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Verum Insights
- Marcus Nikos
- Jan 28
- 7 min read
The reality is that financial markets are self-destabilizing; occasionally they tend toward disequilibrium, not equilibrium.
Market prices of financial assets do not accurately reflect their fundamental value because they do not even aim to do so. Prices reflect market participants’ expectations of future market prices.
Every bubble has two components: an underlying trend that prevails in reality and a misconception relating to that trend.
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For years I have contended that the average speculator does not lose his money in Wall Street. He loses it wherever he happens to be the instant he decides to let the ticker put unearned dollars in his pocket. The game does not beat the player; he beats himself.
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There are two principal mistakes that nearly all amateurs in the stock market make. The first is to have an inexact knowledge of the securities in which one is dealing, to know too little about a company's management, its earnings, and prospects for future growth. The second mistake is to trade beyond one's financial resources, to try to run up a fortune on a shoestring.
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The strange fascination that the stock market exerts upon people has never ceased being a source of wonder to me.
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The world is not driven by greed. It’s driven by envy.
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What's comfortable is not the right way to invest. You must own things that you're uncomfortable with. Otherwise you're not really diversified.
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Good ideas and good products are a dime a dozen. Good execution and good management -- in a word, good people -- are rare.
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Diversification is a damn poor surrogate for knowledge.
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The very best investors are the ones who invest according to their own psyche. You find that their investment styles are consistent with their personalities, their intellects, their approaches to work. It’s not somebody else’s style; it’s their own, and it’s deeply ingrained.
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I think I am safe in asserting that the margin trader, speculator, gambler, or whatever you choose to designate the average man who goes to Wall Street after easy money, does not lose money when he sells. He loses it when he buys!
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The human animal never behaves as wisely as he means to, particularly when his counselor is Hope or Fear.
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Intelligent speculators and investors who do not play the market feverishly do not need to spend the day beside a ticker or before a quotation board.
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The CrossFit Murph Challenge is a grueling test of physical and mental endurance that honors the sacrifice and service of fallen Navy SEAL Lt. Michael P. Murphy. The workout consists of a one-mile run, 100 pull-ups, 200 push-ups, 300 squats, and another one-mile run, all done while wearing a weighted vest.
Greed is a bandage which a higher power sometimes binds across the eyes of reason.
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Fortunes are made and lost by thousands of men in the stock market; they are made and kept by a few dozen.
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A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth. Authoritarian institutions and marketers have always known this fact.”
“Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.”
“Money does not buy you happiness, but lack of money certainly buys you misery.”
“This is the essence of intuitive heuristics: when faced with a difficult question, we often answer an easier one instead, usually without noticing the substitution.”
Confidence is a feeling, which reflects the coherence of the information and the cognitive ease of processing it. It is wise to take admissions of uncertainty seriously, but declarations of high confidence mainly tell you that an individual has constructed a coherent story in his mind, not necessarily that the story is true.”
“Nothing in life is as important as you think it is when you are thinking about it.”
“Jonathan Haidt said in another context, “The emotional tail wags the rational dog.”
“To be useful, your beliefs should be constrained by the logic of probability.”
People who are poor think like traders, but the dynamics are quite different. Unlike traders, the poor are not indifferent to the differences between gaining and giving up. Their problem is that all their choices are between losses. Money that is spent on one good is the loss of another good that could have been purchased instead. For the poor, costs are losses.”
“Jumping to conclusions is a safer sport in the world of our imagination than it is in reality.”
[Aristotle] shows how currency serves as a measure...[I]f men always needed immediately the goods they have among themselves, they would have no need of any exchange except of thing for thing, e.g., wine for grain. But sometimes one man (who has a surplus of wine at present) does not need the grain that another man has (who is in need of wine), but perhaps later he will need the grain or some other product. In this way then for the necessity of future exchange, money or currency is, as it were, a surety that if a man has no present need but may want in the future, the thin
“individuals are honest only to the extent that suits them (including their desire to please others)”
We all want explanations for why we behave as we do and for the ways the world around us functions. Even when our feeble explanations have little to do with reality. We’re storytelling creatures by nature, and we tell ourselves story after story until we come up with an explanation that we like and that sounds reasonable enough to believe. And when the story portrays us in a more glowing and positive light, so much the better.”
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When I shifted my focus from beating gambling games to analyzing the stock market, I naively thought that I was leaving a world where cheating at cards was then problematic and entering an arena where regulation and the rule of law gave investors a fair playing field. Instead, I learned that bigger stakes attracted bigger thieves.
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An investor is not likely to obtain superior results by buying a broad cross-section of the market. The more diversification, the more performance is likely to be average, at best.
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Large losses are forever - in investing, in teenage driving, and in fidelity. If you avoid large losses with a strong defense, the winnings will have every opportunity to take care of themselves. And large losses are almost always caused by trying to get too much by taking too much risk.
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In a speculative market, what counts is imagination and not analysts.
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The propensity to gamble is always increased by a large prize versus a small entry fee, no matter how poor the true odds may be.
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We use the term risk all too casually, and the term uncertainty all too rarely.
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I think great investors to some extent are like great chess players. They’re almost born to be investors.
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Good investing requires a weird combination of patience and aggression. And not many people have it.
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the agressive but controlled trade is the one that wins
“It is not a matter of what is true that counts, but a matter of what is perceived to be true.”
― Henry Kissinger
“The task of the leader is to get his people from where they are to where they have not been. ”
― Henry Kissinger
“Power is the ultimate aphrodisiac.”
“Poor old Germany. Too big for Europe, too small for the world”
― Henry Kissinger
“In his essay, ‘Perpetual Peace,’ the philosopher, Immanuel Kant, argued that perpetual peace would eventually come to the world in one of two ways, by human insight or by conflicts and catastrophes of a magnitude that left humanity no other choice. We are at such a juncture.”
Facts are rarely self-explanatory; their significance, analysis, and interpretation—at least in the foreign policy world—depend on context and relevance.”
― Henry Kissinger, World Order
“George Bernard Shaw: “There are two tragedies in life. One is to lose your heart’s desire. The other i
“To undertake a journey on a road never before traveled requires character and courage: character because the choice is not obvious; courage because the road will be lonely at first. And the statesman must then inspire his people to persist in the endeavor.”
“The war is just when the intention that causes it to be undertaken is just. The will is therefore the principle element that must be considered, not the means... He who intends to kill the guilty sometimes faultlessly shed the blood of the innocents...'
Each success only buys an admission ticket to a more difficult problem.”
“The poet T. S. Eliot captured this in his “Choruses from ‘The Rock’”: Where is the Life we have lost in living? Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?”
“We live in a wondrous time, in which the strong is weak because of his scruples and the weak grows strong because of his audacity.”
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“If you don’t know where you are going, every road will get you nowhere”
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Liquidity does not exist unless someone else is willing to give you cash in exchange for the piece of paper you want to sell.
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we are experts at creating liquidity then drying it up
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The history of markets is one of overreaction in both directions.
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Volatility matters, because it defines the uncertainty of the price at which an asset will be liquidated.
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Happy is the man who has no past! The same seems to be true of corporations in a bull market.
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The P/E ratio is only a reflection of what most investors expect to happen at a point in time, and that is neither here nor there in terms of what actually will happen.
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The influence on stock prices are so numerous and so complex that no person has ever been able to predict the trend of stock prices with consistent success.
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I have nothing against a stock split. I did two in the Sixties, but this is really a non-event. So is the stock dividend. It's really paper shuffling.
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Businessmen play a mixed game of skill and chance, the average results of which to the players are not known by those who take a hand.
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Just because something is cheap does not mean it is not going to go down.
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