• Prices have no memory, and yesterday has nothing to do with tomorrow. Every day starts out fifty-fifty. Yesterday’s price discounted everything yesterday. To quote Prof. Fama, ‘the past history of the series (of stock price changes) cannot be used to predict the future in any meaningful way. The future path of the price level or a security is no more predictable than the path of a series of cumulated numbers’.
• If you are successful Game player, it can be a fascinating, consuming, totally absorbing experience, in fact it has to be. If it is not totally absorbing, you are not likely to be among the most successful, because you are competing with those who do find it so absorbing.
• The irony is that this is a money game and money is the way we keep score. But the real object of the Game is not money, it is the playing of the Game itself. For the true player, you could take all the trophies away and substitute plastic beads or whale’s teeth; as long as there is a way to keep score, they will play.
• What is it the good managers have? It’s a kind of locked-in concentration, an intuition, a feel, nothing that can be schooled. The first thing you have to know is yourself. A man who knows himself can step outside himself and watch his own reactions like an observer.
• The market is a crowd and if you’ve read Gustave Le Bon’s The Crowd you know a crowd is a composite personality. in fact, a crowd of men acts like a single woman. The mind of the crowd is like a woman’s mind.
• This is no science. It is an art. Now we have computers and all sorts of statistics, but the market is still the same and understanding the market is still no easier. It is personal intuition, sensing patterns of behaviour …
• You are - face it - a bunch of emotions, prejudices, and twitches, and this is all very well as long as you know it.
• That is one of the cryptograms which are my own and this is the first Irregular Rule: If you don’t know who you are, this is an expensive place to find out.
• If you really know what’s going on, you don’t even have to know what’s going on to know what’s going on.
• There is one requirement that is absolute in money managing. The requirement is emotional maturity.
• You may even come out a fine fellow on tests, but the real test is how you behave when the crowd is roaring the other way. We know a little about some individual types, but the crowd, the elusive Australopithecus, is still largely an unknown, an exercise in mass psychology still not accomplished. But is the market really a crowd?
• Whoever be the individual that compose it, however like or unlike be their mode of life, their occupations, their character, or their intelligence, the fact that they have been transformed into a crowd puts them in possession of a sort of collective mind which makes them feel, think, and act in a manner quite different from that in which each individual of them would feel, think, and act were he in a state of isolation.
• Good research and good ideas are the one absolute necessity in the marketplace, and until someone can better define this Autralopithecus of a market animal, they will be the best tools.
• The dynamics of capitalism is post-ponement of enjoyment to the constant postponed future.
• You never really have to say anything, you just agree gently with what was just said and maybe form a question a tiny step forward from that.
• What do you think of Comsat? I sad, with the proper turn-back technique.
• The strongest emotions in the marketplace are greed and fear.
• Obviously no one rationally would want to buy at the top, and yet enough people do to product a top. How do they manage it? It must be that element of contagion from Le Bon’s crowd, from the unwillingness to be out of step.
• The only real protection against all the vagaries of identity-playing, and against the final role of being part of the crowd when it stampedes, is to have an identity so firm it is not influenced by all the brouhaha in the markeplace.
• Mr Stearns must have been a soothing investment counselor to know, for his thesis is that the end object of investment is serenity, and serenity can only be achieved by the avoidance of anxiety, and to avoid anxiety you have to know who you are and what you’re doing.