Toward the end of 2010, a reader was kind enough to send in a collection of his
favorite "nuggets" from Bill, which is reproduced here.
- Hope is a terrible investment strategy (8/29/01).
- Yes, I think it will happen again, but the real opportunity was 1981-1982. The
"hope being a bad strategy" refers to AFTER you take a position, we can all hope for
lots of things, but we shouldn't invest money on that basis.
- It's very important to have conviction in the investment business as the
market is always trying to trick you. Of course, you also have to be flexible
enough to say that you might be wrong - at least when it comes to timing (when you
are speculating). It's also important to learn how to manage your own psychology, so
you don't help defeat yourself. We all have weaknesses we need to manage
- To be successful at speculating or investing, one needs conviction (though one
has to learn to be flexible as well -- a tricky combination), and I would
currently have none if I were attempting to outguess what I think the other
guessers are liable to guess. Thus, if the stock market wants to trade higher, it
can do so without me. Besides, I've got my hands full with my money printing ideas
-- where I have plenty of conviction (plus exposure), and I can endure (though not
cheerfully) the bone-jarring corrections that are what we must deal with.
- Human emotions are always the worst right when the market is ready to
turn...both directions. Important highs and lows are created by EMOTIONAL
reactions to what has been taking place...not due to some rational analysis. It's
why the ends of moves are always so wild.
- And FWIW, every move in a market doesn't mean something, lots of times it's
- The patience required in investing is not so much the patience sitting with a
position after you establish it, but the willingness to be patient before you
- "You have to take the market down to where it will trade." It means you have a
stock you own a bunch of and you can't sell it (but want out) because it isn't
trading. You need to drop offers down to where the buyers (i.e., volume) are, then
you can take your loss and move on. That is the entire USA housing market, prices
need to drop to where they can clear the market and find buyers.
- Sure, I get bored all the time. There are many, many days when I do nothing at
all. Then occasionally like this week I get active as a few things set up. Sitting
on your hands is not only OK, it's critical to do so when you don't have great
ideas, or as you wait for events to play out.
- Don’t let market action make you impatient.
- All paper currencies CAN decline against goods and services (or gold, Monet's,
etc.) if they print enough of them. On a relative basis some will win vs. others.
So, you can look for the winners of the paper race, to the bottom, or look for ideas
like gold, silver, etc. that win in absolute terms.
- I have said for years that I do not think we will see hyperinflation. It may
come to that, but it isn't my belief at this time. However, what protects you from
inflation will protect you from hyperinflation as well, which is gold.
- The best thing to do when you know you have been wrong is to start some action
(this is what I try to do), thus buying a bit of gold or covering a short. Depending
on how you’ve been wrong changes how you look at the situation. Even if you just
take a tiny bit of action you will feel differently. Doing nothing just reinforces
what you have already done or not done.
- Being prepared for volatility does strengthen one's resolve.
- When we face life's difficulties, quite often they are not as bad as we think
- I have the perfect Chinese investment. Gold. It's what they themselves are buying.