“...theories should be judged by their ability to predict events rather than by the realism of their assumptions.” ShouldAbilityEventsTheoryInvestingAssumptionJudgedRealism Author:Milton Friedman
“Stock prices are likely to be among the prices that are relatively vulnerable to purely social movements because there is no accepted theory by which to understand the worth of stocks....investors have no model or at best a very incomplete model of behavior of prices, dividend, or earnings, of speculative assets.” SocialMovementTheoryBehaviorModelsInvestingAcceptedVulnerableAssetsInvestorsEarningIncompleteDividendsSocial MovementsStock Price Author:Robert J. Shiller
“The growth stock theory of investing requires patience, but is less stressful than trading, generally has less risk, and reduces brokerage commissions and income taxes.” GrowthRiskTheoryTaxesInvestingIncomeTradingStressfulIncome Tax Author:Thomas Rowe Price, Jr.
“While the apostles of the new so-called "behavioral" theory present ample evidence of how often human beings make irrational financial decisions, it remains to be seen whether these decisions lead to predictable errors that create systematic mispricings upon which rational investors can readily and economically capitalize.” HumansHuman BeingsDecisionTheoryEvidenceRemainsErrorsInvestingFinancialRationalInvestorsIrrationalApostlesPredictableSystematic Author:John C. Bogle
“The efficient market theory is one of the better models in the sense that it can be taken as true for every purpose I can think of. For investment purposes, there are very few investors that shouldn't behave as if markets are totally efficient.” IfsThinkingI CanPurposeTakenTheoryModelsInvestmentInvestingBehaveInvestorsEfficientEfficient Markets Author:Eugene Fama
“And, partly, I had found that theory-structure was a superpower in helping one get what one wanted. As I had early discovered in school wherein I had excelled without labor, guided by theory, while many others, without mastery of theory failed despite monstrous effort. Better theory I thought had always worked for me and, if now available could make me acquire capital and independence faster and better assist everything I loved.” IfsHelpingWantedSchoolFoundEffortTheoryLaborIndependenceStructureInvestingAvailableDespiteFasterAcquireMasteryMonstrousSuperpower Author:Charlie Munger
“One of the greatest sources of problems in our society arises from people having loads of wrong theories in their heads - often theories that are critical of others - that they won't test by speaking to the relevant people about them. Instead, they talk behind people's backs, which leads to pervasive misinformation.” PeopleLifeProblemGrowthBehindsTheorySourceTestsPersonal GrowthInvestingCriticalAriseOur SocietyRelevantLoadMisinformation Author:Ray Dalio
“Market-cap based indexing will never be driven from its deserved perch as core and deserved king of the investment world. It is what we should all own in theory and it has delivered low-cost equity returns to a great mass of investors... the now and forever king-of-the-hill.” WorldShouldForeverTheoryReturnKingsCostMassLowsInvestmentInvestingDrivenCoreHillsInvestorsEquityCapsIndexing Author:Cliff Asness
“Berkshire's whole record has been achieved without paying one ounce of attention to the efficient market theory in its hard form. And not one ounce of attention to the descendants of that idea, which came out of academic economics and went into corporate finance and morphed into such obscenities as the capital asset pricing model, which we also paid no attention to. I think you'd have to believe in the tooth fairy to believe that you could easily outperform the market by seven-percentage points per annum just by investing in high volatility stocks.” ThinkingBelieveHas BeensIdeasHardWholeFormAttentionRecordsTheoryModelsEconomicsPaidSevenInvestingTeethFinanceCorporateFairyAssetsAcademicEfficientPercentagesDescendantsObscenityPricingVolatilityTooth FairyEfficient Markets Author:Charlie Munger