Investing And Human Nature

Investing And Human Nature

By Investment master Class  “Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.” Jesse Livermore

“History repeats because of the weakness of human nature” William D Gann

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Venture Capital Investing Process Improvement Through "Machine Learning"
"As a student of human nature, I always have felt that a good speculator should be able to tell what a man will do with his money before he does it". Bernard Baruch

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"We're all supposed to be more sophisticated investors now, but human psychology doesn't change"  Ralph Wanger

"I don't think the investment landscape has changed much because human mentality is always the same" Francisco Garcia Parames

"Human nature and the emotions of greed and fear have not changed as civilization has become more sophisticated"  Barton Biggs

"It is my belief that one constant in the stock market is human nature"  Michel Burry

"Human nature—and by extension the stock market—is always the same" Francois Rochon

"The world has changed, but people haven't changed, and the mind hasn't changed"  Arnold Van Den Berg

"Fear and greed are very much fundamental to the human psyche.  As long as humans drive buying and selling decisions in equity markets, pricing will be affected by these fear and greed attributes" Mohnish Pabrai

"Markets are inefficient because of human nature - innate, deep rooted, permanent.  People don't consciously choose to invest with emoption - they simply can't help it"  Seth Klarman

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"The basic neural network of the brain is there through broad genetic and cultural evolution.  And it's not Fermat/Pascal.  It uses a very crude, shortcut-type of approximation.  It's got elements of Fermat/Pascal in it.  However it's not good" Charlie Munger

"It's crucial to be able to resist your human nature" Peter Lynch


“Humankind’s recurring propensity to unwittingly fall victim to financial fads, follies, and foibles is like a bad dream that we can’t get out of our minds” Frank Martin

"What is the point of the market?  As far as market participants are concerned, it is to discover the weakness of human nature.  If there are things that you don't understand, or if you have any kind of psychological or physiological weakness, there will be a situation in the market which exposes you.  Anyone who's been in the market before will understand exactly what I'm talking about"  Li Lu

"Human beings in mass respond to the same investment stimuli of hope, confidence, fear and impatience in exactly the same way, not alone year by year but century by century" Phil Fisher

"Stock market trends reflect the buying and selling of thousands of human beings.  Their trading reflects only in part, consciously and subconsciously, the state of trade.  At one time their hopes and at another their fears affect prices more vitally that steel production, carloadings, or any other business fact" Philip Carret

“Studies have shown that human beings do not exhibit their best decision making under duress or in an environment of negative reinforcement” Jim Chanos

Human nature is a key factor in stocks being mispriced. I wouldn’t expect that to change anytime soon” Bernard Horn

"One could say that my whole career in Wall Street proved one long process of education in human nature" Bernard Baruch

“At the centre of all market pricing are human beings. I joke the Four Horseman of the investment apocalypse are fear, greed, hope and ignorance, only one of which is not an emotion. Fear, greed and hope have wiped out more money than any market downturn. Because of all the foibles of human nature that are well documented by behavioural research – and now by neuroloigical research – people are always going to overshoot and undershoot when pricing securities. A review of financial markets all the way back to the South Sea company proves this out. As long as human nature doesn’t fundamentally change, we can continue to arbitrage the pricing inefficiencies it creates” James O’Shaugnnessy

“You must have the discipline and temperament to resist your impulses. Human beings have precisely the wrong instincts when it comes to the markets.” Walter Schloss

“Crowd madnesses recur so frequently in human history that they must reflect some deeply rooted trait in human nature. “ Bernard Baruch

“Behind every order ticket to buy or sell a stock or security is a human being, most of whom suffer from one sort of affective disorder or another” Frank Martin

“The stock market is the story of cycles and of the human behaviour that is responsible for overreactions in both directions” Seth Klarman

“Mass human behaviour cannot be modelled or predicted with any degree of precision.” Paul Singer

“People chronically mis-appraise the limits of their own knowledge; that’s one of the most basic parts of human nature.” Charlie Munger

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“there will always be the opportunity to gain a behavioural edge because most innate cognitive biases are Darwinian. Evolutionary forces caused these behaviours to evolve because they were useful at a prior point in history even though they are not useful in modern, complex markets. They are hardwired into all of us”  Ken Shubin Stein

“For participants in the stock market, one of the biggest problems is that the subrational, instinctive part of the brain is subject to dire mood swings, including outbreaks of irrational optimism and irrational pessimism. Indeed, money related issues often activate the “subrational” parts of our brain” Guy Spier

Seth Klarman: Investing In A Tech Bubble

"The market is made up of people, and to beat it you have to know them as well as you do the thing your investing in" Howard Marks

"Independent thinking, emotional stability, and a keen understanding of both human and institutional behaviour are vital to long-term investment success" Warren Buffett

"In the figurative canyons of Wall Street, learning is not cumulative - in large measure because ignorance, greed, fear and folly indigenous to the human species regularly impede the process of acquiring wisdom.  Today's follies are little more than yesterday's foolishness adorned in different finery"  Frank Martin

"One could say that my whole career in Wall Street proved one long process of education in human nature"  Bernard Baruch

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"Human nature is wildly emotional and thus prone to disorderly excesses that cause booms and busts" Barton Biggs

"The manic-depressive behaviour of stock market investors is immutable.  It is inherent to the nature of human beings and no system is going to change that"  Francois Rochon

"In many ways the art of common stock investment has changed radically over the past fifty years. However, human nature en masse in relation to its attempt to make profits through buying capital assets does not change at all. What figures are available show that a chart of prices for tulip bulbs during the great speculative mania that occurred in that exotic commodity in Holland many centuries ago would parallel with amazing closeness a comparable chart of the rise and fall of leading stock prices in our own hectic period just before and after 1929.

Even more illuminating is a study of what happened when nation wide optimism about the profit possibilities of the British East India Company caused a great wave of eagerness for common stocks to en gulf the British Isles in the eighteenth century. The parallel between the difference in action of leading and secondary stocks then and in recent markets is astonishingly close. So are the resemblances in size and duration of the various dips or rallies that ran against the general price trend both on the way up and the way down. While these parallels are colorful, they merely confirm what most shrewd observers have recognized after they have had enough experience with the investment public: Human beings en masse always react about the same way to the same investment stimuli" Phil Fisher

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