Mistakes

“Selling is difficult, and my track record suggests it’s usually a mistake”

“Failure to be honest with yourself is a problem in any business, but it is especially disastrous in an entrepreneurial company, where the risk-reward stakes are so high.”

“Nearly every mistake I’ve made has been because I picked the wrong people, not the wrong idea.”

“Extrapolating existing conditions too far into the future is likely to lead to disappointment. But as long as people continue to make this mistake, and as long as the market consensus reflects it, history will continue to repeat itself in Wall Street.”

“If we really knew what the future will bring that is all we would have to know; but since stock market people can only guess the future and since they have the embarrassing habit of guessing wrongly, it seems best not to lay too much stress upon forecasts.”

“Many mistakes have been made in buying growth stocks on the theory that the future will duplicate the past.”

“Be skeptical of the popular reasoning behind any spectacular move in the stock market — but don’t be too sure this reasoning is wrong.”

“It is a great mistake to refine the analysis of a single year’s showing to the last possible penny, in order to build from that some substantial idea of the value of the stock; because it cannot be found in the results for any given year no matter how accurately those results were stated.”

“There are two principal mistakes that nearly all amateurs in the stock market make. The first is to have an inexact knowledge of the securities in which one is dealing, to know too little about a company’s management, its earnings, and prospects for future growth. The second mistake is to trade beyond one’s financial resources, to try to run up a fortune on a shoestring.”

“The most common error in investing is confusing business fundamentals with investment merit.”

“Being wrong is something anyone involved in capital markets has to get used to, though being used to it and being comfortable with it are two different things.”

“Investing is all about probabilities, and just because there appears to be a strong consensus prices are going to keep going up, doesn’t mean that is wrong, or right. The consensus does tend to be wrong at the turning points, being invariably bullish at the top and bearish at the bottom.”

“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”

“It is said the only thing worse than being wrong is staying wrong.”

“I think that most individual investors make great mistakes when they try and time the market, and try and think about what’s the best stock to buy now.”

“A lot of people look to hit singles and sacrifice bunts and make small returns. But statistically you are far better off with huge gains because you are going to make mistakes. And if you are playing small ball and you make a few mistakes, you can’t recover.”

“Investors lose money not because they’re wrong, but because they’re surprised.”

“You will be wrong a lot. Success depends on how quickly you recognize it.”

“The biggest mistakes are made at turning points, not in the middle of trends”

“Most investors mistake a cyclical recovery for a secular trend”

“The mistake most people make is answering the door just because Mr. Market knocks. You don’t have to let him in.”

“I have made bad business decisions. You can’t live a successful life without doing some difficult things that go wrong. That’s just the nature of the game.”

“The single most important thing, if you want to avoid a lot of stupid errors, is knowing where you’re competent and where you aren’t. Knowing the edge of your own competency. And that’s very hard to do because the human mind naturally tries to make you think you’re way smarter than you are.”

“I’m constantly making mistakes where I can, in retrospect, realize that I should have decided differently. And I think that that is inevitable because it’s difficult to be a good investor.”

“If you’re capable of being reasonable, it’s a moral failure to be unreasonable when you have a capacity to be reasonable.”

“My definition of being properly educated is being right, when the professor is wrong.”

“Modern life creates successful bureaucracy and successful bureaucracy breeds failure and stupidity.”

“The investor is bombarded with staggering amounts of information, staggering amounts of stimuli that are designed to get the investor to buy and sell and trade, to do exactly the wrong thing, to create excessive profits for these intermediaries that aren’t acting in the investor’s best interests.”

“It is only fair to admit that the commonest and most expensive blunder that all exceptionally brilliant business men make is being right too soon.”

“One of the biggest mistakes investors make is to look at the last few years and assume that’s the new norm.”

“I assume that markets are always wrong. Even if my assumption is occasionally wrong, I use it as a working hypothesis.”

