Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.
Interpretation
Newton's brilliance in science did not translate to his ability in investing, highlighting human unpredictability.
Warren Buffett reflects on the limitations of even the greatest minds like Isaac Newton, who, despite his revolutionary contributions to physics, faced significant failure in the realm of finance. This quote underscores the notion that intellectual ability doesn't always extend to understanding human behavior, and suggests that as one pursues rapid gains or motion in investing, the likelihood of losses increases.
In practice
In a presentation about investment strategies, one might quote Buffett to illustrate the unpredictability of markets compared to scientific laws.
I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot - and it's a lot - it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.
If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or be thought of as the world's worst investor when you were actually the best?
Cash never makes us happy, but it's better to have the money burning a hole in Berkshire's pocket than resting comfortably in someone else's.
I think you should read everything you can. In my case, by the age of 10, I'd read every book in the Omaha public library about investing, some twice. _x000D_ You need to fill your mind with various competing thoughts and decide which make sense.
The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
One’s objective should be to get it right, get it quick, get it out and get it over. Your problem won’t improve with age.
Habit is a cable; we weave a thread of it each day, and at last we cannot break it.
What people most need now is to apply their conversion skills to those things that are essential for their survival. They need to convert facts into logic, free will into purpose, conscience into decision. They need to convert historical experience into a design for a sane world.
The revealed Word awakened me, but it was the preached Word that saved me, and I must ever attach peculiar value to the hearing of the truth, for by it I received the joy and peace in which my soul delights.
I've never been convinced that experience is linear, circular, or even random. It just is. I try to put it in some kind of order to extract meaning from it, to bring meaning to it.
When the mind withdraws into itself and dispenses with facts it makes only chaos.
Loving ourselves opens us to truly knowing ourselves as part of the matrix of existence, inextricably connected to the boundlessness of life... when we see that we are far bigger than the person that is delineated by family or cultural expectations, we realize we are capable of so much more than we usually dare to imagine.
Subscribe for the occasional hand-picked quote. No noise.