Money and Finance
- Charlie Munger And Circle Of Competence...
From Charlie Munger: The Complete Investor:Munger has a range of approaches he uses to avoid mistakes. To make this point by analogy, Munger is fond of saying that he wants to know where he will die so he can intentionally never go there. His friend...
- 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...
- Jim Chanos Interview
Found via The Reformed Broker. LP: What do we know about the timing of frauds? When are they most likely to happen? JC: One of our models is the Kindleberger-Minsky model, named after Hyman Minsky and Charles Kindleberger. It’s a macro model, and basically...
- Warren Buffett Quote On Filters
As I've previously mentioned (HERE) how important I think filters are in deliberate practice and achieving expertise in investing, this quote from Warren Buffett during yesterday's Berkshire Hathaway Annual Meeting really struck a chord with me:"Charlie...
- 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...
Money and Finance
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 dismiss logic, history and time- honored norms. This tendency makes people accept unlikely propositions that have the potential to make them rich . . . if only they held water. Charlie Munger gave me a great quotation on this subject, from Demosthenes: “Nothing is easier than self- deceit. For what each man wishes, that he also believes to be true.” Th e belief that some fundamental limiter is no longer valid— and thus historic notions of fair value no longer matter— is invariably at the core of every bubble and consequent crash.
In fiction, willing suspension of disbelief adds to our enjoyment. When we watch Peter Pan, we don’t want to hear the person sitting next to us say, “I can see the wires” (even though we know they’re there). While we know boys can’t fl y, we don’t care; we’re just there for fun.
But our purpose in investing is serious, not fun, and we must constantly be on the lookout for things that can’t work in real life. In short, 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?”
- Charlie Munger And Circle Of Competence...
From Charlie Munger: The Complete Investor:Munger has a range of approaches he uses to avoid mistakes. To make this point by analogy, Munger is fond of saying that he wants to know where he will die so he can intentionally never go there. His friend...
- 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...
- Jim Chanos Interview
Found via The Reformed Broker. LP: What do we know about the timing of frauds? When are they most likely to happen? JC: One of our models is the Kindleberger-Minsky model, named after Hyman Minsky and Charles Kindleberger. It’s a macro model, and basically...
- Warren Buffett Quote On Filters
As I've previously mentioned (HERE) how important I think filters are in deliberate practice and achieving expertise in investing, this quote from Warren Buffett during yesterday's Berkshire Hathaway Annual Meeting really struck a chord with me:"Charlie...
- 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...