Internet Bubble 2.0?
The big rise of LinkedIn shares at its IPO provides another good excuse to paste some wise excerpts from Howard Marks’ book, The Most Important Thing.
The desire for more, the fear of missing out, the tendency to compare against others, the influence of the crowd and the dream of the sure thing—these factors are near universal. Thus they have a profound collective impact on most investors and most markets. The result is mistakes, and those mistakes are frequent, widespread and recurring.
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…the process of investing requires a strong dose of disbelief. . . . Inadequate skepticism contributes to investment losses. Time and time again, the postmortems of financial debacles include two classic phrases: “It was too good to be true” and “What were they thinking?"
...As Warren Buffett told Congress on June 2, 2010, “Rising prices are a narcotic that affects the reasoning power up and down the line.”…
Time and time again, the combination of pressure to conform and the desire to get rich causes people to drop their independence and skepticism, overcome their innate risk aversion and believe things that don’t make sense.
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People who might be perfectly happy with their lot in isolation become miserable when they see others do better. In the world of investing, most people find it terribly hard to sit by and watch while others make more money than they do.
- Howard Marks On The Biggest Investing Errors
From The Most Important Thing:The desire for more, the fear of missing out, the tendency to compare against others, the influence of the crowd and the dream of the sure thing— these factors are near universal. Thus they have a profound collective impact...
- The Willing Suspension Of Disbelief...
Via Howard Marks in The Most Important Thing: Many times over the course of my career, I’ve been amazed by how easy it is for people to engage in willing suspension of disbelief. Thus, the third factor I want to discuss is people’s tendency to...
- The Wsj Interview With Robert Shiller
Link to interview: Robert Shiller's Nobel KnowledgeQ: One theme that runs through your work is that people tend to make mistakes over and over again. That's quite different than what I learned in college economics—that people are rational. How...
- Howard Marks Interviewed By Hugo Scott-gall
Via Zero Hedge: Hugo Scott-Gall: How can we understand investor psychology and use it to make investment decisions? Howard Marks: It's the swings of psychology that get people into the biggest trouble, especially since investors’ emotions invariably...
- Excerpt From The Most Important Thing Illuminated - By Howard Marks
Combating Negative Influences By Howard Marks, Author of The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor People who might be perfectly happy with their lot in isolation become miserable when they see others do better....