Peter Mallouk Quotes

I never use hedge funds because I am well aware of what drives future performance, and hedge funds start out with a great disadvantage in every major category: taxes, fees, risk management, transparency and liquidity.

There is ample evidence that confirmation bias permeates throughout investors' decisions. For example, once an investor likes a stock, he is likely to seek out information that validates that stock. In a 2010 study, researchers showed that investors used message boards to seek out information that validated rather than challenged, stocks they owned (Park et al. 2010). If we own a stock, we tend to look for anything that validates our decision to buy it, and to reinforce why we should keep holding it.

Gold belongs only in the portfolios of fearmongers and speculators. If you own gold in your portfolio, expect to not get paid an income, pay higher taxes on your returns, take a more volatile ride than the stock market, and get a long-term return lower than bonds.

Rather than be fearful and sell out at the worst time or get greedy when the market is way up, investors should control their emotions and not only avoid panic, but embrace the market volatility for what it is: an opportunity and a gift. Suffocate the instincts that want to make you a bad investor and rather embrace the chaos that normally causes them to rise to the surface.

The stock market cares about only one thing above all else: anticipated earnings. If companies make more money, their share prices eventually rise. The stock price is simply a reflection of a company's earning power. Everything else is noise.

...there should be no place in a portfolio for hedge funds. There are lots of reasons, but the main one is simple: Investing in hedge funds is a great way to increase the odds of underperformance.