Smart Investors Quotes

I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.

The idea that “it takes money to make money” is the thinking of financially unsophisticated people. It does not mean that they’re not intelligent. They have simply not learned the science of money making money. Money is only an idea. If you want more money, simply change your thinking. Every self-made person started small with an idea, and then turned it into something big. The same applies to investing. It takes only a few dollars to start and grow it into something big. I meet so many people who spend their lives chasing the big deal, or trying to amass a lot of money to get into a big deal, but to me that is foolish. Too often I have seen unsophisticated investors put their large nest egg into one deal and lose most of it rapidly. They may have been good workers, but they were not good investors. Education and wisdom about money are important. Start early. Buy a book. Go to a seminar. Practice. Start small. I turned $5,000 cash into a one-million-dollar asset producing $5,000 a month cash flow in less than six years. But I started learning as a kid. I encourage you to learn, because it’s not that hard. In fact, it’s pretty easy once you get the hang of it. I think I have made my message clear. It’s what is in your head that determines what is in your hands. Money is only an idea. There is a great book called Think and Grow Rich. The title is not Work Hard and Grow Rich. Learn to have money work hard for you, and your life will be easier and happier. Today, don’t play it safe. Play it smart.

The best investors are visionaries—they look beyond the present. By the same token, vision remains vision until you focus, do the work, and bring it down to earth where it will do some good.

Einstein also recognized the power of simplicity, and it was the key to his breakthroughs in physics. He noted that the five ascending levels of intellect were, “Smart, Intelligent, Brilliant, Genius, Simple.” For Einstein, simplicity was simply the highest level of intellect.

SOME PEOPLE ARE JUST born unlucky—so unlucky in fact that they do just the opposite of what they should at exactly the wrong time. Suckers? Maybe. But in the business of investing, those people have a name: retail investors.

I don’t have any wonderful insights that other people don’t have. I just have slightly more consistently than others avoided idiocy. Other people are trying to be smart. All I’m trying to be is non-idiotic. I find that all you have to do to get ahead in life is to be non-idiotic and live a long time. It’s harder to be non-idiotic than most people think.

Here are my simple rules for identifying market tops and bottoms: 1. Market tops are relatively easy to recognize. Buyers generally become overconfident and almost always believe “this time is different.” It’s usually not. 2. There’s always a surplus of relatively cheap debt capital to finance acquisitions and investments in a hot market. In some cases, lenders won’t even charge cash interest, and they often relax or suspend typical loan restrictions as well. Leverage levels escalate compared to historical averages, with borrowing sometimes reaching as high as ten times or more compared to equity. Buyers will start accepting overoptimistic accounting adjustments and financial forecasts to justify taking on high levels of debt. Unfortunately most of these forecasts tend not to materialize once the economy starts decelerating or declining. 3. Another indicator that a market is peaking is the number of people you know who start getting rich. The number of investors claiming outperformance grows with the market. Loose credit conditions and a rising tide can make it easy for individuals without any particular strategy or process to make money “accidentally.” But making money in strong markets can be short-lived. Smart investors perform well through a combination of self-discipline and sound risk assessment, even when market conditions reverse.

While we might expect to see venture capital develop further in an increasingly intangible economy, it is not clear that governments can or should do much more to promote it than they already do. As Josh Lerner showed in The Boulevard of Broken Dreams (2012), once tax breaks or subsidies for venture capital get beyond a certain level, they tend to encourage dumb investments (since the tax gain on its own is enough for the investors to profit); since the entire point of venture capital is smart investment, very large tax breaks are self-defeating. For a country to grow its venture capital sector, time and favorable framework conditions are more important than additional subsidies.

