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The Most Important Thing IlluminatedUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2013

Print ISBN-13: 9780231162845

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162845.001.0001

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The Most Important Thing Is … Avoiding Pitfalls

The Most Important Thing Is … Avoiding Pitfalls

(p.185) 18 The Most Important Thing Is … Avoiding Pitfalls
The Most Important Thing Illuminated

Howard Marks

Columbia University Press

This chapter considers an important requirement for successful investing: avoiding pitfalls. It argues that trying to avoid losses is more important than striving for great investment successes; the latter can be achieved some of the time, but the occasional failures may be crippling, while the former can be done more often and more dependably—and with consequences that are more tolerable when it fails. To avoid losses, the investor needs to understand and avoid the pitfalls that create them. This chapter examines some of the pitfalls attributable to psychology that every investor needs to avoid, including the so-called “failure of imagination” and the failure to recognize market cycles and manias and move in the opposite direction. Comments and insights from four renowned investors and investment educators are included.

Keywords:   pitfalls, loss, investment, psychology, failure of imagination, market cycles, investors

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