Friday, December 31, 2010

Quotes of 2010

A collection of quotes said or written at some point during this calendar year.

"There are 309 million people out there that are trying to improve their lot in life. And we've got a system that allows them to do it. It doesn't allow things to get changed overnight, though. And-- and-- it's-- it's important to have the right monetary policy. It's important for-- to have the right fiscal policy. But it's nowhere near as important as just the normal regenerative capacity of American capitalism." - Warren Buffett

"Most sports have conceded flaws in their design, and are better off for having addressed them. Tennis added the tiebreaker, football penalties for pass interference, basketball the three-point shot. So why not soccer? Oh, there was one attempt: the penalty shootout. It's like someone said, 'For really important games, let's make the outcome even more random.'" - Richard Bookstaber

"...let's talk about soccer scores. There are a few things that people all around the world need to admit to themselves. Trade restraints slow economic growth, the euro is not a reserve currency and scoreless sports ties are boring." - P.J. O'Rourke

".The purpose of sports—even foreign sports—is not to bore people. Boredom can be so easily obtained. Hunger, exhaustion from making a living and authoritarian governments that ban the fun parts of the Internet provide it free in most of the world." - P.J. O'Rourke

"Nothing But Costs"
"What is Wall Street supposed to do? It's not a creator of wealth. It's a handmaiden to creators of wealth. It occupies an essentially parasitic, but usefully parasitic relationship with the rest of the society. It's totally out of control. It's not making America a great place; it's making America a worse place right now." - Michael Lewis

Markets, Psychology, & the Business Cycle
"...markets have rhythms tied to the interplay of psychology and the business cycle. And while they are only a rough guide for what to expect, what they aren't is irrelevant. Investors forget that it's better to have the problems exposed and absorbed than to be unaware they're there, fuses burning." - Michael Santoli

"The web evolved into a powerful, ubiquitous tool because it was built on egalitarian principles, the web as we know it, however, is being threatened in different ways. Some of its most successful inhabitants have begun to chip away at its principles." - World Wide Web Founder Tim Berners-Lee

"The more you enter, the more you become locked in. Your social-networking site becomes a central platform - a closed silo of content, and one that does not give you full control over your information in it. The more this kind of architecture gains widespread use, the more the Web becomes fragmented, and the less we enjoy a single, universal information space." - Tim Berners-Lee

"...I'm skeptical about the narrowness of the business school curriculum. I happen to believe it should have a much greater liberal arts emphasis, and even a much greater emphasis on the classics. The Odyssey will tell you an awful lot about human nature and life, and therefore about business, and societal values. Read the Odyssey. Read Dante's Inferno. You can also learn a lot by reading Seneca's essay on the shortness of life or Montaigne's essay on vanity." - John Bogle

"Somebody ought to spend a little time thinking...and this gets back to the classics, about the role of business in society. It should add value. But the financial business does not add value. By definition the financial business subtracts value. In round numbers, it takes something like $600 billion out of the pockets of investors every year. That’s $6 trillion dollars in 10 years." - John Bogle

Senator Johanns: "It kinda reminds me what the chief of staff said: 'never let a good crisis go to waste.' And what we are doing here is we're taking this financial reform and we're expanding it beyond where we should be. And I just question the wisdom of that unless somebody can make the case to me that had this been in place the world would be different."

Paul Volcker: "The problem today is to look ahead, and try to anticipate the problems that may arise that will give rise to the next crisis. And I tell you, sure as I am sitting here, that if banking institutions are protected by the taxpayer and they are given free rein to speculate, I may not live long enough to see the crisis, but my soul is going to come back and haunt you."

"What got us into this mess was raw speculation and its offspring, a sustained misallocation of capital." - Michael Lewitt

"I think we have been distracted a lot by people who bleeded about their own things. I'm not sure somebody as technologically ignorant as Al Gore is entitled to speak on the subject. I think you should have punched your ticket in a few better places before you open your mouth." - Charlie Munger speaking on the building of an alternative energy infrastructure

"Idiots and knaves were making a fortune selling shoddy mortgages with ridiculous theories. It was very regrettable behavior. And it was the easy money that allowed it and, of course, the adults who could have fixed it like the accountants who had ridiculous standards without which the bad behavior wouldn't have worked.

The accountants utterly failed us. And, by the way, there is practically no sign of any intelligent reversal of the failure of that profession. I have yet to meet many accountants who are the least bit ashamed for their contribution to our recent troubles but it was immense." - Charlie Munger

"Our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us. But by and large we don't much bother with trying to predict the tides because we plan to play the game for a long time.

I recommend to all of you exactly the same attitude.

It's kind of a snare and a delusion to outguess macroeconomic cycles...very few people do it successfully and some of them do it by accident. When the game is that tough, why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides?" - Charlie Munger

"...the 3% of GDP that was made up of financial services in 1965 was clearly sufficient to the task, the proof being that the decade was a strong candidate for the greatest economic decade of the 20th century. We should be suspicious, therefore, of the benefits derived from the extra 4.5% of the pie that went to pay for financial services by 2007, as the financial services share of GDP expanded to a remarkable 7.5%. This extra 4.5% would seem to be without material value except to the recipients. Yet it is a form of tax on the remaining real economy and should reduce by 4.5% a year its ability to save and invest, both of which did slow down. This, in turn, should eventually reduce the growth rate of the non-financial sector, which it indeed did: from 3.5% a year before 1965, this growth rate slowed to 2.4% between 1980 and 2007, even before the crisis." - Jeremy Grantham

"I hate gold. It does not pay a dividend, it has no value, and you can't work out what it should or shouldn't be worth," he said. "It is the last refuge of the desperate." - Jeremy Grantham

"Everyone asks about gold. This is the irony: just as Jim Grant tells us (correctly) that we all have faith-based paper currencies backed by nothing, it is equally fair to say that gold is a faith-based metal. It pays no dividend, cannot be eaten, and is mostly used for nothing more useful than jewelry. I would say that anything of which 75% sits idly and expensively in bank vaults is, as a measure of value, only one step up from the Polynesian islands that attached value to certain well-known large rocks that were traded." - Jeremy Grantham

"You don't actually find a strong correlation between— top-line GDP growth and making money in the market. It— it seems like you should. The fastest-growing countries should give you the highest return. They simply don't. But, there's only four of us— that— that believe that story. Everyone else in the world believes that if you grow fast like China, you'll outperform in the stock market." - Jeremy Grantham

"...how little our side of the industry did to move its business to the more ethical firms and to make a fuss about conflicted or unethical behavior. Had a number of us moved our business, we might have slowed or even stopped the 30-year slide in conflicted, unethical behavior that we have experienced. I, for one, regret the modest nature of our moves. We all could have done more. We have tolerated a pretty nasty decline in standards. Shame on us." - Jeremy Grantham

"You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?" - Warren Buffett

"It's quite clear that stocks are cheaper than bonds. I can't imagine anybody having bonds in their portfolio when they can own equities, a diversified group of equities. But people do because they, the lack of confidence. But that's what makes for the attractive prices. If they had their confidence back, they wouldn't be selling at these prices. And believe me, it will come back over time." - Warren Buffett

Happy New Year,

Adam

Quotes of 2009

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