Do you want five hundred dollars?” the manager asked incredulously as he pulled a wad of cash out of his pocket and handed it to the manager. Gross admits that he probably wouldn't be where he is today had he been born a decade earlier or later,” the piece reads. And when that's the case, a view of money that one group of people finds outrageous may make perfect sense to another.
Let me reiterate how new this idea is: the 401(k)—the fundamental savings vehicle of American retirement—didn't exist until 1978. There are about three dozen mountain climbing deaths in the United States each year.⁹ The odds of dying on a mountain in high school are about one per million. I think most of us intuitively know this to be true—the quality of your education and the doors that open to you are strongly related to the socioeconomic status of your parents.
Studying a particular person can be dangerous because we tend to study extreme examples—the billionaires, the CEOs, or the massive failures that dominate the news—and. The average daily volume of $740 million of trades executed electronically by the Madoff firm on the exchange is equivalent to 9% of the New York Stock Exchange.
The hardest financial skill is getting the goalpost to stop moving
Social comparison is the problem here
But to make the top 10 highest-paid hedge fund managers in 2018, you had to make at least $340 million in one year.¹⁴ That's what people like Trout could compare their earnings to. A hedge fund manager earning $340 million a year compares with the top five hedge fund managers who earned at least $770 million in 2018. And someone like Buffett could count on Jeff Bezos, whose net worth increased by $24 billion in 2018. — a sum equal to more per hour than a "rich" baseball player makes in an entire year.
The dealer, serious, replied, "The only way to win at a Las Vegas casino is to get out as soon as you get in." "Enough" is realizing that the opposite—an insatiable appetite for more—will drive you to the point of regret. The only way to know how much food you can eat is to eat until you get sick.
There are many things never worth risking, no matter the potential gain
Effectively, all of Warren Buffett's financial success can be attributed to the financial foundation he built in his teenage years and. None of the 2,000 books chronicling Buffett's success is titled This Guy Has Been Investing Consistently for Three-Quarters of a Century. In 1929, Jesse Livermore was already one of the most famous investors in the world.
During one of the worst months in the history of the stock market, he became one of the richest men in the world. Livermore, the stock market operator, is missing from 1100 Park Avenue and has not been seen since 3 p.m. yesterday,” wrote The New York Times in 1933. But part of the reason this happens is because getting money and keeping money are two different skills.
Planning is important, but the most important part of every plan is to plan on the plan not going
The margin of safety is increasing the chances of success at a given level of risk by increasing your chances of survival. The magic of it is that the higher your margin of safety, the smaller your advantage should be to have one.
A barbelled personality—optimistic about the future, but paranoid about what will prevent you from
The big investors bought enormous amounts of art,” the company writes.¹⁹ “Some of the collections turned out to be great. Here's the most important part of this story: the Russell 3000 has grown more than 73 times in size since 1980. Napoleon's definition of a military genius was: "The man who can do the average when everyone around him is going crazy."
There's the old pilot's quip that their job is "hours and hours of boredom punctuated by moments of sheer terror." It's the same in investing. Going home before midnight was considered a luxury, and there was a saying in the office: "If you don't come to work on Saturday, don't bother coming back on Sunday." The work was intellectually stimulating, paid well and made me feel important. We tend to judge wealth by what we see because that is the information we have in front of us.
It is not only the only way to accumulate wealth; it is the very definition of wealth. You will have a better chance of being able to learn a new skill when needed. It took me a while to figure this out, but once it clicked I realized it's one of the most important parts of finance.
Amulets were left at temples to calm her down, hoping to stave off the next round of shivers. The researchers argued that when using their strategy "expected retirement wealth is 90% higher compared to life cycle funds." It is also 100% less reasonable. Day trading and picking individual stocks is not rational for most investors - the odds are stacked against your success.
This is why it is difficult to predict what they will do next based solely on what they have done in the past. Faced with the argument that few investors are prepared for rising interest rates because they have never experienced them—the last great period of rising interest rates.
You’ll likely miss the outlier events that move the needle the most
Will the current rate hike be like the last one, or the one before that? On the one hand, people who invested during the events of 2008 experienced many different markets. Another way of saying this is that humans have been responsible for perhaps most of the direction of the world over the past century.
Most of what happens in the global economy at any given time can be traced back to a handful of past events that were virtually impossible to predict. The reason surprises occur is not because our models are wrong or because our intelligence is low. So the forecaster who assumes the worst (and best) events of the past will match the worst. and best) events of the future do not follow history;
It was built to withstand the worst earthquake in history, and the builders didn't imagine much worse - and they didn't think that the worst event in history had to be a surprise, since it was unprecedented. Recognizing that the future may not look like the past is a special kind of skill that is generally undervalued by the financial forecasting community. Whenever something surprises us, even if we admit that we have made a mistake, we say, 'Oh, I will never make that mistake again.' But in reality, what you should learn when you make a mistake because you didn't foresee is something that the world is hard to predict.
Not that we should use past surprises as a guide to future limits; that we must use past surprises as an admission that we have no idea what might happen next. The most important economic events of the future—things that will move the needle the most—are things about which history gives us little or no guidance. I'm confident in that prediction because the surprises that move the needle the most are the predictions that have been accurate at virtually every point in history.
History can be a misleading guide to the future of the economy and the stock market because it doesn't.
History can be a misleading guide to the future of the economy and stock market because it doesn’t
It stems from investor John Templeton's belief that “the four most dangerous words in investing are: 'this time it's different.'” But my favorite summary of the theory came when he said in an interview that “the purpose of the margin of safety is to make the prediction unnecessary.” It's another thing to admit that you don't know today what you even want in the future.
It's hard to make lasting long-term decisions when your view of what you want in the future is likely to change. Part of the reason people like Ronald Read—the wealthy janitor we met earlier in the book—and Warren Buffett become so successful is because they kept doing the same thing for decades on end and let it go. Some of the most miserable workers I've met are people who only stay loyal to a career because it's the field they chose when they decided to major at age 18.
He was criticized for his leadership, his acquisitions, the cutting of the dividend, the dismissal of workers and of course the falling share price. Or you can find an asset with less uncertainty and a lower payout, the equivalent of a used car. The volatility/uncertainty fee - the price of returns - is the cost of access to get returns greater than low-fee parks like cash and bonds.
It's the idea that assets have one rational price in a world where investors have different goals and time horizons. Soon – and often not for long – the dominant market price setters with the most authority will be those with shorter time frames. California will form the core of what he calls “the Californian Republic,” and will be part of China or under Chinese influence.
Texas will be the heart of the "Republic of Texas," a group of states that will go to Mexico or fall under Mexican influence. He calls Panari "the Central Republic of North America". Hawaii, he suggests, will be a protectorate of Japan or China and Alaska will be incorporated into Russia.55. Hard-to-use supplies of oil that weren't worth fighting for at $20 a barrel—the cost of drilling didn't make up for the price you could sell it for—became the fortune of a lifetime now that you could sell a barrel for 138 dollars.
