“Be fearful when others are greedy and greedy when others are fearful.“

Recessions, panic, financial crises and other bouts of fever are ideal moments to invest; the valuations are low and there are much more opportunities to acquire excellent assets for good prices than usual.

On the other hand, when the consensus is optimistic and the valuations are high, it is wise to adopt more of a wait-and-see attitude, out of fear for overpaying for too highly valued assets, and therefore suffer the consequences of an inevitable reversion to the mean.


“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”

Instead of trying to foresee the unforeseeable - meaning the market fluctuations - in vain, it makes more sense to focus on the fundamentals and the intrinsic value of the desired asset. 

Notwithstanding the current (market) upheavals, and provided that the investments have been made at attractive valuations, a well-constructed portfolio of sustainably growing companies will generate a satisfying return in the long term or at least one that exceeds all the alternatives.  


“Time is the friend of the wonderful company and the enemy of the mediocre one.”

Over time, and by the magic of compound interest, and always provided that the investments have been made at attractive valuations, a company with a sustainably high return on equity - in other words, the definition of ‘a wonderful company’ according to Buffett - will enrich its shareholders tremendously.  

On the other hand, a company with an anemic or negative return on equity will always be valued at a discount. This discount will sometimes become smaller during brief periods of collective euphoria - hence offering shareholders an excellent exit - but, in the longer term, the risk and the cost of opportunity are too penalizing.      


“Long ago, Benjamin Graham (Warren Buffett’s professor at Columbia) thought me that price is what you pay and that value is what you get. Whether we’re talking about stocks or socks, I like buying quality merchandise when it is marked down.”

A company’s price - meaning its market capitalization - has to be distinguished from its value: the price fluctuates every second depending on the mood of the market, while the company’s value, even if this generally isn’t precisely definable, goes up or down depending on the profit growth and the return on equity.  

This is why, when the company’s price dramatically underestimates the company’s value, an opportunity to make excellent investments presents itself; on the other hand, when the prices largely overestimates said value, the danger is the greatest. 


“Only when the tide goes out do you discover who has been swimming naked.”

This famous quote of the master is applicable in several contexts - and was probably used to point the finger to the dangers of an excessive leverage - but individual investors can interpret it as follows: as a rising tide lifts up all vessels, including the walnut shell boats, a bull market allows all participating investors - even the less competent ones - to cheat.    

It’s only when the difficulties arise that the masks come off, and throughout an ordeal that we recognize those who will survive - and perhaps prosper - and those who should have never taken the risk.