A Wealth of Common Sense Quotes

“Thinking, Fast and Slow by Daniel Kahneman The Four Pillars of Investing by William Bernstein The Little Book of Common Sense Investing by John Bogle The Little Book of Behavioral Investing by James Montier Stocks for the Long Run by Jeremy Siegel The Warren Buffett Portfolio by Robert Hagstrom Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger by Janet Lowe Investing: The Last Liberal Art by Robert Hagstrom Success Equation: Untangling Skill and Luck in Business, Sports, and Investing by Michael Mauboussin Devil Take the Hindmost by Edward Chancellor The Most Important Thing by Howard Marks All About Asset Allocation by Rick Ferri Winning the Loser's Game by Charles Ellis”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Negative knowledge is the process of first looking at what does not work to eventually come to the realization of what does. This process of elimination may seem like a minor distinction and a backwards way of looking at the world, but once investors are able to negate bad behavior, all that's left over are improvements and better decisions.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Here is some standard investment advice that is both simple and effective: Think and act for the long term. Ignore the noise. Buy low, sell high. Keep your emotions in check. Don't put all of your eggs in one basket. Stay the course.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Everyone wants to outperform the market over every single time frame, both short term and long term. There's a name for this strategy—it's called impossible.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“The best investors always think in terms of probabilities. Even if you're fairly certain of a particular outcome, always play devil's advocate to your own line of thinking to have a contingency plan in case something goes wrong.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Time is one of the most misunderstood, yet important, concepts to understand about the investment process. Time doesn't guarantee you anything, but it increases your probability for success when you use it to your advantage. Many investors have learned the hard way that trying to beat the market over shorter time frames can be more trouble than it's worth.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Every day at noon, Saban eats the same exact lunch—a salad with lettuce, cherry tomatoes, and turkey slices served in a Styrofoam container. Automating his lunch decision allows Saban to focus on more important tasks at hand. That minor decision is eliminated.1 Saban says that if you can “Eliminate the clutter and all the things that are going on outside and focus on the things that you can control with how you sort of go about and take care of your business. That's something that's ongoing, and it can never change.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Everything about the investment process is a series of trade-offs. Investing itself is delaying current consumption for future consumption. You can either try to maximize your chances of getting rich or minimize your chances of missing out on your goals and becoming poor. You have to be willing to accept periodic large losses to earn higher long-term returns. Or you have to save a lot more money to accept lower returns and decrease your chances of short-term losses. You have to be able to sleep at night, but also be able to sustain your living standards throughout retirement. You have to worry about certain spending needs in the near-term but also your spending needs many decades out. Decisions, decisions.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Intelligent investors know that they should also plan for the inevitable by asking themselves: What if I'm wrong? Diversification is the ``what-if-I'm-wrong?'' portion of the investment process.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Diversification is the best way to admit you have no idea what's going to happen in the future. It's how you prepare a portfolio for a wide range of future possibilities and admit your own infallibility.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“In the 1960s, when America was neck and neck in a race with Russia to get the first man into space, NASA trained the astronauts in one skill more than any other—the art of not panicking.16 Nothing else matters if you can't control your reactions under stressful situations. Panic is a huge reason for the behavior gap that persists in investor returns. It causes unforced errors. People abandon their plans. They ignore good advice. They forget their time horizon and risk profile. It becomes about the next 24 hours instead of the next 24 years.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“The paradox of skill shows that as skill improves in a given task, the variance of outperformance shrinks—meaning the range of results becomes compressed—and luck becomes more important in determining the winners and losers.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“The benefits of simplicity, even for those who excel at their craft, is that it can help keep you grounded. This can be a good lesson to understand in all walks of life. People who earn the most money are likely to be higher up the totem pole in management positions at most companies. The problem is that the power and responsibility these higher-ups have can lead to overconfidence in other areas of their life.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Simply put, the more often you trade the higher the probability of incurring worse results from a combination of increased costs and poor market timing decisions.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“The long-term increase in the stock market is entirely the result of the increase in long-term dividends and earnings growth of the companies that make up the market. How much investors are willing to pay for those earnings and dividends will change constantly. Much of these fluctuations have to do with speculation, but most of them have to do with the fact that investors are constantly projecting out the recent past into an uncertain future. That doesn't mean the odds are stacked against individual investors; just the ones who are unable to control their emotions.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“This is why total return matters—not just income. The total return to investors over three years was –13.7 percent even though each year the company started out showing a yield in excess of 15 percent. Also, the amount of dividend payments dropped over 30 percent. There are investors who will see 15 percent yields and think it's a can't-miss investment opportunity with little-to-no-risk involved because there's a dividend payment attached. Yield makes investors feel safe because it's tangible. As usual, higher returns come from higher risks, and a higher yield means higher risk. Either you own high-quality investments with a lower yield, but more safety in the short term, or you own riskier investments with a higher yield and less short-term safety of principal.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Risk means different things to different investors over different time horizons.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“When the unemployment rate has been below average, the S&P 500 is up 6 percent annually, much lower than the long-term average of almost 10 percent per year in that time. When the unemployment rate has been above average, the annual performance of stocks jumps to over 16 percent per year. An unfortunate truth of the stock market is that the best time to buy is when conditions are at their worst.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“For investors with a mature portfolio, the markets like 1928 to 1945, 1969 to 1977, and 2000 to 2008 can be especially challenging. But for those who have a decade or more until they will need to spend down their portfolio and have future earnings power to save money over time, these terrible market environments are a blessing. In extremely volatile, low-returning markets, savers are consistently being offered stocks at lower prices.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan

“Financial advisor and author Nick Murray summed this up best when he said, “There is virtually always an apocalypse du jour going on somewhere in the world. And on the rare occasions when there is not, journalism will simply invent one, and present it 24/7 as the incipient end of the world.”
― Ben Carlson, A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan