Risk estimation is the specialty of experienced experts, and the results of their work will necessarily be subjective, imprecise, and more qualitative than quantitative (even if expressed numerically).
(Experts may say it very precisely and logically, but in the general direction, it is not much better than us)
2017-12-19
I highly recommend Einstein's comment: "Not everything that matters is calculated, and not everything that is calculated is important." The philosopher and logician CarvethRead put it well: "It's better to be vaguely correct than to be precise." ”
I firmly believe that, first, in the investment community, the key phenomena of most investments are cyclical in nature; second, this cycle is repeated over and over again, reflecting consistent patterns of behavior; and finally, the outcome of such behavior is predictable.
(The length and amplitude of the cycle are not easy to predict, but the cycle is inevitable)
2017-12-20
Favorite Buffett's philosophy: The less cautious others are in their own affairs, the more cautious we should be about our own affairs. And when others become overly cautious and risk-off, assets become so cheap, we should be aggressive.
When market confidence is high, emerging-market countries are seen as equivalent to developed markets, with only rapid growth, which means that it is reasonable for emerging-market countries' securities to be sold at the level of developed country yields and price-to-earnings ratios. But when market confidence declines, it's easy to spot risks exposed by emerging-market countries that developed countries don't have: coups, institutionalized corruption, maximum devaluations, and refusal to pay their debts, so significant valuation discounts come in an orderly manner
This incident illustrates a strange picture that exists in this era: (investors think) some things may go wrong, but they may not be exposed so quickly. For this, I prefer Buffett's point of view: "If you don't want to own a stock for ten years, then don't consider owning it for ten minutes."
(It's foolish to hope that you're not the last baton in the relay race)
Two lads, Joe and Bob, met on the street. Joe told Bob about the hamsters he sold: skilled and highly intelligent. Bob said he wanted to buy a hamster for his child: "How much?" Joe replied, "Half a million," and Bob said Joe was crazy.
The next day they met again. "What happened to your hamster," Bob asked. "Sold," Joe said. "Sold for half a million?" Bob asked. "Yes," Joe said. "Cash?" "No," Joe replied, "I took two canaries for $250,000. ”
(Experts are actually not much better than us when it comes to predicting the future))
Today's news media is far worse than it was 30, 40, 50 years ago. Many media outlets are particularly subjectively biased, and what audiences read, see, and hear is one-sided. The longer you are exposed to the media, the more you can't see the whole picture
(There's no way around it.) Media opinion is no longer valuable)
People just like to listen to voices in the media that agree with their opinions, and don't like to hear voices that disagree with them.
Paying attention to the opinions of experts in the media is a pastime that does not help sanity.
(We only want to see what we want to see, so the effect of seeing is to deepen our point of view rather than change our point of view)
(Especially in the era of self-media, it is more difficult to pick a better media)
(Extreme situations may last a long time)
At the same time, we are very clear about what we don't know. In the tepid and unclear situation, we do not bet heavily.
(Being clear about what you won't is as important as being clear about what you're going to be)
A year ago, I was having dinner with Warren Buffett, who told me that information that deserves our attention should have two characteristics: one is important and the other is knowable.
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