They say the chains of habit are too light to be felt until they are too heavy to be broken. The chains you put around yourself now have enormous consequences as you go through life.
Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices.
If some institution wants to sell you a billion dollars worth of mortgages, they might have to sell 100 million in the market, and then you'll buy the other 900 million on the same terms. Now, the very fact that this has been authorized or will be authorized, I hope, will firm up the market to some degree. And that's fine. But you don't want to have artificial prices being paid.
The most common cause of low prices is pessimism - sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces.
The secret is to find what you love to do.I mean, I tell the students look for the job that you would take if you didn't need a job. I mean, it's that simple. And I was lucky enough to find it very early in life. And then the second thing is to have people around you that make feel good every day, and make you a better person than you otherwise would be.
What could be more advantageous in an intellectual contest - whether it be chess, bridge, or stock selection - than to have opponents who have been taught that thinking is a waste of energy?
Americans are in a cycle of fear which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We'll break out of it. It takes time.
Most investors, both institutional and individual, will find that the best way to own common stocks (shares') is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) of the great majority of investment professionals.