great. This is a good description of Rovio, which was around for six years and underwent layoffs before the “instant” success of the Angry Birds video game franchise. In the case of the Five Guys restaurant chain, the founders spent fifteen years tweaking their original handful of restaurants in Virginia, finding the right bun bakery, the right number of times to shake the french fries before serving, how best to assemble a burger, and where to source their potatoes before expanding nationwide. Most businesses require a complex network of relationships to function, and these relationships take time to build. In many instances you have to be around for a few years to receive consistent recognition. It takes time to develop connections with investors, suppliers, and vendors. And it takes time for staff and founders to gain effectiveness in their roles and become a strong team.* So, yes, the bar is high when you want to start a company. You’ll have the chance to work on something you own and care about from day to day. You’ll be 100 percent engaged and motivated, and doing something you believe in. You can lead an integrated life, as opposed to a compartmentalized one in which you play a role in an office and then try to forget about it when you get home. You can define an organization, not the other way around. But even if you quit your job, hunker down for years, work hard for uncertain reward, and ask everyone you know for help, there’s still a great chance that your new business will not succeed. Over 50 percent of companies fail within their first three years.2 There’s a quote I like from an unknown source: “Entrepreneurship is living a few years of your life like most people won’t, so that you can spend the rest of your life like most people can’t.

History favors the bold. Compensation favors the meek. As a Fortune 500 company CEO, you’re better off taking the path often traveled and staying the course. Big companies may have more assets to innovate with, but they rarely take big risks or innovate at the cost of cannibalizing a current business. Neither would they chance alienating suppliers or investors. They play not to lose, and shareholders reward them for it—until those shareholders walk and buy Amazon stock. Most boards ask management: “How can we build the greatest advantage for the least amount of capital/investment?” Amazon reverses the question: “What can we do that gives us an advantage that’s hugely expensive, and that no one else can afford?” Why? Because Amazon has access to capital with lower return expectations than peers. Reducing shipping times from two days to one day? That will require billions. Amazon will have to build smart warehouses near cities, where real estate and labor are expensive. By any conventional measure, it would be a huge investment for a marginal return. But for Amazon, it’s all kinds of perfect. Why? Because Macy’s, Sears, and Walmart can’t afford to spend billions getting the delivery times of their relatively small online businesses down from two days to one. Consumers love it, and competitors stand flaccid on the sidelines. In 2015, Amazon spent $7 billion on shipping fees, a net shipping loss of $5 billion, and overall profits of $2.4 billion. Crazy, no? No. Amazon is going underwater with the world’s largest oxygen tank, forcing other retailers to follow it, match its prices, and deal with changed customer delivery expectations. The difference is other retailers have just the air in their lungs and are drowning. Amazon will surface and have the ocean of retail largely to itself.

I believe that social media, and the internet as a whole, have negatively impacted our ability to both think long-term and to focus deeply on the task in front of us. It is no surprise, therefore, that Apple CEO, Steve Jobs, prohibited his children from using phones or tablets—even though his business was to sell millions of them to his customers! The billionaire investor and former senior executive at Facebook, Chamath Palihapitiya, argues that we must rewire our brain to focus on the long term, which starts by removing social media apps from our phones. In his words, such apps, “wire your brain for super-fast feedback.” By receiving constant feedback, whether through likes, comments, or immediate replies to our messages, we condition ourselves to expect fast results with everything we do. And this feeling is certainly reinforced through ads for schemes to help us “get rich quick”, and through cognitive biases (i.e., we only hear about the richest and most successful YouTubers, not about the ones who fail). As we demand more and more stimulation, our focus is increasingly geared toward the short term and our vision of reality becomes distorted. This leads us to adopt inaccurate mental models such as: Success should come quickly and easily, or I don’t need to work hard to lose weight or make money. Ultimately, this erroneous concept distorts our vision of reality and our perception of time. We can feel jealous of people who seem to have achieved overnight success. We can even resent popular YouTubers. Even worse, we feel inadequate. It can lead us to think we are just not good enough, smart enough, or disciplined enough. Therefore, we feel the need to compensate by hustling harder. We have to hurry before we miss the opportunity. We have to find the secret that will help us become successful. And, in this frenetic race, we forget one of the most important values of all: patience. No, watching motivational videos all day long won’t help you reach your goals. But, performing daily consistent actions, sustained over a long period of time will. Staying calm and focusing on the one task in front of you every day will. The point is, to achieve long-term goals in your personal or professional life, you must regain control of your attention and rewire your brain to focus on the long term. To do so, you should start by staying away from highly stimulating activities.

According to the media and other stock market "experts," the equities bull is forever hiding just around that next corner on Wall Street. But millions of investors who listened to the experts back in 1998-2001 about "the New Economy" get hammered in the stock market and are still trying to get back to even. The smart investor looks for opportunities to acquire value on the cheap, with one eye out for a dynamic change in the offing that might make that investment even more valuable.

If Cole successfully analyzes an opportunity for the hedge fund and it invests slightly more effectively, that will be a win for the fund’s managers and its investors. But there will very likely be an equivalent loss on the other side of the investment (whoever sold it to them makes out slightly less well for having undervalued the asset). It’s not clear what the macroeconomic benefit is, unless you either favor the hedge fund’s investors over others or have a very abstract view toward capital markets working efficiently.

The adversary politics thesis contends that attempts to generate long-term solutions to problems are thwarted by a system that encourages an adversary relationship between the two main political parties, with those parties vying with one another for the all-or-nothing spoils of a general election victory.39 Investors and managers are unable to plan ahead because the

The nature of the private markets is that if nine smart investors pass, it only takes one relatively dumber investor, and suddenly we’re valued at $16 billion,” the finance team member said

Smart investors don’t time the markets. If they miss a wave, they search for the next one and get themselves in position.

The problem was a crazy problem. It wasn’t going to have a non-crazy solution. Still, she’d sort of shocked herself. She’d never had the slightest interest in business. But if she wanted to save the country, she’d need to become an entrepreneur, and create a company—though in business, she quickly learned, she couldn’t talk like that. When she said she wanted to build a tool “to save the country,” people just smiled and thought she was goofy in the head. But when she said things like “I’m going to create a data-based tool for disease prevention that companies can use to secure their supply chains,” serious business types nodded. “Five smart people have replied with confusion when I said the company was to save the world and protect our country,” said Charity, after her first attempts to explain her vague idea. “Then when I said, ‘We’re going to do private government operations, like Blackwater,’ their eyes lit up and they said, ‘Oh wow, you could take over the world.’ ” She’d entered the private sector with the bizarre ambition to use it to create an institution that might be used by the public sector. She’d already hired twenty people, among them public-health nurses and some of the team at the Chan Zuckerberg Biohub responsible for genomic sequencing, including Josh Batson and David Dynerman. Joe DeRisi had signed on as an adviser; Carter Mecher was about to. She’d raised millions of dollars in capital. Venrock, a leading health care venture capitalist, had taken a stake in the new company. As a local health officer, she hadn’t been able to get the tens of thousands of dollars she needed for some new disease-stopping machine. In the private sector, people would throw tens of millions at an idea: if she failed, it wouldn’t be because investors wouldn’t give her the money to try. The Public Health Company, she’d called it.

If you reinvest dividends, which can often be a very smart investment move, you will no longer get to see on your statement what you originally paid to buy the position. Instead, our dividend profit masquerades as principal in a very powerful illusion that affects almost every investor.

The best on horses you think will lose are a valuable "insurance policy." When rare disaster strikes, you'll be glad you had the insurance. 71 The exponential growth of wealth in the Kelly system is also a consequence of proportional betting. As the bankroll grows, make larger bets. 98 [2 questions are central to John Kelly's analysis] What level of risk will lead to the highest long-run return? What is the chance of losing everything? 286 As Fred Schwed, Jr. author of Where are the Customer's Yatchs? put it back in 1940, "Like all of life's rich emotional experiences, the full flavor of losing important money cannot be conveyed in literature." 304 Claude Shannon: A smart investor should understand where he has an edge and invest only in those opportunities. 308 The longer you hold a stock, the harder it is to beat the market by much. 316

Non-Round Numbers Are Better at Anchoring Choosing a round number will send the message—especially to experienced negotiators—that you have no specific rationale for that price. And, if you have no rationale for a price, it’s reasonable to assume that you aren’t committed to that price. For example, if a house is listed at $250,000, and you offer $200,000, a smart seller will realize that it’s unlikely that $200,000 number has any specific meaning to you, and that you’re likely just fishing to see if the seller will budge on their price. On the other hand, if you were to offer, $204,200 on that same house, the seller will assume there was thought put into that offer, and will likely believe that the number has some specific meaning. You could reinforce this belief by communicating additional information to the seller when making the offer. For example, before offering $204,200, you might say to the seller: Investor: “I’m glad I met you today… this is actually perfect timing. I just left a closing this morning where I sold a previous property, and I have some cash available to make another purchase.” You haven’t said that the amount of cash you have available is $204,200, but given that your offer is so specific, the seller will likely assume a connection. The seller is now anchored to your $204,200 number, subconsciously thinking that this number is important to your side of the negotiation, perhaps even a requirement for you. Later in the negotiation, you can reinforce this anchor by saying something to the effect of: Investor: “I only have a specific amount of cash available to invest right now. I may be able to increase my offer a little bit, but not much.” Without saying it, you have reinforced the belief that $204,200 is the specific amount you have available to purchase the property, though you’re willing to reluctantly try to find a few more nickels under the sofa cushion.

Whatever the reason, the existence of some persistent investment factors is today accepted by almost every (if not all) financial economist and investor. In an ingenious bit of marketing, factors are often called “smart beta.” Sharpe himself grew to hate the term, as it implies that all other forms of beta are dumb.10 Most financial academics prefer the term “risk premia,” to more accurately reflect the fact that they think these factors primarily yield an investment premium from taking some kind of risk—even if they cannot always agree what the precise risk is. An important milestone was when Fama and his frequent collaborator Ken French—another Chicago finance professor who would later also join DFA—in 1992 published a paper with the oblique title “The Cross-Section of Expected Stock Returns.”11 It was a bombshell. In what would become known as the three-factor model, Fama and French used data on companies listed on the NYSE, the American Stock Exchange, and the Nasdaq from 1963 to 1990 and showed that both value (the tendency of cheap stocks to outperform expensive ones) and size (the tendency of smaller stocks to outperform bigger ones) were distinct factors from the broader market factor—the beta. Although Fama and French’s paper termed these factors as rewards for taking extra risks, coming from the father of the efficient-markets hypothesis, it was a signal event in the history of financial economics.12 Since then academics have identified a panoply of factors, with varying degrees of durability, strength, and acceptance. Of course, factors do not always work. They can go through long fallow stretches where they underperform the market. Value stocks, for example, suffered a miserable bout of performance in the dotcom bubble, when investors wanted to buy only trendy technology stocks. And to DFA’s chagrin, after small caps enjoyed a robust year in DFA’s first year of existence, they would then undergo a long, painful seven-year period of trailing dramatically behind the S&P 500.13 DFA managed to keep growing, losing very few clients, partly because it had always stressed to them that stretches like this could happen. But it was an uncomfortable period that led to many awkward conversations with clients.

Fama proposed that in an efficient market, the competition among so many smart traders, analysts, and investors meant that at any given time, all known, relevant information was already reflected in stock prices. And new information would continually be baked into the price virtually instantaneously.

Although financial markets are a wildly more dynamic game, with infinitely more permutations and without the fixed rules of poker, the metaphor is a compelling explanation for why markets actually appear to be becoming harder to beat even as the tide of passive investing continues to rise. Mediocre fund managers are simply being gradually squeezed out of the industry. At the same time, the number of individual investors—the proverbial doctors and dentists getting stock tips on the golf course and taking a bet—has gradually declined, depriving Wall Street of the steady stream of “dumb money” that provided suckers for the “smart money” of professional fund managers to take advantage of.

Discount brokerage accounts are low-cost online accounts offered by firms like E*TRADE, Charles Schwab, and Fidelity. These accounts allow do-it-yourself investors to purchase a large variety of common stocks, mutual funds, and exchange-traded funds (ETFs),

Passion is an excellent guide for choosing hobbies but less so for choosing a business.

According to the Global Entrepreneurship Monitor (Babson College and the London Business School), friends and family investing annually accounts for $50 to $75 billion in early stage capital in the United States. This is two to three times the amount of money invested annually by either angel investors or venture capitalists.

Loans are easier than equity. I generally think that offering debt is better than offering equity. When you offer F&F members equity, they are legally your business partners. Do you really want Uncle Freddy as a business partner? It’s better to treat such investments as loans. But if your F&F members insist on equity, try to make it nonvoting stock, so they can’t insist on being consulted on every management decision.

A short list of good ETFs from Vanguard and iShares will get just about any investor to his or her goal.

Startups often make a fatal assumption when they attend presentations, business plan competitions, or demo days. They assume they are basically invisible until they take their place on the stage. Big mistake. The truth is, investors are observing you. We learn as much from watching your off-stage behavior as your canned presentation. Here’s a good way to go. Resolve that your formal presentation starts the moment team members leave their homes or offices and ends only when the last team member returns. At all other times, you are “on.” Assume the microphones are always on and someone has a camera phone on you at all times. Act like a disciplined team at all times. Watch what you say in the elevator or in the bathroom. You can’t believe the damaging stuff I’ve heard in bathrooms. Wait to debrief until you get back to the privacy of your office.

We are now seeing angels outsourcing due diligence to entities they assume will do it better. In one case, the entity is Y Combinator, the elite accelerator. Yuri Milner’s DST Fund and Ron Conway’s SV Angel fund recently announced that they will invest in every single startup coming out of Y Combinator. The seed rounds will provide $150,000 to every single one of the 40 startups that wants it, without any due diligence on their own part whatsoever. The capital is in the form of convertible debt with no cap and no discount. The loan will convert when and if the startup raises a proper angel or VC capital round at the same valuation that’s set in the round. Most convertible debt has a valuation ceiling and also gets a discount on conversion. The angels are banking on the premise that Y Combinator, in vetting the startups it stewards, has performed satisfactory due diligence. Milner has effectively shut out any other angel investors by offering such attractive terms. It’s almost free money. I’d be surprised if any of the 40 startups in each Y Combinator class decline such an offer.

Burning bridges with one investor can cut off multiple sources because of their extensive networks.

The problem is, when are we ever satisfied?

Seventy-five percent of success is predicted by your optimism level, your social support, and (perhaps most of all for entrepreneurs) your ability to see stress as a challenge instead of as a threat, according to Shawn Achor in a fabulous TED talk called “The Happy Secret to Better Work.

A mutual fund pools together money from many different investors and invests this larger pool in a portfolio of stocks.

People think that bold projects don’t get funding because of their audacity. That’s not the case. They don’t get funded because of a lack of measurability. Nobody wants to make a large up-front investment and wait ten years for any sign of life. But more often than not, if you can show progress along the way, smart investors will come on some pretty crazy rides.

The efficient market hypothesis (EMH) explains this phenomenon: current market prices reflect the total knowledge and expectations of all investors, and it is highly unlikely that one investor can know more than the market does collectively. For

Markets compensate investors with expected returns commensurate with the degree of risk they take. By investing in asset classes that are higher risk, and therefore higher return, an investor can expect to outperform the market as a whole—while acknowledging that they are accepting greater risk. These higher risk, higher expected return asset classes are small-capitalization stocks, value stocks, and small-value stocks. An

While investing in equities always entails risk, the longer the investment horizon, the more likely it is that equity investors will be rewarded for taking incremental risk—assuming they have the ability to remain disciplined during periods of economic crisis. Disciplined investors think bear markets are really just periods when the market temporarily wears a big “for sale” sign. On

Rather than attempt to time the market or pick individual stocks, it is more productive to invest and stay invested. As Warren Buffett said: “We continue to make more money when snoring than when active.” Mr. Buffett also said: “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after expenses and fees) delivered by the great majority of investment professionals.

