Important Things About Investing

Notes from Howard Marks’ Lecture: 48 Most Important Things I Learned on Investing

  • “Investing is not supposed to be easy, and anybody who finds it easy is stupid.”
  • Keynes said the markets can remain irrational longer than you can remain solvent. That’s especially true of leveraged investors. That’s the danger of leverage.
  • In investing, to succeed you must survive.
  • There are two kind of forecasters – one who don’t know, and one who don’t know they don’t know. You must decide which are you.
  • Most investors act as if they can see the future. Either they think they can, or they must, or they try to. In my experience, they can’t.
  • We can make decisions not based on what we think could happen in the future, but based on what’s happening today.
  • The most important choice that any investor can make in the intermediate term is whether to be aggressive or defensive. Not whether it’s stocks or bonds. Not whether is a developed market or an emerging market. But whether it’s a good time to be aggressive, or it’s time to be defensive. And I believe this distinction can be made on the basis of observations regarding the current situation. They do not require guesswork about the future.
  • Superior results do not come from buying high quality assets but from buying assets regardless of quality for less than their worth. That is the most dependable way to achieve success as an investor. And it is essential to understand this difference.
  • There are three stages of a bull market – In the first stage, only a few exceptional people begin to realize that things are improving; In the second stage, most people believe improvement is actually taking place; and In the third stage, everybody thinks that things can only get better.
  • Markets are riskiest when there is a widespread belief there is no risk. This makes investors believe that it’s safe to do risky things.
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Markets, Exchanges, Indexes, And Investments

"Markets are not exchanges, exchanges are not indexes, and indexes are not investments. Yet, these words are often interchanged in discussions about index investing. A financial market is created when there is an exchange of financial instruments. These transactions typically take place on an exchange. Securities exchanges are facilities for trading securities among investors as well as whereby public companies, governments and other entities issue and redeem financial instruments. Securities traded on exchanges include, but are not limited to, stocks, bonds, unit trusts, derivatives and pooled investment products such as limited partnerships."

— Forbes

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