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Market Sense and Nonsense: How the Markets Really Work (and How They Don't) by Joel Greenblatt, Jack D. Schwager

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Epilogue

32 Investment Observations

1. Listening to the experts may be detrimental to your financial health.
2. The market is not always right. The best opportunities arise when the market is most wrong.
3. Big price moves begin on fundamentals but end on emotion.
4. The price move often causes the news rather than the other way around.
5. Past returns are not future returns. Past returns can be very misleading if there are reasons to believe that future market conditions are likely to be significantly different from those that shaped past returns.
6. At major fundamental or psychological transition points, the best past performers often become among the worst future performers.
7. The best time to initiate long-term investments in equities is after extended periods of underperformance.
8. Faulty risk measurement is worse than no risk measurement at all because it will lull investors into unwarranted complacency.
9. Volatility is frequently a poor proxy for risk. Many low-volatility investments have high risk, while some high-volatility investments have well-controlled risk. Typically, volatility is a good measure of risk for only highly liquid investments.
10. The real risks are often invisible in the track record.
11. Volatility is detrimental to return.
12. Leveraged exchange-traded funds (ETFs) can drastically underperform equivalently leveraged investments in the underlying market—sometimes even losing when they get the market direction right.
13. High past returns sometimes ...

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