Stock Picking

“It may be that professionally managed funds are too large a part of the total picture to be able to outperform the market as a whole; it may also be true, as I suspect, that certain weaknesses in their basic principles of stock selection tend to offset the superior training, intelligence, and effort that they bring to this task.”

“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.”

“Attempting to guess short-term swings in individual stocks, the stock market or the economy is not likely to produce consistently good results. Short-term developments are too unpredictable.”

“If it’s a choice between investing in a good company in a great industry, or a great company in a lousy industry, I’ll take the great company in the lousy industry any day. Good management, a strong balance sheet, and a sensible plan of action will overcome many obstacles, but when you’ve got weak management, a weak balance sheet, and a misguided plan of action, the greatest industry in the world won’t bail you out.”

“No stock picker knows so much that he can’t learn a trick or a tip from a peer.”

“Most useful and most dangerous are the stock market averages, most useful in revealing the general trend of the market, most dangerous if they mislead the trader into forgetting that, after all, his profits depend on the movements of the individual stocks in which he deals.”

“Individual stocks may obviously pursue courses widely dissimilar.”

“Even a great company can be priced too high if there’s a lot of glamour attached to it.”

“The stock market itself seems to be mainly driven by fashions and fads. However, when you look at individual stocks, it’s a different story, because individual stocks are much more diverse, and some of them can be predicted to perform well over the long run.”

“When picking a list of growth stocks for long-term investment, broad diversification of the risk is the first and most important principle to follow. No one can look ahead five or ten years and say what is the most promising industry or the best stock to own.”