Just one thing c 5 to 8

...continued from yesterday...

Ed Easterling – risk is not a knob.
Accepting higher risks in an investment can lead to lower returns, contrary to the conventional belief that higher risks beget higher risks.

James Montier – psychology matters: an investor’s guide to thinking about thinking.
Your thinking is biased and so is everyone else’s. You know less than you think you do. Focus on facts, not stories. More information is not necessarily better. Consider both the strength and weight of information. Look for information that disagrees with your opinion. Examine mistakes to improve. You didn’t really know it all along. Re-bias because you can’t de-bias – replace unimportant information with relevant information. Judge things by how statistically likely they are, not how they appear. Don’t overweight personal experience. Big vivid easy to recall events are less likely than you think they are. Don’t take information at face value; consider how it was presented. Don’t value something more just because you own it. Sell your losers and ride your winners.

Bill Bonner – the means are the ends.
Almost all that political leaders and opinion setters say is self-serving claptrap; most of what they do is counterproductive, fraudulent, and sometimes lethal.

Rob Arnott – the two percent solution.
Weight adjusted indicies such as the S&P 500 are always overweight in overvalued stocks and underweight in undervalued stocks. That is why equal or non-weighted indices where each stock in it is an equal amount will outperform the weighted indicies.

...cont'd tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
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