Sell Too Early, Never Go Broke

“My son Pete often jokes that the secret to my success is that I always sell too early, and in a way he’s exactly right. You never go broke taking a profit.”

“The secret of business success is precisely the same: You have to be where the action is heading. You have to anticipate and prepare and be there when the risk/opportunity (words I often use interchangeably) presents itself, even if—especially if—the crowd is focused elsewhere. You have to know when to count your blessings, take your profits, and avoid greed.”

“PERSONAL EQUIPMENT SELF-RELIANCE: Do your own thinking. Don’t let your emotions enter into it. Keep out of any environment that may affect your acting on your reason. JUDGMENT: Consider all the facts—meditate on them. Don’t let what you want to happen influence your judgment. COURAGE: Don’t overestimate the courage you will have if things go against you. ALERTNESS: To discover any new facts that change the situation; or which may affect public opinion. PRUDENCE: Be pliable or you won’t be prudent. Become more humble as the market goes your way. It is not prudent to buy when you think the bottom has been reached. It is better to wait and see, and buy too late. It is not prudent to wait for the top of the market to sell—it is better to sell “too soon.” (Never buy so that your margin will be less than 85, or hold if it drops below 80. In a particularly “clear sky” situation with[out] “buts” or “ifs,” one can lower these margins to 80–75%.) PLIABILITY: Consider and reconsider the facts, and your opinions. Stubbornness as to opinions—“cockiness”—must be entirely eliminated. A determination to make a certain amount within a certain time absolutely destroys pliability. When you decide, act promptly—don’t wait to see what the market will do.”

““I have always thought that if, in the lamentable era of ‘New Economics,’ culminating in 1929, even in the very presence of dizzily spiraling prices, we had all continuously repeated ‘two and two still make four,’ much of the evil might have been averted,” he wrote. “Similarly, even in the general moment of gloom in which this foreword is written, when many begin to wonder if declines will never halt, the appropriate abracadabra may be: ‘They always did.’”