Warren Buffet

Severe change and exceptional returns usually don’t go together.
Most investors, of course, behave as if just the opposite were true. That is, they usually confer the highest price-earnings ratios on exotic-sounding businesses that hold out the promise of feverish change.

That prospect lets investors fantasize about future profitability rather than face today’s business realities. For such investor-dreamers, any blind date is preferable to one with the … [ Read more ]

Warren E. Buffett

Be fearful when others are greedy, and be greedy when others are fearful.

Henry Blodget

The first problem with labeling a particular style of investing “socially responsible” is that it suggests that other kinds of investing are not. So it’s no wonder many people find the concept silly or offensive.

At some level, after all, our very economic system is socially problematic. The benefits accrue disproportionately to owners (investors, this means you), who make fortunes off the labor of rank-and-file employees. … [ Read more ]

Jeff Heilman

Going by the numbers alone can be misleading, meaningless or downright hazardous -there are banana skins galore in financial statements “tidied up” for earnings season. One-time charges, for instance, while properly used to take nonrecurring expenses that do not materially affect company value off the balance sheet, can hide unfavorable expenses, bad debt or poor investments. Easy to calculate, the venerable valuation standard P/E ratio-market … [ Read more ]

Chuck Lucier, Rob Schuyt, and Edward Tse

Returns to investors reflect changes in a company’s financial performance, not the level of its performance.

Justin Jenk, Patricia Anslinger and John J. Ballow

Earnings have proven to be a poor tool for valuing companies, and not just because they are subjectively determined. Earnings also ignore the crucial consideration of the cost of capital.

John Maynard Keynes

The game of professional investment is intolerably boring and over-exacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll.

Leon Levy

As investors, we deceive ourselves a thousand different ways, both large and small. We attribute gains to acumen when they are the product of luck, and attribute losses to ill fortune when they are often the product of stupidity or inattention. The common problem is that we fall in love with a company that is unworthy of our affection.

Leon Levy

If you are reluctant to sell, you are typical of American investors, who sell their winners and keep their losers. Investors do this because the act of selling at a loss is an admission that they were wrong.