BY THE LAISSEZ-FAIRE FRATERNITY
Success requires rational behavior and markets are about chaos.
An investment methodology will work until real money is deployed.
Risk and reward are related in theory because academic models can only work with that assumption.
Most investment models are based upon historical relationships. Historical relationships are harmful and misleading
Down is faster than up.
The consensus is always wrong.
Every market cycle produces a new prophet and new theology that remains until its inevitable failure at the end of the cycle.
Timing doesn’t work but is the panacea for risk management every other bear market.
Every bear market introduces a new method of risk management which will fail as more participants use it.
The primary determinant of return is market movement.
There is an inverse relationship between the complexity of an investment methodology and results achieved.
A perfect hedging strategy provides a return equal to the return earned on three-month treasury bills but makes brokers rich.
Experience and common sense will outperform the best research every time.
Wall Street research is useless.
Consensus buy opinions are an excellent signal to sell.
Technology and new things are seductive and value stocks are boring. Boring keeps you out of harm’s way. This also applies to life.
Gas lights and trolley cars were high tech growth sectors once.
In analyzing a company, management is everything.