By Investment Master Class. Originally published at ValueWalk.
“A stock is for all practical purposes, a piece of paper that sits in a bank vault. Most likely you will never see it. It may or may not have an intrinsic value; what it is worth on any given day depends on the confluence of buyers and seller on that day. The most important thing to realise is simplistic: The stock doesn’t know you own it. All those marvellous things, or those terrible things, that you feel about a stock, or a list of stocks, all these things are unreciprocated by the stock or group of stocks. You can be in love if you want to, but that piece of paper doesn’t love you, and unreciprocated love can turn into masochism, narcissism, or, even worse, market losses and unreciprocated hate” Adam Smith, the Money Game
“As investors, we deceive ourselves a thousand different ways, both small and large. We attribute gains to acumen when they are the product of luck, and attribute losses to ill fortune when they are often the product of stupidity or inattention. We believe that the market remembers or cares about the price we paid for a stock, or that our stocks will go up when every other stock is going down. But most commonly in markets, we fall in love with a company that is unworthy of our affection” Leon Levy “
“We document our analysis and valuation not only at the beginning, but also by formally revisiting everything in writing at least twice a year. It’s easy to get married to something you own and if it’s not working to change the reason your’e still in it. We find this a very good exercise to help prevent that kind of thesis creep” David Hurwitz
“Never fall in love with anything! If facts change, re-evaluate your position!” James Dinan
“One should fall in love with ideas, with people, or with idealism based on the possibilities that exist in this adventuresome world. The last thing to fall in love with is a particular security. It is, after all, just a sheet of paper indicating a part ownership in a corporation. Its use is purely mercenary” Roy Neuberger
“If we only confirm our beliefs, we will never discover if we’re wrong. Be self-critical and unlearn your best-loved ideas. Search for evidence that disconfirms ideas and assumptions. Consider alternative outcomes, viewpoints and answers.” Peter Bevelin
“He [Michael Steinhardt] doesn’t fall in love with his position. It’s only a piece of paper” Lattanzio
“Never fall in love with a stock; always have an open mind” Peter Lynch
“One of the important things in stocks is that a stock does not know that you own it. You have all these feelings about it; You remember what you paid. You remember who told you about it – all these little things. And it doesn’t give a damn. It just sits there. If a stock’s at $50, somebody’s paid $100 and feels terrible, somebody else has paid $10 and feels wonderful – all these feelings. And it has no impact whatsoever” Warren Buffett
“A market could care less if I am bullish or bearish. In fact, if I am a bull, once I do my buying, my only influence is as a bear because I become a source of selling” Peter Brandt
“You never understand a stock until you’re long (or short)” Gary Helms
“We don’t have many rules, but when a stock is down materially relative to its peer group we assign another analyst to formally review it and then force ourselves to buy more or get out. Not surprisingly, the analyst who originally recommended the stock is the last person to want to sell it” Jeff Bronchick
“Fall in love with people, children and dogs, but not stocks” Barton Biggs
“Never fall in love with an asset. If you get deal fever you can do really stupid things. So if it’s going to be, it’ll be. If not, it won’t be” Jim Tisch
“Stuff happens. Don’t fall in love with any position” Joel Greenblatt
“If you let your emotions dictate when to sell, you risk falling in love with companies that have been doing well and you ride them too long.” Richard Pzena
“The biggest key is to never fall in love with what you own. Something you’ve made a lot of money on is going to look absolutely great to you at precisely the time you should be getting out” James Clarke
“One thing my father taught me at a young age was not to fall in love with companies or the people running them” Lloyd Khaner
“You have got all these feelings. The stock doesn’t know you own it. The stock just sits there; it doesn’t care what you paid or the fact that you own it. Any feeling I have about the market is not reciprocated. I mean it is the ultimate cold shoulder we are talking about here.” Warren Buffett
“A stock doesn’t know you own it. Don’t become so attached to a winner that complacency sets in and you stop monitoring the story” Peter Lynch
“The stocks we own don’t know we own them, and therefore do not behave in ways that are always consistent with our near term interests” Tweedy Browne Co
“A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; It doesn’t care whether you make money or not. Whenever a trader says “I wish” or “I hope” he is engaging in a very destructive way of thinking because it takes attention away from the diagnostic process” Bruce Kovner
“Investment managers, without realizing it, often personalise and become emotionally involved with stocks when the investment decision-making process should be completely intellectual and rational because, after all, they are just pieces of paper. Or as Adam Smith put it, the stock doesn’t know you own it, and there’s no reward or pension paid for being a faithful long-term holder” Barton Biggs
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