“We start with the assumption that the stock market is always wrong, so that if you copy everybody else on Wall Street you’re doomed to do poorly.”

“I start with the assumption that the market is always wrong and that there is a divergence between the way people look at a situation and what the situation is.”

“Pro-cyclical behavior is one of the greatest and one of the most frequent mistakes.”

“The truth is markets are made up of people, with their emotions, insecurities, their tendency to go to extremes, and their other foibles. Thus, they often make mistakes and swing to erroneous extremes.”

“Superior investing is taking advantage of the errors of others.”

“Investors are right and wrong all the time for the wrong reasons.”

“It’s not what you buy, it’s what you pay. And success in investing doesn’t come from buying good things, but from buying things well. And if you don’t know the difference, you’re in the wrong business.”

“One of the biggest mistakes you can make is to think that overpriced and going down tomorrow are synonymous. Markets that are overpriced often keep going.”

“Whenever we consider an investment, we think just as much or more about what can go wrong as about what can go right, and we put the avoidance of losses on a high pedestal.”

“A great mob of easily led investors, eagerly searching for “straight tips” which may bring instant wealth, make their mistake in common, and when the mistake is disastrous they try, en masse, to escape.”

“Investment success requires the ability to look wrong for a very long time”

“Being early feels exactly like being wrong.”

“If you are a value investor, every now and then you lag, or experience what consultants call tracking error. It can be very painful. To be a value investor, you have to be willing to suffer pain.”

“People who have had success in other parts of their lives have difficulty accepting how much failure there is in the stock market.”

“In investing, where doing nothing often prevents blunders, a certain style of laziness is adaptive, but mental laziness isn’t, and not thinking independently is absolutely toxic.”

“Call it humility, call it honesty with yourself, but failing to admit to investment mistakes means failing investing.”

“I don’t think it’s productive to wallow in regret. But if you’ve lost money in a stock and you don’t learn anything, that’s wasted money. Figure out what it is that you did wrong and don’t do it again.”

“Economists, when they seek to be profound, often succeed only in being wrong.”

“A lot of people can’t bear to sell when a stock’s price is going up. They’re convinced that they’ve made a mistake if they don’t hold out for the last dollar.”

“Diversification is a safety factor that is essential because we should be humble enough to admit we can be wrong.”

“Most mistakes come from action, not inaction”

“If you want short-term excitement, investing is the wrong profession.”

“If I’ve made one mistake in the course of managing investments it was selling really good companies too soon. Because generally, if you’ve made good investments, they will last for a long time.”

“A great business bought at the wrong price can be a poor investment”

“Few positions, deeply understood, reduce error.”

“Debt turns mistakes into disasters”

“Ignoring base rates is one of the most common decision errors.”

“You know, we make mistakes. Some go from 12 to 10 and we sell them. Some go from 20 to nothing. In a 10-year period, you are going to have one or two that go from 20 to nothing. If you have more, it is bad.”

“We would rather be approximately right than precisely wrong.”

“Failure will give you a tattoo that will stay with you your whole life, and sometimes it’s a really good thing.”

“Paradigm shifts are an inevitable result of forecast errors — the raw material from which paradigm shifts are fashioned.”

“Risk means the chance of being wrong — not always in an adverse direction, but always in a direction different from what we expected.”

“The more irreversible the decisions, the more expensive the consequences of being wrong.”

“While majority opinion can give any market movement considerable momentum that keeps it going in the same direction, majority opinion is inevitably and consistently wrong at turning points.”

“Managers do not create large alphas by being conventional. They do so by taking the risk of being wrong and alone.”

“The times I have been most wrong are the times I thought I was most right.”

“Being wrong on occasion is inescapable.”

“While we can learn from the long run about how bonds and stocks respond to changing environments and to each other, the long run can tell us perilously little about what kinds of environments lie ahead.”

“Most mistakes come from failing to see second-order effects.”

“Time magnifies both quality and mistakes.”

