Vanity Fair has a fascinating article in the latest issue on airplane safety and how it affects pilot error. To make planes safer these days, engineers have designed automated systems that basically allow the planes to fly themselves.

“If every stock you own is on the new high list, you’re a momentum guy. If every stock you own is on the new low list, you’re out of business.” – Leon Cooperman Mean reversion is one of the most powerful forces in all of finance. Above average performance is eventually followed by below average performance….

In early 2006 I was in the market for a new job. A friend from college worked for one of the largest banks and asked if I’d like to interview for a spot in his group.

“The intelligent investor realizes that stocks become more risky, not less, as their prices rise, and less risky, not more, as their prices fall.” – Jason Zweig If you’re in the business of fear-mongering, one of the go-to moves to try to scare investors is to predict that the markets are looking eerily similar to…

“The term bubble should indicate a price that no reasonable future outcome can justify.” – Cliff Asness There’s been a steady stream of bubble talk since the financial crisis. Everything that goes up in value ends up being called a bubble — stocks, bonds, gold, IPOs, biotech, Silicon Valley, etc. Most investors seem surprised more…

“I’m trying to manage myself, not just my portfolio.” – Guy Spier

When asked what people would learn from the financial crisis, GMO’s Jeremy Grantham replied: In the short term a lot, in the medium term a little, the in the long term, nothing at all. That would be historical precedent. As they say, we don’t want to let a crisis go to waste. Here are some…

“The paradox of skill says that when the outcome of an activity combines skill and luck, as skill improves, luck becomes more important in shaping results.” – Michael Mauboussin I recently wrote a post about how size is the enemy of outperformance. My main point was that extreme levels of outperformance become nearly impossible to pull…

Earlier this month the Wall Street Journal posted an excerpt from a letter written by a hedge fund manager to his investors stating the reasons (see also: excuses) he had to close down his fund. Here’s part of the rant: Post-2008 monetary policies have rewarded the beta investor who’s gone “all in” on market risk and themes,…

Earlier in the year many investors were under the impression that something had to give because stocks and bonds were both rising.  I looked at the historical data on positive stock and bond returns to show that this is more common than most investors assume: Since performance has been so strong in both stocks and bonds…