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Many investors – especially equity and growth equity investors – have a positive bias. People tend to look at negative developments and characterize them as isolated. They ignore contagion and second order consequences. In positive periods, investors engage in selective perception – they only see the good and skewed interpretation – whatever happens, people interpret it positively in a bull market. In recent years, the central bank, by pushing rates to zero, mandated that people – we can think of them as handcuffed volunteers – indulged in highly risky behaviour. The market eventually reached a tipping point where the reality could no longer be ignored.

Howard Marks

What the wise man does in the beginning, the fool does in the end. That’s the nature of the investment business – every trend gets overdone – in the investment business, the most important, single-biggest decision a strategist has to make is whether to play offense or defense. When do you turn aggressive? We just try to figure out when the negatives are being over-emphasized. It’s feel – there’s no science. Everybody should understand their own psychology – are you generally an optimist or a pessimist? Personally, I’m more conservative – but my caution is overcome by the desperation I see around me. When everybody thinks there’s no hope, I find it easier to turn bullish. If the fundamentals are a little worse, but the psychology is drastically worse, that results in cheap prices and one can be less cautious.

– Howard Marks

Fixed income investing is a negative art – all that matters is avoiding the downside and excluding the securities that won’t pay what they claim they will pay. However, avoiding the losers is not sufficient if you want to exceed fixed income returns. You have to take some chances.

Howard Marks

The theoretical broadening which comes from having many humanities subjects on the campus is offset by the general dopiness of the people who study these things.

– Richard Feynman

There is nothing noble in being superior to your fellow men. True nobility lies in being superior to your former self.

– Ernest Hemingway

The best time to invest is when you have money. This is because history suggests it is not timing which matters, but time.

– John Templeton

While the surface manifestations change, the underlying forces are very, very old. The acceleration of productivity we see in Silicon Valley has been happening for thousands of years. If you look at the history of stone tools, technology was already accelerating in the Mesolithic. The acceleration would have been too slow to perceive in one lifetime. Such is the nature of the leftmost part of an exponential curve. But it was the same curve.

You do not want to design your society in a way that’s incompatible with this curve. The evolution of technology is one of the most powerful forces in history.

– Paul Graham

The best place to find new work is on your desk, not out glad-handing somebody on the golf course. Do what you are doing, do it well and over time that will produce the next good piece of work.

– Charlie Munger

There’s no question whatsoever that we could not have done what we did back then if I hadn’t had my airplanes. I bought that first plane for business, to travel between the stores and keep in touch with what was going on. But once we started really rolling out the stores, the airplane turned into a great tool for scouting real estate. We were probably ten years ahead of most other retailers in scouting locations from the air, and we got a lot of great ones that way. From up in the air we could check out traffic flows, see which way cities and towns were growing, and evaluate the location of the competition—if there was any. Then we would develop our real estate strategy for that market.

I loved doing it myself. I’d get down low, turn my plane up on its side, and fly right over a town. Once we had a spot picked out, we’d land, go find out who owned the property, and try to negotiate the deal right then. That’s another good reason I don’t like jets. You can’t get down low enough to really tell what’s going on, the way I could in my little planes. Bud and I picked almost all our sites that way until we grew to about 120 or 130 stores. I was always proud of our technique and the results we got. I guarantee you not many principals of retailing companies were flying around sideways studying development patterns, but it worked really well for us. Until we had 500 stores, or at least 400 or so, I kept up with every real estate deal we made and got to view most locations before we signed any kind of commitment. A good location, and what we have to pay for it, is so important to the success of a store. And it’s one area of the company in which we’ve always had family involvement.

– Sam Walton