Salient to Investors:

Jason Zweig writes:

  • Good advice rarely changes, while markets change constantly.
  • People need good advice, but want advice that sounds good.
  • The advice that sounds the best in the short run is always the most dangerous in the long run.
  • Everyone wants the magical low-risk, high-return investment that can double your money in no time. Everyone chases the returns of whatever has been hottest and to shun whatever has gone cold.
  • The financial universe is set up to deceive us. Most financial journalism, like most of Wall Street, is dedicated to a basic principle of marketing: When the ducks quack, feed ‘em. Like telling people to buy Internet stocks in 1999 and early 2000, to “flip” houses in 2005 and 2006, to dump stocks and buy leveraged inverse ETFs that made explosively risky bets against stocks in 2008 and 2009, and since 2008, to buy bonds and high-dividend-paying stocks and minimum-volatility stocks.
  • Psychologist Paul Andreassen found that people who receive frequent news updates on their investments earn lower returns than those who get no news – the media ignores those findings.
  • Benjamin Graham said the investor’s chief problem, and worst enemy, is likely to be himself.
  • Regression to the mean is the most powerful law in financial physics. Periods of above-average performance are inevitably followed by below-average returns, and bad times inevitably set the stage for surprisingly good performance.
  • Approximately 99% of the time, the single most important thing investors should do is absolutely nothing.
  • This time is never different. History always rhymes. Human nature never changes.
  • Become more skeptical of any investment that has recently soared in price, and become more enthusiastic about any asset that has recently fallen in price.


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