Hand-picked quotes about risk from the best non-fiction books

Poverty is simply having more problems than solutions. Poverty is caused by a person’s being overwhelmed by problems he or she can’t solve.

Ultimately, it is not the asset that makes you rich. Information makes you rich... or poor.

By the time a person hears a hot tip about a company’s new product or news that a company is in trouble, people on the inside and close to the inside have already traded on that information. The battle has already been won, and the average investor has lost.

Since I know a trend can reverse and change direction, I do not blindly invest for the long term. The Information Age is about change and I need to be flexible... not a robot.

The new capitalism puts millions of workers’ money into investments that allow them very little control or leverage.

There is no reason to risk what you have and need for what you don’t have and don’t need.

I simply want to know the rules and play by the rules. This does not mean I believe the rules are fair or equitable. They aren’t.

Just because you invest or are self-employed, does not mean you are an investor or a business owner.

There’s only one way to stay wealthy: some combination of frugality and paranoia. Getting money is one thing. Keeping it is another.

Inside every problem is a gem of wisdom, a gem that makes us smarter, stronger, and able to do better regardless of economic conditions.

In the world of money, there are two things investors invest for: capital gains and cash flow. In most cases, investing for capital gains is gambling, or speculation.

When it comes to the game of money, most people are playing—if they know they are playing at all—not to lose rather than playing to win.

The reason you do not count your money while you’re sitting at the table is because as long as you are at the table, your money does not belong to you. The moment you step away from the table, the money in your pocket is your money and you can count it.

Good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that can’t be repeated. It’s about earning pretty good returns that you can stick with and which can be repeated for the longest period of time. That’s when compounding runs wild.

There are books on economic cycles, trading strategies, and sector bets. But the most powerful and important book should be called Shut Up And Wait. It’s just one page with a long-term chart of economic growth.

A smart investor knows the difference between facts and opinions. Generally a person who invests for capital gains is investing on an opinion. A cash flow investor invests for facts. If possible, a smart investor will invest using both opinion and facts, and invest for both cash flow and capital gains.

Intelligence is the ability to take information and make it meaningful.

Being able to live well and still invest no matter how much you make requires a high level of financial intelligence.

Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort. They are so similar that you can’t believe in one without equally respecting the other.

The reason most financial advisors say that higher returns mean higher risk is simply because they sell only investments that allow very little control.

Professional investors don’t diversify. As Warren Buffett says, “Diversification is a protection against ignorance. Diversification is not required if a person knows what they are doing.”

The value of my apartment house is based upon the rent my tenants pay. In other words, the true value of the property is the value my tenants think the property is worth. If I can increase the perceived value of my property to my tenants, I, not the market, have increased the value of the property.

Golf is not my game. Golf is what I do for fun. Business, investing, and making money is my game. I love my game.

If a government agency is efficient and saves money, the agency is punished, instead of rewarded, by having next year’s budget reduced. To avoid this, most government agencies spend all their budgeted money, even if they do not need to. This means costs keep going up and the chances of a government budget surplus are slim to none.

There has been too much greed, misinformation, and corruption running our businesses, governments, and schools.

Getting money requires taking risks, being optimistic, and putting yourself out there. But keeping money requires the opposite of taking risk. It requires humility, and fear that what you’ve made can be taken away from you just as fast.

Two of the main reasons I do not like mutual funds is that banks do not lend money on them and insurance companies will not sell me insurance against catastrophic loss if the market crashes—and all markets crash.

The idea is that you have to take risk to get ahead, but no risk that can wipe you out is ever worth taking. The odds are in your favor when playing Russian roulette. But the downside is not worth the potential upside. There is no margin of safety that can compensate for the risk.

Investing for cash flow is investing for income. If I put savings in the bank and receive 5 percent in interest, I am investing for cash flow.

The problem with letting bureaucrats and bankers manage your money is they think your money is their money.