Quotes by: Barry Ritholtz
Asset managers have different approaches, and I don't wish to suggest there is only one way to run money. There are many ways one can attempt to reduce risk, improve performance, lower drawdowns and reduce volatility.
Once you research an idea, you begin to develop a perspective. Writing about anything in public, often in real time, has helped fashion my views.
Twitter has become a group conversation of that type that used to take place on trading floors.
You, your employer and your plan's investment managers fail to follow even the most basic rules of investing. You overtrade, chase performance, do not think long term. All of you - All Of You - have done a horrible job managing your retirement plans.
Indeed, eventually, random outcomes all revert to the mean, meaning that streaks eventually end. Understanding this is a key part of intelligent and rational investing.
It is in your DNA to love a good story. You know, neat tales with heroes and villains and conflicts to resolve. A good story pushes our buttons, is exciting and memorable.
Investors tend to discover 'hot' mutual fund managers just after a successful run and just before the inescapable force of mean reversion is about to kick in.
If you think too-big-to-fail banks are not worthy of investment because of their impossible-to-read balance sheets, well then, don't buy them.
If your investing approach requires that you become Nostradamus to succeed, then you are destined to fail.
Any time you speak to people about their posture, you learn about their most recent investment activity. When someone just bought stocks, they tend to be bullish; someone who just sold is bearish.
The bottom line is this: Cash, in modest increments, has a role in any portfolio. But unless you are Warren Buffett, you should limit it to 2 or 3 percent.
Based on a lifetime of observations and a few decades in the markets, I understand that societies, beliefs and fashions all move in long arcs of time. We call these arcs several things: cycles, periods, eras.
Whenever I see a forecast written out to two decimal places, I cannot help but wonder if there is a misunderstanding of the limitations of the data, and an illusion of precision.
Google's founders have had a good eye for imagining what technologies will be significant in the near future. No one asked Google to develop self-driving cars, but it helped them with street views for Google Maps.
When you buy anything with lots of leverage, it does not require a whole lot to go wrong to lose it all.
Rather than engage in the sort of selective retention that so many investors tend to do and pretend mistakes never happened, I prefer to 'own' them. This allows me to learn from them and, with any luck, avoid making the same errors again.
Most of the time, economic data is fairly benign. I don't wish to imply it is meaningless, but it is not a driver of stock markets. Indeed, the correlation between economic noise and how equity markets perform has been wildly overemphasized.
You have a natural tendency to want an emotionally satisfying tale - and to make investments based on that - despite times when the actual data may be telling you something different.
Here is a dirty little secret: Stock-picking is wildly overrated. Sure, it makes for great cocktail party chatter, and what is more fun than delving into a company's new products? But the truth is that individual stocks are riskier than broad indices.
Have a well-thought financial plan that is not dependent upon correctly guessing what will happen in the future.
There is a shortage of doctors, and the American Medical Association is aiming to keep it that way.