The Most Important Thing

Survival under negative outcomes is more important than maximizing gains under favorable ones.

The correctness of a decision can’t be judged from the outcome. A good decision is one that’s optimal at the time it’s made, when the future is by definition unknown.

Much of risk is subjective, hidden, and unquantifiable.

The avoidance of losses and terrible years is more easily achieved than repeated greatness, and thus risk control is more likely to create a solid foundation for a superior long-term track record.

You can’t do the same things others do and expect to outperform.

No investment is so good that it can’t be a bad investment at the wrong price.

The most important thing is being aware of the importance of risk.

To outperform the average investor, you have to be able to outthink the consensus.

To buy when others are despondently selling and to sell when others are euphorically buying takes the greatest courage, but provides the greatest profit.

The biggest investing errors come not from factors that are informational or analytical, but from those that are psychological.

Risk control is the best route to loss avoidance. Risk avoidance is likely to lead to return avoidance as well.

Being too far ahead of your time is indistinguishable from being wrong.

The greatest risk doesn’t come from low quality or high volatility. It comes from paying prices that are too high.

Cycles always prevail eventually. Nothing goes in one direction forever.

Skepticism calls for pessimism when optimism is excessive. But it also calls for optimism when pessimism is excessive.

The most important thing is being attuned to where we are in the cycle and acting accordingly.

In investing, what is comfortable is rarely profitable.

The market’s not a very accommodating machine; it won’t provide high returns just because you need them.

Risk means more things can happen than will happen.

The greatest risk doesn't come from low quality or high volatility; it comes from paying prices that are too high.

The pendulum cannot continue to swing toward an extreme, or reside at an extreme, forever. Those who believe that it will eventually lose huge sums.

The safest and most potentially profitable thing is to buy something when no one likes it.

Investment success doesn’t come from ‘buying good things,’ but rather from ‘buying things well.

The avoidance of losses is the most important goal of all.

Well bought is half sold.

In times of extreme optimism, greed and self-deceit cause investors to disregard the relationship between value and price.

The key during a crisis is to be (a) insulated from the forces that require selling and (b) positioned to be a buyer instead.

When others are recklessly confident and buying aggressively, we should be highly cautious; when others are frightened into inaction or panic selling, we should become aggressive.

The key to minimizing risk lies in knowing what you don’t know and paying a fair price for not knowing.

If riskier investments reliably produced higher returns, they wouldn’t be riskier!

Ask whether the result you’re expecting is too good to be true. This requires skepticism, a quality that’s absolutely essential for investment success.

Superior investing requires both generating returns and controlling risk. And recognizing risk is an absolute prerequisite for its control.

Even if you do everything right, other investors can ignore your favorite stock; management can squander the company’s opportunities; government can change the rules; or nature can serve up a catastrophe.

Loss avoidance is the hallmark of defensive investing. For that reason, it’s essential that we understand risk and limit it wherever possible.

The most important thing is to be aware of the limitations of our knowledge.

To beat the market, you must hold an idiosyncratic, or non-consensus, view.

Investing scared will prevent hubris; will keep your guard up and your mental adrenaline flowing.

An investor needs do very few things right as long as he avoids big mistakes.

The herd buys at high prices and sells at low prices. Thus, being part of the herd is a formula for disaster.

There are few things as risky as the widespread belief that there’s no risk.

A strong sense of intrinsic value is the only way to withstand the psychological influences that affect behavior.

The most important thing is being attentive to cycles.

To achieve superior results, they have to have an edge in either information or analysis, or both.

The herd buys at high prices and sells at low prices. Thus, being part of the herd is a formula for disaster, whereas contrarianism—buying when others are selling and selling when others are buying—will help to avert losses and lead eventually to success.

The avoidance of losses is an important part of providing an excellent return.

The pendulum cannot continue to swing toward an extreme, or reside at an extreme, forever.

Investing scared will prevent hubris; it will keep your guard up and your mental adrenaline flowing.

Good times teach only bad lessons: that investing is easy, that you know its secrets, and that you needn’t worry about risk.

Superior skill is the prerequisite… Only skill can be counted on to add more in propitious environments than it costs in hostile ones.

The most important thing is being attuned to where we stand in cycles and what that implies for our actions.