Great Investors Sleep Well At Night

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By Investment Master Class

The Investment Masters recognise the need to be well rested which means correctly structuring a portfolio and not taking on too much risk…

“Lack of sleep.. causes stress.  The more stress we experience, the more we tend to make decisions that are short term” Peter Bevelin

“The financial calculus that Charlie and I employ would never permit our trading a good night’s sleep for a shot at a few extra percentage points of return” Warren Buffett

“When it comes to investing, my suggestion is to first understand your strengths and weaknesses, and then devise a simple strategy so that you can sleep at night!” Walter Schloss

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“It is important for a portfolio manager to sleep well at night” Ed Wachenheim

“In my younger days I heard someone, I forgot who, remark “sell to the sleeping point”. This is a gem of wisdom of the purest ray serene. When we are worried it is because our subconscious mind is trying to telegraph us some message of warning. The wisest course is to sell to the point where one stops worrying ” Bernard Baruch

“Wealth management, the markets in their own perverse way occasionally remind us, is not just about eating well, it’s also about sleeping well” Frank Martin

“Investors should always keep in mind that the most important metric is not the returns achieved, but the returns weighed against the risks incurred. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night” Seth Klarman

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“We are fundamental investors and we tend to worry more than most. As a result, are willing to trade some upside during good times for the ability to sleep better at night. Holding cash in the absence of compelling opportunities helps us sleep. At the right price, and under certain conditions, hegding a portion of our risk through the purchase of put options helps us sleep even better” Christopher Parvese

"We sleep better at night knowing that we are focused on investing in true bargains." Bruce Berkowitz

“Successful investing goes hand in hand with productive worrying. Worried that a stock you hold might fall sharply? Reduce your holdings or buy some puts. Concerned that interest rates may rise or the dollar fall? Establish an appropriate hedge. Worried that the stock you bought on a tip might be a bad idea? Sell it and move on. Worry enough during the day and you can, in fact, sleep justifiably well at night” Seth Klarman

“Our approach to risk management at Pershing Square relies in part on what I have deemed the 'Sleep at Night Test” Bill Ackman

Sleeping well at night requires constructing a portfolio that can tolerate unexpected adverse events and isn't going to result in the permanent loss of capital. It requires deep thought as opposed to relying on a risk model.


Avoiding the '7 Deadly Sins of Portfolio Management' will go a long way to ensuring a portfolio's longevity.

"We try to "reverse engineer" our future at Berkshire, bearing in mind Charlie's dictum: "All I want to know is where I'm going to die so I'll never go there" Warren Buffett

"If we can't tolerate a possible consequence, remote though it may be, we steer clear of planting it's seeds" Warren Buffett

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Make sure you can sleep well at night!

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