Passages from “My Own Story,” written by Barnard M. Baruch
- Don’t speculate unless you can make it a full-time job
- Beware of anyone bringing gifts of ‘inside’ information or ‘tips’
- Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibility for growth
- Don’t try to buy at the bottom and sell at the top. This can’t be done – except by liars.
- Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time… If you have made a mistake, cut your losses as quickly as possible.
- Don’t buy too many different securities. Better to have only a few investments which can be watched.
- Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.
- Study your tax position to know when you can sell to greatest advantage.
- Always keep a good part of your capital in cash reserve. Never incest all your funds.
- Don’t try to be a jack of all investments. Stick to the field you know the best. - 254
“What registers in the stock market’s fluctuations are not the events themselves but the human reactions to these events, how millions of men and women feel these happenings may affect the future” 84
“To be a champion you have to learn to take it or you can’t give it” 65
“I began a habit I was never to forsake – of analyzing my losses to determine where I had made my mistakes” 90
“Two principal mistakes of amateurs
- Having an inexact knowledge of the securities in which one is dealing
- To trade beyond one’s financial resources”
“First, one must get the facts of a situation or problem. Second, one must form a judgement as to what those facts portend. Third, one must act in time – before it is too late.” 105
“The longer I operated in Wall Street, the more distrustful I became of the tips and ‘inside’ information of every kind.” 123
“Value in an investment is like character in an individual. It stands up better under adversity and overcomes that adversity more readily.” 227
“A panic may bring a temporary collapse in the market price of an investment, but the stock is bound to recover if the company meets a genuine economic need and is under good management.” 228
“I have bought when things seemed low enough and sold when they seemed high enough – in that way I have managed to avoid being swept along to those wild extremes of market fluctuations which prove so disastrous.” 242
“Still, the truth is there is no investment which doesn’t involve some risk and is not something of a gamble.” 247
“The constant problem of the speculator or analyst is how to disentangle the cold, hard economic facts from the rather warm feeling of the people dealing with these facts. Few things are more difficult to do. The main obstacle lies in disentangling ourselves from our own emotions.” 248
“One of the worst mistakes anyone can make is to hold on blindly and refuse to admit his judgement has been wrong.” 257
“Actually, the procedure one should follow is to sell the bad stock and keep the good stock. With rare exceptions, stocks are higher because they are good, and stocks are low because they are of doubtful value.” 252