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I just finished reading this book last week and decided to copy down some quotes I particular liked from it.

Where are the Customers' Yachts? by Fred Schwed, 1940 Edition

p. 44 “It is a fair thing to say of a piston, an elevator, or a golf ball at a certain moment, that it is “going up.” This suggests not only that it has been going up, but that it will continue to go up, for a little time at least, because whatever impulse started it is still operating to some extent. But that is not a fair thing to say of the stock market, which, not being a physical thing, is not subject to Newton's law of propulsion or inertia. Unfortunately most of us unconsciously credit this false analogy. Thus we are not tempted to buy unless they are “going up” or to sell unless they are “going down.”

p. 60 “If a man has tossed a coin “heads” four times in succession, which do you think he is more likely to toss the fifth time, heads or tails? (If you think he is more likely to toss either heads or tails, look into the interior decorating game.)”

p. 61 “If a stock which is not paying a dividend is split two for one, how much good does that do the stockholder? (If you think it does him any real good, come down and join our sales department…)”

p. 91 “… by buying trust shares the modest investor is not forced to “put all his eggs in one basket.” This argument sounds a good deal more reasonable than it actually is. A widely diversified portfolio is not supposed to break downward in value very fast because all its “eggs” won't go bad at once. (This mechanism also prevents its value going up very fast.) But this safety device doesn't seem to work very well.”

p. 102 “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.”

p. 153-54 “I should carry this inquiry into intelligence a little further and ask a second question: what do you think of the mentality of a man who goes down to Wall Street with very little and wins, by speculation, thirty millions, none of which he has as yet lost? My own considered opinion is that he is pretty much a loony. In order to make his second unimportant million he had to risk his first precious million. Obviously he did so, and did it time and time again. That he happens to have successful each time does not really change the picture. What could he have been thinking of each time he took all those risks?”

p. 172 “Speculation is an effort, probably unsuccessful, 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.”

You can read a short review of the book at:

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