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Investing

  • "Rely on the ordinary virtues that intelligent, balanced human beings have relied on for centuries: common sense, thrift, realistic expectations, patience, and perseverance. "
  • ~ John C. Bogle, American founder of Vanguard Investment Group, 1929 –
  • "The greatest achievement of the human spirit is to live up to one’s opportunities, and to make the most of one’s resources. "
  • ~ Luc de Clapiers, Marquis de Vauvenargues, French essayist, 1715 – 1747
  • "Now, speculation — in which the focus is not on what an asset will produce but on what the next fellow will pay for it — is neither illegal, immoral, nor un-American. But it is not a game in which Charlie and I wish to play. We bring nothing to the party, so why should we expect to take anything home? "
  • ~ Warren Buffett, American investor, alluding to why he and his partner avoid speculation, 1930 –

Insane World

People often reserve rational and careful thinking for their business or investment decisions, and think in an entirely different way in other aspects of their lives. But simply because one seeks to maximize intangibles — honor, pride — whatever they may be, does not mean that one has to pursue these values in some sort of irrational, poorly defined way.

Living Sanely

The more intangible the goal, the more it requires clear, hard-headed thinking, and financial investment criteria are excellent for this purpose. One might make an investment, financial or otherwise, in helping a child, or feeding a hungry animal. The idea of return is relevant to all aspects of life; every investment should have a return, although the best return for many investments is a sense of personal satisfaction. And it’s sometimes necessary to take losses — to surrender a battle to avoid losing the war — both with people and with business investments.

Greed is wanting more than you have a right to expect, whether the subject is financial investment or life. Since living sanely is most fundamentally about creating value, the first question to ask when making an investment is what value you’re adding, and based on that value, what return you should expect. Adding value can take all sorts of forms: money, insight, experience, judgment, courage. The sorts of things that make one a good investor are not very different than the sorts of things which make one a good person.

Some of the most important philosophical elements of investing, especially independence of judgment, are important to living sanely. Making decisions about what is valuable, and what is not, is fundamental to living well. The most important difference between the investment arena and the broader arena of life is that in the former, all returns are measured financially; whereas in the latter, financial returns are only one part, and not the most important part, of the equation.

Focus

On applying rigorous analysis about investment and returns to all aspects of your life.

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