Market Wisdom from Bernard Baruch

• Don't underestimate the power of thinking. "During my eighty-seven years I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think."
• If your stocks are keeping you awake a night worrying about them, you should sell them to a "sleeping point."
• Never take stock tips from others. Self-reliance and "doing one's own thinking" is a must.
• The stock market does not determine the health of the economy but "rather reflects it." The ability to understand this is an important skill.
• "There is no investment which does not involve some risk and is not something of a gamble." Moreover, "what we can try to do perhaps is to come to a better understanding of how to reduce the element of risk in whatever we undertake."
• "Better to have a few stocks and to watch them carefully."
• Having a "good supply of cash on hand at all times in reserve is important" to take advantage of market declines and major crashes.
• No one could be an expert at too many things. He liked to focus on "one thing at a time, perfect it, and do it well."
• What drives stock prices are human reactions. Ironically, the key to successful speculation is to remove our decisions from our emotions. "Without control over your emotions, there is very little chance for profitable success in the stock market."
• Baruch often described the market as a thermometer and the economic environment as the fever. "The market does not cause economic cycles but merely reflects them and the judgments of what traders believe business and the future will be like."
• "Don't try to buy at the bottom and sell at the top. It can't be done except by liars."
• "It is much harder to sell stocks correctly than to buy them correctly." Because of the emotional aspect of trading, if a "stock went up, the average investor would hold because he wants more gains - he's exhibiting greed. If the stock declines, he also holds on and hopes the stock will come back so he can at least sell and break even - he's hoping against hope."
• "Do not blame anybody for your mistakes and failures."
• It is important to "follow what the market is currently doing as opposed to following what one might personally think the market should do." As he said, "Every man has a right to his opinion, but no man has a right to be wrong in his facts."
• Knowing your biases and weakness are important. "Only as you do know yourself can your brain serve you as a sharp and efficient tool. Know your own failings, passions, and prejudices so you can separate them from what you see."
• "The main purpose of the stock market is to make fools of as many men as possible."

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