“In any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work for the organization itself. Examples in education would be teachers who work and sacrifice to teach children, vs. union representative who work to protect any teacher including the most incompetent. The Iron Law states that in all cases, the second type of person will always gain control of the organization, and will always write the rules under which the organization functions.” PeopleWritingKindChildrenPersonsTwoStatesWould BeLawGoalTeachCasesTeacherSacrificeExampleTypeProtectGainsOrganizationFunctionUnionsIncludingInvestingIronRepresentativesIncompetent Author:Jerry Pournelle
“A minuscule 4 percent of funds produce market-beating after-tax results with a scant 0.6 percent (annual) margin of gain. The 96 percent of funds that fail to meet or beat the Vanguard 500 Index Fund lose by a wealth-destroying margin of 4.8 percent per annum.” LosesWealthResultsFailingProduceTaxesBeatsPercentGainsInvestingFundDestroyingMarginsAnnualsVanguardIndex Funds Author:David F. Swensen
“While it is probably a poor idea to own actively managed funds in general, it is truly a terrible idea to own them in taxable accounts... taxes are a drag on performance of up to 4 percentage points each year... many index funds allow your capital gains to grow largely undisturbed until you sell... For the taxable investor, indexing means never having to say you're sorry.” YearsMeanIdeasGrowsPoorTerribleTaxesGainsPerformancesAccountsSellsSorryInvestingFundInvestorsDragPercentagesCapital GainsIndex FundsIndexing Author:William J. Bernstein
“Index funds are... tax friendly, allowing investors to defer the realization of capital gains or avoid them completely if the shares are later bequeathed. To the extent that the long-run uptrend in stock prices continues, switching from security to security involves realizing capital gains that are subject to tax. Taxes are a crucially important financial consideration because the earlier realization of capital gains will substantially reduce net returns.” IfsLongImportantRunningRealizingShareSubjectsSecurityReturnTaxesGainsInvestingFinancialRealizationConsiderationFriendlyFundAllowingInvestorsLong RunsSwitchingStock PriceCapital GainsIndex Funds Author:Burton Malkiel
“Index funds do not trade from security to security and, thus, they tend to avoid capital gains taxes.” SecurityTaxesGainsTradeInvestingFundCapital GainsIndex FundsCapital Gains Tax Author:Burton Malkiel
“In the financial markets, however, the connection between a marketable security and the underlying business is not as clear-cut. For investors in a marketable security the gain or loss associated with the various outcomes is not totally inherent in the underlying business; it also depends on the price paid, which is established by the marketplace. The view that risk is dependent on both the nature of investments and on their market price is very different from that described by beta.” DifferentLossViewsClearCuttingRiskSecurityDependsGainsConnectionsPaidInvestmentInvestingFinancialVariousOutcomesDependentInvestorsInherentMarketplaceFinancial MarketsBeta Author:Seth Klarman
“I had made what I believe was one of the more valuable decisions of my business life. This was to confine all efforts solely to making major gains in the long-run.” BelieveLongMadeRunningI BelieveDecisionEffortMajorsGainsInvestingValuableLong RunsBusiness Life Author:Philip Arthur Fisher
“People who acquire things beyond their usefulness not only will derive little or no marginal gains from these acquisitions, but they also will experience negative consequences, as with any form of gluttony.” PeopleLifeLittlesFormGrowthConsequenceGainsNegativePersonal GrowthInvestingAcquireAcquisitionUsefulnessGluttonyNegative Consequences Author:Ray Dalio
“It is a law of nature that you must do difficult things to gain strength and power. As with working out, after a while you make the connection between doing difficult things and the benefits you get from doing them, and you come to look forward to doing these difficult things.” LifeLooksLawDifficultGrowthBenefitsGainsConnectionsPersonal GrowthInvestingWork OutLaws Of NatureDifficult Things Author:Ray Dalio
“If top marginal income tax rates are set too high, they discourage productive economic activity. In the limit, a top marginal income tax rate of 100 percent would mean that taxpayers would gain nothing from working harder or investing more. In contrast, a higher top marginal rate on consumption would actually encourage savings and investment. A top marginal consumption tax rate of 100 percent would simply mean that if a wealthy family spent an extra dollar, it would also owe an additional dollar of tax.” IfsMeanEconomicHigherActivityLimitsTaxesPercentGainsHarderDollarsInvestmentRateInvestingIncomeSavingExtrasProductiveWealthyContrastConsumptionTaxpayersSavingsDiscouragingIncome TaxSavings And Investment Author:Robert H. Frank
“There is empirical evidence that leading brands that keep investing during recessions gain share.” BusinessShareEvidenceGainsInvestingBrandsRecessionsEmpirical Evidence Author:Ken Kaess