10 Life-Changing Financial Quotes
Lessons to be a Better Investor, Learn Anything and Do More.
One of the articles that without a doubt, we have enjoyed writing the most. It has reminded us of many of the basic concepts that make a successful investor and that we hope will be helpful.
Here are the 10 quotes that will help you exponentially to improve your economy and you as a person:
“The way to become rich is to put all your eggs in one basket and then watch that basket.” — Andrew Carnegie
The way to win in this game is through concentration and leverage. However, both are weapons of mass destruction if not used correctly.
To concentrate it is necessary to have total knowledge of the asset or company in which one is investing, following a predefined analysis process and knowing that when the investment thesis is no longer valid or the conviction is lost, the best idea is to sell the asset, even at a loss.
In the case of leverage, here there are many more possibilities, surely the two best known are through a margin portfolio and through derivatives. Either of the two is equally valid, although from our point of view it is much more sensible to use the second one since it provides us with limited losses. In this article, we explain a simple strategy with leverage ETFs.
“As sure as the spring will follow the winter, prosperity and economic growth will follow recession.” — Bo Bennett
Great investors (Warren Buffett, Howard Marks…) have always emphasized their obsession with cycles. Do you remember the famous quote: ‘when the tide goes out, we’ll see who swims naked’?.
It seems a bad decision not to be currently invested when, month after month, the indices return to record highs. It is precisely at this time when we should be more protected against possible market reversals and we have been warning about this for a long time in our newsletter.
“Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary, but is dependent on their scarcity, the quantity of labour bestowed in procuring them, and the value of the capital employed in the mines which produce them.” — David Ricardo
More than 2,000 years ago you were able to buy a glass of wine with a gold coin. Today, 2,000 years later, you can still buy a glass of wine with that same coin. It seems clear that this asset is one of those that has best protected us from inflation throughout history, it even seems stupid not to have some gold in your portfolio.
Moreover, with the policies that central banks are following, it seems certain that now more than ever we should have more money in gold and other metals (silver, aluminium…) rather than in cash.
“Do one thing every day that scares you.” — Eleanor Roosevelt
You may have heard many times the term comfort zone. Believe it or not, the fact of doing small tasks that make us uncomfortable makes us grow exponentially personally.
Applied to finance and specifically to portfolio management, the fact of having an antifragile portfolio that loses little by little in a continuous way to finally achieve outstanding returns, makes us grow as investors and substantially improve the performance of our portfolio.
“Patience and diligence, like faith, remove mountains.” — William Penn
In the investment world, human behaviour plays a much bigger role than IQ, as impatience and making hasty actions in moments of euphoria or desperation in the markets lead to losing a lot of money.
“Formal education will make you a living; self-education will make you a fortune.” — Jim Rohn
Remember the Long Term Capital (LTC) investment fund, it was a fund made up of the brightest minds around, many of them Nobel laureates. However, they failed to understand that market returns do not follow a normal distribution and that the tails of the distributions are fat (‘Fat Tails’). This caused them to lose huge amounts of money that the government had to replace.
The stock market is not continuous and stock prices jump and events that should never happen (1987, 2000, 2008, 2020…) happen much more frequently than the very well educated investors calculate. For this, it is necessary to get out of models that are still taught in schools and that have been proven not to work.
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” — Warren Buffett
How many times have you heard the typical brother-in-law say ‘I’ll buy when it stops falling’? Remember that the biggest rises in the market happen during the falls and being out of the very important rises in the long term, makes our profitability is significantly diminished.
We believe it makes no sense to be consistently uninvested and not doing so has a real opportunity cost.
“Success is the sum of small efforts repeated day in and day out.” — Robert Collie
One of the books that undoubtedly helps you to generate habits that make you grow exponentially in your day to day is ‘Atomic Habits’. Doing small actions on a daily basis and turning them into a routine is a must, these routines can change us both positively and negatively.
The habit that is most in demand today is Deep Work because in the multitasking world we live in, this attitude is being lost, causing our productivity to decrease exponentially.
“Given a 10% chance of a 100 times payoff, you should take that bet every time.” — Jeff Bezos
Although this quote is from Jeff Bezos, the Range book repeats it over and over again. We must test and thus grow personally. We must focus on the extremes of the distribution, and this can only be achieved by shooting many times. Or what do Venture Capitalists think they survive on?
“The stock market is filled with individuals who know the price of everything, but the value of nothing.” — Phillip Fisher
Today as we live on the brink of a hyperinflationary period with artificially low-interest rates it is very important to know the value of things. The value in a year and a half has dropped by 50% due to all the liquidity injections that central banks are applying and there are few assets and currencies in which to protect ourselves.
Pursuing financial freedom is precisely what we seek with our portfolio, we firmly believe that we are in a market situation where central bank policies are not being adequate and that sooner or later it will explode. To this end, we share our portfolio on a weekly basis and in such a way that an individual can replicate all those movements in order to benefit as much as possible from another possible black swan: