The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing)

by Howard Marks

the quality of a decision is not determined by the outcome.

Short-term gains and short-term losses are potential impostors, as neither is necessarily indicative of real investment ability (or the lack thereof).

view the future as a probability distribution and invest accordingly;

the more challenging and potentially lucrative the waters you fish in, the more likely they are to have attracted skilled fishermen.

A portfolio that contains too little risk can make you underperform in a bull market, but no one ever went bust from that; there are far worse fates.

When there’s nothing particularly clever to do, the potential pitfall lies in insisting on being clever.

Investment expectations must be reasonable. Anything else will get you into trouble, usually through the acceptance of greater risk than is perceived.

Thus, in the good years, defensive investors have to be content with the knowledge that their gains, although perhaps less than maximal, were achieved with risk protection in place … even though it turned out not to be needed.