Eugene Fama Quotes

Index investing outperforms active management year after year.

The average investor's return is significantly lower than market indices due primarily to market timing.

Most people might just as well buy a share of the whole market, which pools all the information, than delude themselves into thinking they know something the market doesn't.

If your investing approach requires that you become Nostradamus to succeed, then you are destined to fail.

If you can predict where the market's going, just do what you can predict. If you can't, which is the presumption of dollar cost averaging or time cost averaging, either one, then you're trying to ease in. But if the market rises more than it falls most of the time, easing in is, by definition, a loser's game.

My advice to the average investor in 1988 is to be patient and think long-term. It will take 18 months for confidence to get better and, in the meantime, this is absolutely no place for short-term money.

The beauty of diversification is it's about as close as you can get to a free lunch in investing.

Investing is a business where you can look very silly for a long period of time before you are proven right.

If the investor doesn't have enough time and skill to investigate individual stocks or enough money to diversify a portfolio, the right thing to do is to invest in exchange-traded funds that give you exposure to asset classes. It does make sense for the individual investor to think in terms of holding individual asset classes.

Regardless of what happens in the markets, stick to your investment program. Changing your strategy at the wrong time can be the single most devastating mistake you can make as an investor.

I think it is crucial to diversify one's portfolio.

In my view, the biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital. Not only is the mere drop in stock prices not risk, but it is an opportunity. Where else do you look for cheap stocks?

Diversification is an established tenet of conservative investment.

In the financial markets, hindsight is forever 20/20, but foresight is legally blind. And thus, for most investors, market timing is a practical and emotional impossibility.

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

The optimum portfolio depends on the various expectations of choices available and the degree of variance in performance which is tolerable. The greater the number of selections, the less will be the average year-to-year variation in actual versus expected results. Also, the lower will be the expected results, assuming different choices have different expectations of performance.

You could lose hundreds or thousands one day on paper and gain it all back the next, and it has literally no effect on your immediate future, provided the money you have in the market is money you're investing for the long haul (meaning at least three to five years).

Always keep your portfolio and your risk at your own individual comfortable sleeping point.

I had some airline stock, but the airlines tanked. I didn't have a lot of money in them, though.

Wide diversification is only required when investors do not understand what they are doing.

Both cheap value stocks and more glamorous growth stocks can work well in a portfolio - if done right.

There's a tendency to look at investments in isolation. Investors focus on the risk of individual securities.

I'm not a money manager, but I can tell you what the conventional wisdom is. The younger you are, the more risk you can take on.

Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it.

The thing to do with mutual funds is to buy a couple of decent ones, set up an investment plan and then never, ever think about them again, except maybe once a quarter or so when you take a peek at your statements to make sure that you have not accidentally been buying the Fidelity Peace-in-the-Middle-East fund.