Almost all the parts of our bodies require some expense. The feet demand shoes, the legs stockings, the rest of the body clothing, and the belly a good deal of victuals. Our eyes, though exceedingly useful, ask when reasonable, only the cheap assistance of spectacles, which could not much impair our finances. But the eyes of other people are the eyes that ruin us.
Anyone who tries to make a distinction between education and entertainment doesn’t know the first thing about either.
A universal law of economics says the moment something becomes free and ubiquitous, its position in the economic equation suddenly inverts. When nighttime electrical lighting was new and scarce, it was the poor who burned common candles. Later, when electricity became easily accessible and practically free, our preference flipped and candles at dinner became a sign of luxury.
Success traps can be harder to get out of, because at least with failure traps, there’s incentives to change things. With success traps, the incentives are to keep doing the same thing.
My own experience of how little this knowledge has changed the quality of my own judgment can be sobering. Avoiding noise in judgment is not really something individuals are going to be very good at.
When I look back on my life nowadays, which I sometimes do, what strikes me most forcibly about it is that what seemed at the time most significant and seductive, seems now most futile and absurd. For instance, success in all of its various guises; being known and being praised; ostensible pleasures, like acquiring money or seducing women, or traveling, going to and fro in the world and up and down in it like Satan, explaining and experiencing whatever Vanity Fair has to offer. In retrospect, all these exercises in self-gratification seem pure fantasy, what Pascal called, “licking the earth.”
An invention has some of the characteristics of a poem. Standing alone, by itself, it has no value; that is, no value of a financial sort. This does not mean that inventions—or poems—have no value. It is said that a poet may derive real joy out of making a poem, even if it is never published, even if he does not recite it to his friends, even if it is not a very good poem. No doubt one has to be a poet to understand this. In the same way an inventor can derive real satisfaction out of making an invention, even if he never expects to make a nickel out of it, even if he knows it is a bit foolish, provided he feels it involves ingenuity and insight. An inventor invents because he cannot help it, and also because he gets quiet fun out of doing so. Sometimes he even makes money at it, but not by himself. One has to be an inventor to understand this.
I look at the gap between the entry price and the price in a scenario in which most of the positive assumptions don’t pan out as expected. The ingredients of successful investing lie in locating gaps between current expectations and future likely performance which provide me favourable odds as an investor…The prediction of earnings per share is mainly science and partly art. But prediction of price-to-earnings ratio is an art, with very little science. It is a chemistry that can be mastered only by experience…I have learnt that in investing decisions, all factors are numerators but the denominator is only one which is price/value, for it is ultimately the price or value at which you buy/sell shares which determines not only your profit/gains but also the very important aspect of the risk that you take. At a value, I am a buyer of everything, including the most hated companies. What you are buying is important, but it is more important at what price/value you are buying.