John Neff on Investing

as the market grew more excited, we grew more cautious.

I'd seen enough hitting behind the ball. By playing it safe, you can make a portfolio so pablum-like that you don't get any sizzle. You can diversify yourself into mediocrity. This sounds like heresy to many advocates of modern portfolio theory, but sticking our neck out worked for Windsor.I

We never salivated for the last dollar in a major move (i.e., the oil stocks). Instead, we tried to take stocks from undervalued to fairly valued. We left "greater-fool" investing to others.

Judgment lies in recognizing which way the fundamentals point. Conventional wisdom and preconceived notions are stumbling blocks as well as signs of opportunity.

You can sum up the Street's psychology this way: Hope for the best, expect the worst. Meantime, don't stick your neck out.

Brain surgery it's not, but I've always found that investors who skip elementary steps stumble sooner rather than later.

Investing is not a very complicated business; people just make it complicated. You have to learn to go from the general to the particular in a logical, sequential, rational manner.

Windsor did not achieve superior results by going against the grain at every chance. Stubborn, knee-jerk contrarians follow a recipe forcatastrophe. Savvy contrarians keep their minds open, leavened by a sense of history and a sense of humor.

Shortcuts usually grease the rails to disappointing outcomes.