“Most human error is predictable”

“You have to say to yourself, “If I’m right, how much am I going to make? If I’m wrong, how much am I going to lose?” That’s the risk/reward ratio.”

“A lot of my stocks don’t work. The beauty of the stock market is that if you are wrong, if you put $1,000 up, all you lose is $1,000. I have proven that many times.”

“If a stock has gone sideways for a couple of years, and the fundamentals are decent, and you can find something new that’s positive in the company, then if you’re wrong, the stock will probably continue to go sideways, and you won’t lose a lot of money. But if you’re right, that stock is going north.”

“One of the oldest sayings on Wall Street is “Let your winners run, and cut your losers.” It’s easy to make a mistake and do the opposite, pulling out the flowers and watering the weeds.”

“There’s a psychological benefit to tossing the bums out: The names disappear from the monthly brokerage statements; we’re no longer reminded of our mistakes.”

“What you learn from history is the market goes down. It goes down a lot.”

“The stock market has a 100% record, in the last 50 years, of predicting upturns in the economy. It’s never been wrong. It’s less than 50-50 on a downturn.”

“You’re going to make mistakes. If you’re terrific in this business you’re right six times out of 10.”

“I’ve always found that if you find 10 stocks you really like and buy three, you always pick the wrong three. So I just buy all 10.”

“I’m an optimist, both as a person and an investor. It’s a big mistake to be pessimistic as long as we have a viable civilization which is reasonably well managed.”

“If some of the most astute people in Wall Street have frequently guessed wrong in trying to profit by stock market movements, it may not be too much to assume that the attempt itself has represented a misconception of the proper function of management.”

“The man in the street associates the acquisition of wealth with rising markets; failures, ruin, depression, panics with falling markets.”

“It is true that you don’t go broke taking a profit, but that assumes you will make a profit on everything you do. It doesn’t allow for the mistakes you’re bound to make in the investment business.”

“Recessions are not failures — they’re necessary corrections”

“If we use prediction as the measure of a model, traditional finance makes precisely wrong predictions.”

“There’s something intellectually much more intriguing about failure, which is knowable, rather than success, which is sort of unknowable.”

“Faith in the future is as much motivated by confidence as it is a reflection of fear in acknowledging a mistake.”

“Some might see buying and creating value from others’ mistakes as a form of exploitation, but I see it as giving neglected or devalued assets, in any industry, new life.”

“Margin of safety is simply the idea that you want room to be wrong.”

“It would be silly to expect every bear market to turn into the Great Depression. It would be equally wrong to expect that a fall from overvalued, to more fairly valued, couldn’t badly overshoot on the downside.”

“Being extremely early is tantamount to being wrong, so contrarians are well advised to develop an understanding of the psychology of the sellers.”

“Investors must never mistake an investment that is down in price for one that is bargain-priced; undervaluation is determined only by a security’s price compared to its underlying value.”

“Being very early and being wrong look exactly the same 99% of the time.”

“I’ve thought a lot of things when I’m managing money with great, great conviction, and a lot of times I’m wrong. And when you’re betting the ranch and the circumstances change, you have to change, and that’s how I’ve always managed money.”

“Every great money manager I’ve ever met, all they want to talk about is their mistakes. There’s a great humility there.”

“You can be wrong often and still make a lot of money”

“The crowd is usually right about outcomes, wrong about prices.”

“I’ve made so many mistakes over the years that I struggle to isolate just one as the biggest single mistake. Among the choices though I think excessive leverage has been the most personally painful.”

“Just because we think a stock is undervalued doesn’t mean we’re right. We may be wrong in our judgment.”

“One of the things you learn in this business is humility because you see your mistakes the next day.”

“I would rather sustain the penalties resulting from over-conservatism than face the consequences of error, perhaps with permanent capital loss, resulting from the adoption of a “New Era” philosophy where trees really do grow to the sky.”

“I really believe it’s better to learn from other people’s mistakes as much as possible.”