Michael Batnick > Quotes

“some lessons have to be experienced before they can be understood.”
― Michael batnick

“When the game is no longer being played your way, it is only human to say the new approach is all wrong, bound to lead to trouble, etc. I have been scornful of such behavior by others in the past. I have also seen the penalties incurred by those who evaluate conditions as they were – not as they are. Essentially I am out of step with present conditions. On one point, however, I am clear. I will not abandon a previous approach whose logic I understand even though it may mean foregoing large, and apparently easy, profits to embrace an approach which I don't fully understand, have not practiced successfully and which, possibly, could lead to a substantial permanent loss of capital.6”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“By the fall of 1929, Livermore built up his biggest short position ever, $450 million spread across 100 stocks. And he was about to receive the biggest payday of his entire life. From October 25 through November 13, the Dow crashed 32%. In those 11 days, the Dow fell 5% seven times. Livermore covered all of his shorts and was worth $100 million, equivalent to $1.4 billion in today's dollars. He was one of the richest people in the world. This would be the height of his powers.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“Graham taught his students and his readers that prices fluctuate more than value, because it is humans who set price, while businesses set value.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“In 1720, as shares of the South Sea Company began to rise and hysteria swept the streets of London, Newton found himself in a precarious situation. He bought and sold the stock, earning a 100% return on his investment. Except shares of the South Sea Company rose eightfold in under six months, and they did not stop going higher just because he decided to collect his profits. Unable to cope with the feelings of regret, Newton jumped back into the stock with three times the amount of his original purchase. He reentered as shares approached their apex and instead of doubling his money, he would lose nearly all of it. When the bubble burst, it took just four weeks for prices to plummet 75%. This left Newton despondent, and it is said that he could not stand to hear the words “South Sea” for the rest of his life. He got an expensive lesson in just how far intelligence goes when attempting to turn money into even more money.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“From peak to trough (June 1998 through March 2000), Warren Buffett's Berkshire Hathaway fell 51% in value! During this time, I estimated that Buffett's net worth fell by more than $10 billion. How much Berkshire did Buffett sell? How much Cisco did he buy? Zero point zero. Not tempted by tech stocks, Buffett remained committed to value investing, and it paid off.1 One of the keys to successfully managing your money is to accept, like Buffett did, that there will be times when your style is out of favor or when your portfolio hits a rough patch. It's when you start to reach for opportunities that you can do serious damage to your financial well‐being.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“In Tsai's go‐go years, high‐flying stocks with​ positive momentum were all the rage. Polaroid, Xerox, IBM all traded at price‐to‐earnings ratios of more than 50. These expensive stocks were supported by explosively high growth rates. From 1964 to 1968, IBM, Polaroid, and Xerox grew their earnings per share at 88%, 22%, and 171%, respectively. Others like University Computing, Mohawk Data, and Fairchild Camera traded at several‐hundred times their trailing 12‐month earnings. The latter three and many others like them would go on to lose more than 80% in the 1969–1970 bear market. The Manhattan Fund was up almost 40% in 1967, more than double the Dow. But in 1968, he was down 7% and was ranked 299th out of 305 funds tracked by Arthur Lipper.16 When the market crash came, the people responsible were entirely unprepared. By 1969, half of the salesmen on Wall Street had only come into the business since 196217 and had seen nothing but a rising market. And when stocks turned, the highfliers that went up the fastest also came down the fastest. For example, National Student Marketing, which Tsai bought 122,000 shares for $5 million, crashed from $143 in December 1969 to $3.50 in July 1970.18 Between September and November 1929, $30 billion worth of stock value vanished; in the1969‐1970 crash, the loss was $300 billion!19 The gunslingers of the 1960s were thinking only about return and paid little attention to risk. This carefree attitude was a result of the market they were playing in. From 1950 through the end of 1965, the Dow was within 5% of its highs 66% of the time, and within 10% of its highs 87% of the time. There was virtually no turbulence at all. From 1950 to 1965, the only bear market was “The Kennedy Slide,” which chopped 27% off the S&P 500, and recovered in just over a year.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“Twain recalled, “He visited me every few days to report progress and I early noticed by his breath and gait that he was spending 36 dollars a week on whisky, and I could never figure out where he got the other dollar.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“The lesson us mere mortals can learn from this seminal blowup is obvious: Intelligence combined with overconfidence is a dangerous recipe when it comes to the markets. ​”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“Amazon is up a whopping 38,600% since its 1997 IPO, compounding at 35.5% annually. This would have grown a $1,000 investment into $387,000 today. But the degree of difficulty of actually turning that $1,000 into $387,000 20 years later cannot be overstated. See, Amazon got cut in half three separate times. On one of those occasions, from December 1999 through October 2001, it lost 95% of its value! Over that time, the hypothetical $1,000 investment would have shrunk from a high of $54,433 down to $3,045, a $51,388 loss. So you see why looking at a long‐term winner and wishing you had bought in is a fool's errand. “Man I should have known Amazon was going to change the world.” Fine, perhaps you should have. But even if you had that information, it would not have made it any easier to hang on for the ride.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“Studying what happened in the past might not serve as any guide to what
will happen when rates rise in the future”
― Michael Batnick

“In a winner's game the outcome is determined by the correct actions of the winner. In a loser's game, the outcome is determined by mistakes made by the loser.1 —Charlie Ellis”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“Quit while you're ahead. All the best gamblers do.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“Quit while you're ahead. All the best gamblers do. —Baltasar Gracian”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“​Genius is a rising market. —John Kenneth Galbraith”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“Fundamentals are how fast the horse runs and expectations are the odds.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“The most important thing successful investors have in common is worrying about what they can control. They don't waste time worrying about which way the market will go or what the Federal Reserve will do or what inflation or interest rates will be next year. They stay within their circle of competence, however narrow that might be. Warren Buffett said, “What counts for most people in investing is not how much they know, but rather how realistically they define what they don't know.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“Genius is a rising market. —John Kenneth Galbraith”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

“We frequently hear “stocks typically return between eight and ten percent a year.” Well, over multiple decades, you could say they'll compound at between 8 and 10%, but the last time the Dow returned between 8 and 10% was 1952. There is a lot of space between what you expect the market to do and what it actually does, and this is where unforced errors lurk. Stocks tend to swing in a wide range, spending a lot of time at the fringe and little time near the average, delivering maximum frustration. This sort of erratic behavior transfers money from the amateur's pocket and into the professional's.”
― Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments