Quotes from Barry Ritholtz

Investors tend to discover 'hot' mutual fund managers just after a successful run and just before the inescapable force of mean reversion is about to kick in.

Narrative drives most of economics. Everything seems to be part of a story, and how that story is told often leads to critical error.

Indeed, eventually, random outcomes all revert to the mean, meaning that streaks eventually end. Understanding this is a key part of intelligent and rational investing.

History shows us that people are terrible about guessing what is going to happen - next week, next month, and especially next year.

As investors, we want to believe we are smart, insightful and uniquely talented - even though we often fail to do the heavy lifting, put in the long hours, and make the uncomfortable but necessary decisions to achieve success.

Good investors must learn to contextualize the daily background noise.

Much of the traditional thinking about cash is well intentioned but unrealistic. Should you have six months of living expenses in the bank for emergencies? Sure. Do you? Probably not.

The ability to select stocks, manage them over time and know when to sell them is incredibly difficult, even for professional fund managers.

Any time you speak to people about their posture, you learn about their most recent investment activity. When someone just bought stocks, they tend to be bullish; someone who just sold is bearish.

If you are not making any mistakes, you are being excessively risk-averse. Investing involves risk, and that means you will occasionally be wrong. And although it is okay to be wrong, it is not okay to stay wrong.

TV producers want ratings and are willing to do nearly anything to get them. They gin up artificial conflicts and create an urgency for even the most minor of economic data points.

The good news is that economists are intelligent, engaging and often charming folks. The bad news is their work is often of little use to investors.

Owning a variety of asset classes means that some part of your portfolio will be doing well when the cyclical turmoil arises. A broadly diversified portfolio includes large capitalization stocks, small cap, emerging markets, fixed income, real estate and commodities.

Hedge fund managers charge so much more than mutual fund managers; alpha is even harder to come by. They end up selling a variety of things beyond mere outperformance.

If your investing approach requires that you become Nostradamus to succeed, then you are destined to fail.

Any investment bought via credit always runs the risk of margin calls and, eventually, liquidation.

Google's founders have had a good eye for imagining what technologies will be significant in the near future. No one asked Google to develop self-driving cars, but it helped them with street views for Google Maps.

Once you research an idea, you begin to develop a perspective. Writing about anything in public, often in real time, has helped fashion my views.

We love a tale of heroes and villains and conflicts requiring a neat resolution.

It is in your DNA to love a good story. You know, neat tales with heroes and villains and conflicts to resolve. A good story pushes our buttons, is exciting and memorable.

With Twitter, you can build your own virtual trading floor and research department, populated by the smartest people on earth. Almost any subject or sector has you can think of, you can find a few people with an expertise in that area.