Harry Markowitz Quotes

The average investor does significantly worse than a simple index... It's literally because of the way our brains are wired.

There's no statistical evidence that human beings have an ability to move in and out of the markets effectively. It's next to impossible.

With actively managed funds, people have big behavior problems. With funds that have done well, they put their money in, and when it has done bad, they want to take it out.

When reviewing one's portfolio, it is important to be aware of common mental mistakes that may lead to bad decisions. The most powerful is commitment bias, which, as manifested in investing, is the tendency to fall in love with one's stocks.

I buy when other people are selling.

A second reason why science cannot replace judgement is the behavior of financial markets.

Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed.

The wisest rule in investment is: when others are selling, buy. When others are buying, sell. Usually, of course, we do the opposite. When everyone else is buying, we assume they know something we don't, so we buy. Then people start selling, panic sets in, and we sell too.

Numerous academic studies have shown that amateur investors make poor traders - buying stocks for the wrong reasons, holding losers for too long, and acting on whims and emotions.

As a bull market turns into a bear market, the new pros turn into optimists, hoping and praying the bear market will become a bull and save them. But as the market remains bearish, the optimists become pessimists, quit the profession, and return to their day jobs. This is when the real professional investors re-enter the market.

Individual investors beware: If you're constantly worried about a crash, you're probably making some big mistakes - and losing a lot of money in the process.

People come in. They are too gung ho. They invest too much money in things they don't know. They lose it and then they clam up and stop investing. Then they miss the actual boom. That's the nature of the market.

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

There's something on Wall Street called PIG - panic, ignorance, and greed. Those are the big sins. I'm not greedy, I knew I was ignorant, and I didn't panic.

Buy when there's blood in the streets, even if the blood is your own.

Outperforming the majority of investors requires doing what they are not doing. Buying when others have despaired, and selling when they are full of hope, takes fortitude.

A lot of people got in at the wrong time. A lot of people did very well and some people said, "This is it. I'll never get back in again." And they maybe meant it, but they probably got back in again anyway.

Bulls don't read. Bears read financial history. As markets fall to bits, the bears dust off the Dutch tulip mania of 1637, the Banque Royale of 1719-20, the railway speculation of the 1840s, the great crash of 1929.

All of us would be better investors if we just made fewer decisions.

Actually, one of the better indicators historically of how well the stock market will do is just a Gallup poll, when you ask Americans if you think it's a good time to invest in stocks, except it goes the opposite direction of what you would expect. When the markets going up, it in fact makes it more prone toward decline.

One thing on psychology, which we've always known, is that every investor says they're long-term - and they are until the market takes a hit.

People often panic when the markets go down and sell off their stocks - but then they aren't in the game when the markets are doing well.

In falling markets, there is nothing that has not happened before. The bear or pessimist sees only the past, which imprisons the wretched financial soul in eternal circles of boom and bust and boom again.

Active management leads to lots of poor investor behavior. It sends people chasing after whoever has the hot hand at the moment.

The main purpose of the stock market is to make fools of as many men as possible.