QUOTES by Barry Ritholtz
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What you pay for an investment is the single biggest determinant for how successful that investment will be. When equity prices are high, your returns will be lower. When they are cheap, your returns will be higher.
Quote by -Barry Ritholtz
Owning a variety of asset classes means that some part of your portfolio will be doing well when the cyclical turmoil arises. A broadly diversified portfolio includes large capitalization stocks, small cap, emerging markets, fixed income, real estate and commodities.
Quote by -Barry Ritholtz
We must recognize our own behavioral errors. To be blunt, you are not likely to become a cognitive Zen master anytime soon. But a little enlightenment could keep you from making some common investing errors.
Quote by -Barry Ritholtz
Here is a dirty little secret: Stock-picking is wildly overrated. Sure, it makes for great cocktail party chatter, and what is more fun than delving into a company's new products? But the truth is that individual stocks are riskier than broad indices.
Quote by -Barry Ritholtz
If you are not making any mistakes, you are being excessively risk-averse. Investing involves risk, and that means you will occasionally be wrong. And although it is okay to be wrong, it is not okay to stay wrong.
Quote by -Barry Ritholtz
If you think too-big-to-fail banks are not worthy of investment because of their impossible-to-read balance sheets, well then, don't buy them.
Quote by -Barry Ritholtz
Even when you are right, there are costs and taxes associated with being tactical. When you are wrong, there are opportunity costs.
Quote by -Barry Ritholtz
Whenever you try to pick market tops and bottoms, you are making a prediction. Guessing what stock is going to outperform the market is forecasting, as is selling a stock for no apparent reason. Indeed, nearly all capital decisions made by most people are unconscious predictions.
Quote by -Barry Ritholtz
If your investing approach requires that you become Nostradamus to succeed, then you are destined to fail.
Quote by -Barry Ritholtz
As investors, we want to believe we are smart, insightful and uniquely talented - even though we often fail to do the heavy lifting, put in the long hours, and make the uncomfortable but necessary decisions to achieve success.
Quote by -Barry Ritholtz
Little white lies are told by humans all the time. Indeed, lying is often how we get through each day in a happy little bubble. We spend time and energy rationalizing our own behaviors, beliefs and decision-making processes.
Quote by -Barry Ritholtz
Most of the time, economic data is fairly benign. I don't wish to imply it is meaningless, but it is not a driver of stock markets. Indeed, the correlation between economic noise and how equity markets perform has been wildly overemphasized.
Quote by -Barry Ritholtz
Yearly data put the rest of the noise into perspective. Most of the weekly or monthly random up-and-down movements get smoothed out. Ultimately, this is where long-term investors should be focused.
Quote by -Barry Ritholtz
Whenever you hear a discussion about the short-term swings in any given stock's price, your immediate thought should be whether it matters to why you are investing.
Quote by -Barry Ritholtz
With Twitter, you can build your own virtual trading floor and research department, populated by the smartest people on earth. Almost any subject or sector has you can think of, you can find a few people with an expertise in that area.
Quote by -Barry Ritholtz
Twitter has become a group conversation of that type that used to take place on trading floors.
Quote by -Barry Ritholtz
In social media, people cannot build big followings organically unless what they are putting out to the world has value.
Quote by -Barry Ritholtz
Getting more and more of our news from the social network is having significant repercussions for markets - and your money.
Quote by -Barry Ritholtz
Investors tend to discover 'hot' mutual fund managers just after a successful run and just before the inescapable force of mean reversion is about to kick in.
Quote by -Barry Ritholtz
Hedge funds are not especially liquid. Many are 'gated' - meaning there are only small windows when you can withdraw your money. They typically have a high minimum investment and often require investors keep their money in the fund for at least one year.
Quote by -Barry Ritholtz
Many hedge fund managers have become billionaires; perhaps this - plus their reputations as the smartest guys in the room - is why they have captured the investing public's imagination.
Quote by -Barry Ritholtz
Despite all the media coverage, glitz and glam of hedge funds, they have not done well for their investors. They have high - some say excessively high - fees; their short- and long-term performance has been poor.
Quote by -Barry Ritholtz
The simple reality of life is that everyone is wrong on a regular basis. By confronting these inevitable errors, you allow yourself to make corrections before it is too late.
Quote by -Barry Ritholtz
You have a natural tendency to want an emotionally satisfying tale - and to make investments based on that - despite times when the actual data may be telling you something different.
Quote by -Barry Ritholtz
It is in your DNA to love a good story. You know, neat tales with heroes and villains and conflicts to resolve. A good story pushes our buttons, is exciting and memorable.
Quote by -Barry Ritholtz
Whenever I see a forecast written out to two decimal places, I cannot help but wonder if there is a misunderstanding of the limitations of the data, and an illusion of precision.
Quote by -Barry Ritholtz
Narrative drives most of economics. Everything seems to be part of a story, and how that story is told often leads to critical error.
Quote by -Barry Ritholtz
The good news is that economists are intelligent, engaging and often charming folks. The bad news is their work is often of little use to investors.
Quote by -Barry Ritholtz
The beauty of diversification is it's about as close as you can get to a free lunch in investing.
Quote by -Barry Ritholtz
Amongst the financial Twitterati, the term 'muppets' has come to describe any client used and abused by some financial predator. I've adopted the term to describe portfolios that have been assembled for purposes other than serving the clients' best interests.
Quote by -Barry Ritholtz
Asset managers have different approaches, and I don't wish to suggest there is only one way to run money. There are many ways one can attempt to reduce risk, improve performance, lower drawdowns and reduce volatility.
Quote by -Barry Ritholtz
You want less of the annoying nonsense that interferes with your portfolios and more of the significant data that allow you to become a less distracted, more purposeful investor.
Quote by -Barry Ritholtz
Truth be told, most financial television bores me. Two or more people discussing the latest economic trends or hot stocks is not especially entertaining.
Quote by -Barry Ritholtz
If I am going to trash others for their dumb predictions, I must at least hold myself to the same sort of accountability.
Quote by -Barry Ritholtz
One thing I detest most about the financial press is the lack of accountability. All sorts of nonsense is said without penalty.
Quote by -Barry Ritholtz
If you have read me for any length of time, you know I am less than enthralled with much of what passes for financial news.
Quote by -Barry Ritholtz
Shopmas now begins on Thanksgiving Day. Apparently, escaping the families you cannot stand to spend another minute with on Thanksgiving Day to go buy them gifts is how some Americans show their affection for one another. Weird.
Quote by -Barry Ritholtz
Footage of people camped out at Best Buy or elsewhere is not remotely a celebration. Rather, it's a reminder of just how economically distressed a large percentage of our populace is.
Quote by -Barry Ritholtz
The bottom line is this: Cash, in modest increments, has a role in any portfolio. But unless you are Warren Buffett, you should limit it to 2 or 3 percent.
Quote by -Barry Ritholtz
When markets are rallying, cash in the portfolio is a drag on performance, returning about zero.
Quote by -Barry Ritholtz
A hedge fund manager whose clients demand monthly performance reports has different needs than any individual investors with a 20-year time horizon. The needs of that long-term investor differ markedly from someone who is retiring in three years.
Quote by -Barry Ritholtz
Much of the traditional thinking about cash is well intentioned but unrealistic. Should you have six months of living expenses in the bank for emergencies? Sure. Do you? Probably not.
Quote by -Barry Ritholtz