Quotes from Burton G. Malkiel

The right response to a fall in the price of one asset class is never to panic and sell out. Rather, you need the long-term discipline and personal fortitude to buy more. Remember: The lower stock prices go, the better the bargains if you are truly a long-term investor. Sharp market declines may make rebalancing appear a frustrating "way to lose even more money." But in the long run, investors who rebalance their portfolios in a disciplined way are well rewarded.

What is a cynic? A man who knows the price of everything, and the value of nothing. — Oscar Wilde, Lady Windermere's Fan

Another lesson that cries out for attention is that investors should be very wary of purchasing today's hot "new issue." Most initial public offerings underperform the stock market as a whole. And if you buy the new issue after it begins trading, usually at a higher price, you are even more certain to lose.

Rebalancing will not always increase returns. But it will always reduce the riskiness of the portfolio and it will always ensure that your actual allocation stays consistent with the right allocation for your needs and temperament.

In David Copperfield, Charles Dickens's character Wilkins Micawber pronounced a now-famous law: Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

You, far more than the market or the economy, are the most important factor in your long-term investment success.

High-quality bonds can moderate the risk of a common stock portfolio by providing offsetting variations to the inevitable ups and downs of the stock market. For

Avoiding serious trouble, particularly troubles that come from incurring unnecessary risks, is one of the great secrets to investment success. Investors all too often beat themselves by making serious—and completely unnecessary—investment mistakes. In

Rule 1: A rational investor should be willing to pay a higher price for a share the larger the growth rate of dividends and earnings.

There are few, if any, absolute rules in saving and investing, but here's ours: Never, never, never take on credit card debt. This rule comes as close as any to being an inviolable commandment. Scott

It is the nature of an average that some investors will beat it.

The secret of getting rich slowly but surely is the miracle of compound interest. Albert Einstein is said to have described compound interest as the most powerful force in the universe. The concept simply involves earning a return not only on your original savings but also on the accumulated interest that you have earned on your past investment of your savings.

As in so many human endeavors, the secrets to success are patience, persistence, and minimizing mistakes. In driving, it's having no serious accidents; in tennis, the key is getting the ball back; and in investing, it's indexing—to avoid the expenses and mistakes that do so much harm to so many investors.

There is no simple road to riches for you and your family. The secret to getting wealthy is that there is no secret. The only way to get rich—unless you inherit or marry a fortune or hit the lottery—is to get rich slowly. Start early and contribute as much as possible to your savings for as long as possible.

Similarly, the buy-and-hold investor who prudently holds a diversified portfolio of low-cost index funds through thick and thin is the investor most likely to achieve her long-term investment goals.

The secret to success and enjoyment in so many parts of life is to know your capabilities and stay within them. Similarly, the key to success in investing is to know yourself and invest within your investing capabilities and within your emotional capacities.

The theory stresses that a stock's value ought to be based on the stream of earnings a firm will be able to distribute in the future in the form of dividends or stock buybacks.

The largest, longest study of experts' economic forecasts was performed by Philip Tetlock, a professor at the Haas Business School of the University of California–Berkeley. He studied 82,000 predictions over 25 years by 300 selected experts. Tetlock concludes that expert predictions barely beat random guesses. Ironically, the more famous the expert, the less accurate his or her predictions tended to be.

There are two times in a man's life when he should not speculate: when he can't afford it, and when he can. —Mark Twain, Following the Equator INVESTMENT

persuasively, that

research analysts were increasingly paid to be bullish rather than accurate. In one celebrated incident, an analyst who had the chutzpah to recommend that Trump's Taj Mahal bonds be sold because they were unlikely to pay their interest was summarily fired by his firm after threats of legal retaliation from "The Donald" himself. (Later, the bonds did default.)

14 A LIFE-CYCLE GUIDE TO INVESTING There are two times in a man's life when he should not speculate: when he can't afford it, and when he can. —Mark Twain, Following the Equator INVESTMENT STRATEGY NEEDS to be keyed to one's life cycle.

Thus, purchasing a fund holding all the stocks in a broad-based index will produce a portfolio that can be expected to do as well as any managed by professional security analysts.

ou could talk about Prohibition, or Hemingway, or air conditioning, or music, or horses, but in the end you had to talk about the stock market, and that was when the conversation became serious.