Judging people carries unavoidable error
“There is no way to eliminate the possibility of error when judging humans particularly in regard to future behavior in an unknown environment.”
Investing
Warren Buffett's October 1969 letter to Buffett Partnership partners, one of the letters in Buffett Partnership Letters, 1957–1970.
Drawdowns feel longer than they look
“While two years may sound like a short time when included in a table of performance, it may feel like a long time when your net worth is down 50%.”
Recommending a manager risks much, gains nothing
“In recommending Bill, I am engaging in the sort of activity I have tried to avoid in BPL portfolio activities - a decision where there is nothing to gain (personally) and considerable to lose.”
Passivity would deliver partners to salesmen
“I feel it would be totally unfair for me to assume a passive position and deliver you to the most persuasive salesman who happened to contact you early in 1970.”
Fundamentals easier to weigh than psychology
“As Ben Graham said: ‘In the long run, the market is a weighing machine - in the short run, a voting machine.’ I have always found it easier to evaluate weights dictated by fundamentals than votes dictated by psychology.”
Few managed funds beat group expectancy
“My judgment would be that less than 10% of professionally managed money (which might imply an average of $40 billion just for this superior segment) handled consistently for the decade would average 2 points per annum over group expectancy. So-called 'aggressively run' money is unlikely to do significantly better than the general run of professionally managed money.”
Best after-tax return matters, whatever inflation
“The simple truth, of course, is that the best expectable after-tax rate of return makes the most sense - given a rising, declining or stable dollar.”