CDs or money-market funds.

You have to keep your priorities straight if you plan to do well in stocks.

There is a close logical connection between the concept of a safety margin and the principle of diversification.

Uncertainty is the friend of the buyer of long term values.

Risk can be greatly reduced by concentrating on only a few holdings.

Taking this view, it is possible to see financial markets as a laboratory for testing hypotheses, albeit not strictly scientific ones. The truth is, successful investing is a kind of alchemy.

Investing is simple, but not easy.

All sensible investing is value investing

There are all kinds of businesses that Charlie and I don't understand, but that doesn't cause us to stay up at night. It just means we go on to the next one, and that's what the individual investor should do.