Warren Buffett terminated his partnership, paid out his investors and went to cash. That’s the only time in his many decades of investing that he has taken such radical action.
I would say there’s been a great increase in the number people doing dumb things. And they do big, dumb things.
In good years, if not in all years, they retain a part of their profits and put them back in the business.
Among other factors, indicators of extremes of euphoria seem much more important than price
Market conditions are fixed only in part by balance sheets and income statements; much more by the hopes and fears of humanity; by greed, ambition, acts of God, invention, financial stress and strain, weather, discovery, fashion, and numberless other causes impossible to be listed without omission
The intelligent investor should be interested in the possibilities of profiting from these pendulum swings. There are two possible ways by which he may try to do this: the way of timing and the way of pricing.
A high volatility 5-to-10-year return stream that might see several 30% drawdowns on the way to a superb 10 year record
They looked at the allocation between stocks, bonds and cash. They found that over 95 percent of the funds’ returns came from their asset allocation.
A risky investment may be volatile, but not every volatile investment is risky.
In such an environment, many investors actually consider investments they are making are low risk when, in fact, they are higher risk.