Oil and Gas Investing in Permian Basin-Smart Move As the true scope of Permian Basin is being understood, one thing is very clear; it is going to attract a lot of investment. As in case of all oil and gas investments, the sooner you invest, the better your returns are going to be. Right now is the perfect time for oil and gas investing in Permian Basin. There are a lot of benefits of choosing to invest in things other than the property, shares and stocks circuit. It not just helps you spread out your earnings, it lets you test potential markets such as these. As these markets are not overcrowded, there is more scope for growth. But why should you choose oil and gas investing in Permian Basin when you have dependable assets elsewhere? The answer is that those assets multiply at such a slow pace that you forget they are there while when there is an oil and gas boom, it turns your fortunes. An oil well investment brings with it years of steady income with the benefit of tax deduction on the investment. It is not as much a gamble as it is made out to be and oil strikes are more frequent than people would like you to believe. About 15% annual income from oil and gas wells is exempt from tax and 65-85% of your first year's investment can be waived off. Gone are the days when all you could do with oil well was bore increasingly downwards, vertically. Now there is technology available that lets you draw oil supply for a long, long time after the initial vertical bore runs dry. With new advancements in drilling and extracting techniques, a lot of oil that was earlier as good as not being there has suddenly become readily available. Being with a company that is well equipped with the latest technology gives your investment more stability. That is one of the reasons for a revival of the boom in Permian Basin and it has been predicted to last for a long time to come. Choose with great care a reliable and experienced company that is a seasoned hand at oil and gas drilling and production. Oil and gas investing in Permian Basin is bound to attract many investors looking to be a part of the upward trend. Invest today and reap benefits for years to come.

Jill buys an index mutual fund that tracks the overall stock market, never touching her money and earning the same return as the overall stock market. Average Joe "tinkers" with his portfolio, purchasing some mutual funds through his financial advisor and investing in stocks whenever he gets a particularly juicy tip from his neighbor. Joe earns the same return as the average investor in the stock market.

Luckily, however, investors and fund managers are smart people who understand what Richard Feynman, the renowned Nobel Prize–winning physicist, had to say about risk: “The first principle is that you must not fool yourself—and you are the easiest person to fool.

When a grocery shop owner can obtain multiple bogus ration card with the support of government authorities, it is also possible for a smart person to open huge number of bogus demat accounts with the help of official responsible for opening such accounts. Unlike

Umar Farooq Zahoor, well-established and smart Norwegian businessmen born into a warm Pakistani family in 1975 has made his name among the world’s best business tycoons. With all his experiences of success, he has managed to become the name behind several successfully established companies today. Sheikh Umar Farooq Zahoor stepped into this world of business when he was just 18 years of age and has never looked back. He has received the honorable title of a philanthropist because of his numerous contributions and support from different parts of the society. His craving for success made him famous in every field where he stepped in and is a smart business investor is now one of the well-settled businessmen in Dubai, U.A.E. Over the years he has been successfully running several companies in multiple industries.

Developers have their own network effect: the more smart developers there are working on a project, the more useful and intriguing that project becomes to other developers. These developers are then drawn to the project, and a positively reinforcing flywheel is created.

We believe smart contracts are better thought of as conditional transactions because they refer to logic written in code that has “IF this, THEN that” conditions.

Counterparty is a cryptocommodity that runs atop Bitcoin, and was launched in January 2014 with a similar intent as Ethereum. It has a fixed supply of 2.6 million units of its native asset, XCP, which were all created upon launch. As described on Counterparty’s website, “Counterparty enables anyone to write specific digital agreements, or programs known as Smart Contracts, and execute them on the Bitcoin blockchain.”7 Since Bitcoin allows for small amounts of data to be transmitted in transactions and stored on Bitcoin’s blockchain, it becomes the system of record for Counterparty’s more flexible functionality. Since Counterparty relies upon Bitcoin, it does not have its own mining ecosystem.

As impact investment managers show that they can deliver a desirable combination of impact and financial return, impact investment will become more than a moral choice – it will become a smart business decision. Investors will come to realize that we are able to increase returns not in spite of impact, but because of it.

This is an extreme example, but easy math. If a $20.00 stock declines by 50% to $10.00, you will need a 100% gain to break even. Why? 100 shares of a $20.00 stock are worth $2,000.00 dollars. After a 50% decline, your investment is now only $1,000.00. So, even if the stock rebounds 50% back to the original price on the following day, your $1,000.00 is now only $1,500.00. 75% down, you need 300% to get back to even. If you were wrong on a stock. Take a loss. It's tuition. Use what you have left to make better choices.