Fred Schwed’s classic Where are the Customers’ Yachts? delivers simple financial truths with a side a satire. He presents the unvarnished view of Wall Street as he saw it:
…thousands of erring humans, of varying degrees of good will, solemnly engaged in the business of predicting the unpredictable.
The book is filled with more great lines about timeless lessons on investing, speculating, and Wall Street.
I thought I’d share a few of my favorites:
It seems that the immature mind has a regrettable tendency to believe, as actually true, that which it only hopes to be true.
Your average Wall Streeter, faced with nothing profitable to do, does nothing for only a brief time. Then, suddenly and hysterically, he does something which turns out to be extremely unprofitable. He is not a lazy man.
There have always been a considerable number of pathetic people who busy themselves examining the last thousand numbers which have appeared on a roulette wheel, in search of some repeating pattern. Sadly enough, they have usually found it.
History does in a vague way repeat itself, but it does it slowly and ponderously, and with an infinite number of surprising variations.
Accounting is not even an art, but just a state of mind.
There are certain things that cannot be adequately explained to a virgin either by words or pictures. Nor can any description that I might offer here even approximate what it feels like to lose a real chunk of money that you used to own.
The man who chooses to take his money and churn it furiously…cannot in any way predict his fate, save for a single assurance. So long as any of the money still clings to the sides of the churn, he will not be bored.
Those classes of investments considered “best” change from period to period. The pathetic fallacy is that what are thought to be the best are in truth only the most popular — the most active, the most talked of, the most boosted, and consequently, the highest in price at that time. It’s very much a matter of fashion.
Choosing the proper stock, at the proper time, for the proper move, is difficult. But the greater difficulty, I am grieved to report, arises after that has all been successfully done.
Booms go boom.
Speculation is an effort, probably unsuccessfully, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little.
Quick Note: Asset tables will be updated Monday (fingers crossed) with first-half returns on the year. Also, no new posts next week thanks to the 4th of July holiday.
Notes: Where Are the Customers’ Yachts?
- The Placebo Effect in Investment – Behavioral Investment
- Would You Return This Lost Wallet? – NY Times
- How Discount Brokerages (Really) Make Money – Kalzumeus
- 4,000-To-1 Long Shot – Krueger & Catalano
- Five Questions: Defending Value Investing with Tobias Carlisle – ValIdea
- Jesse Livermore: The Search for the Truth with the Anonymous Master (podcast) – Invest Like the Best
- Bill Gates: Startups, Investing and Solving The World’s Hardest Problems (video) – Village Global
- The State of the Nation’s Housing 2019 (pdf) – Harvard
- The 70-Year-Old Retiree Who Became America’s Worst Counterfeiter – The Hustle
- Why Weather Forecasting Keeps Getting Better – New Yorker
- I Went to Test Out Tesla’s Vision of the Future – The Verge