Fees

“Indecision has probably cost investors more than bad judgment.”

“If all that can be promised is an average result, how can managers expect to be paid large fees for providing that average result?”

“Investors feelings and reactions regarding inflation are probably more the result of the stock market action that they have recently experienced than the cause of it.”

“The reason to own commodities may be that one believes they provide equity like returns with little correlation with equities. The time to own commodities is (or at least has been) when they are down, when everybody has lost money in them, and when they trade below the cost of production.”

“Two things seem pretty clear to me: first, no one can consistently buy at the low or sell at the high (except liars, as Bernard Baruch said), and second, lowest average cost wins.”

“Active managers are paid to add value over what can be earned at low cost from passive investing, and failure to do that is failure”

“Our approach can be summarized with the phrase “lowest average cost wins.””

“Passive management does not give investors the return of the index; it gives them the return of the index less costs. So, the longer they have their money passively managed, the greater their underperformance will be relative to the index.”

“Beating the market averages, after paying substantial costs and fees, is an against-the-odds game; yet a few people can do it, particularly those who view it as a game full of craziness with an occasional mispriced something or other.”

“Crooks, crazies, egomaniacs, people full of resentment, people full of self-pity, people who feel like victims, there’s a lot of things that aren’t going to work for you. Figure out what they are and then avoid them like the plague.”

“Beating the market averages, after paying substantial costs and fees, is an against-the-odds game; yet a few people can do it, particularly those who view it as a game full of craziness with an occasional mispriced something or other.”

“I have this motto in life as well as in business, which is: every day, I’m lucky if I have learned something new and I’m doubly lucky if it hadn’t cost too much.”

“If you talk to a businessman, a businessman is going to feed the winners and kill the losers. But in the investment world, when you’ve got a winner you should be suspicious about what’s next. And if you’ve got a loser, you should be hopeful — although not naively hopeful.”

“On October 24, 1929, millions of Americans recalled poignantly the hundreds of blithe prophecies that our feelings never again would be harrowed by absurd exhibitions of mob hysteria or mass emotionalism in the stock market. We were living in a new era.”

“All booms are alike. The stage setting varies, but fundamentally they are as drops of water. Customs, like costumes, change from force of environment and economic conditions, but human nature remains the same.”

“One of the astute things I was taught is that on average, the average investor does average before fees, and below average after fees.”

“On average, the average large-stock fund manager produces average returns before fees and below-average returns after fees. So compared with after-fee returns, an index fund is superior.”

“Risk is not a number — it is a feeling”

“Buying cheap assets feels uncomfortable — that’s why it works.”

“Being early feels exactly like being wrong.”

“Stoic detachment combined with emotional awareness is the perfect combination for stocks. Feel the fear, but let reason decide.”

“Speculation is a loser’s game. Because of the costs, it has to be a loser’s game.”

“If your preference is managed funds, you want a managed fund that, one might put it, is like a sailboat fighting not a typhoon of costs but only a breeze.”

“I’ve often said that the efficient market hypothesis, or EMH, has a lot of truth to it, but the CMH — or “cost matters hypothesis” — is eternally truthful to the last penny.”

“Money is made by controlling costs.”

“The more you trade, the harder it is to add value because you’re absorbing a lot of transaction costs, not to mention taxes.”

“Value is created when returns on capital exceed the cost of capital.”

“At times of shock, converting illiquid assets to cash to build flexibility is very expensive. Finding an umbrella in a rain storm might be impossible or very costly.”

“No matter how calm you are, no matter how long term an investor you are, no matter what your horizons, when the market is jumping around, you feel uncertainty in your gut and it’s hard to resist that.”

“Volatility gets you in the gut. There’s no question that when prices are jumping around, you feel different from when they’re stable.”

“The constant lesson of history is the dominant role played by surprise. Just when we are most comfortable with an environment and come to believe we finally understand it, the ground shifts under our feet.”

“When inflation is low, you feel that you know more about the future, and are much more willing to take risks.”

“Missing the bottom on the way up won’t cost you anything. It’s missing the top on the way down that’s always expensive.”

“The fabric of civilization today is woven of millions of threads. No spot in it is so strong that it will not feel some effect from a weakening at any point.”

“Investors in distressed property are motivated primarily by the expectation that the equity value of a real estate asset acquired at less than its original cost-to-construct will in time increase to a point that justifies its original indebtedness.”

“Investors should seek a company that can lower the cost of production and develop an expanding market without materially reducing the return on capital invested in the business.”

“The propensity to gamble is always increased by a large prize versus a small entry fee, no matter how poor the true odds may be.”

“I feel the same way about managing that I do about investing: It’s just not necessary to do extraordinary things to get extraordinary results.”

“Diversification is protection against ignorance, but if you don’t feel ignorant, the need for it goes down drastically.”

“The best kind of business to be in is something where you sell something that costs a penny and sells for a dollar and is habit forming.”