Psychology is probably the most important factor in the market - and one that is least understood.

I buy stocks when they are battered. I am strict with my discipline. I always buy stocks with low price-earnings ratios, low price-to-book value ratios and higher-than-average yield. Academic studies have shown that a strategy of buying out-of-favor stocks with low P/E, price-to-book and price-to-cash flow ratios outperforms the market pretty consistently over long periods of time.

Favored stocks underperform the market, while out-of-favor companies outperform the market, but the reappraisal often happens slowly, even glacially.

Nobody beats the market, they say. Except for those of those of us who do.

History constantly reminds us that in an uncertain world there is no visibility of prospects. Future earnings cannot be predicted with accuracy.

A good starting point [in the measurement of investment risk] is the preservation and enhancement of your purchasing power in real terms.

Experience teaches us that when "everyone" comes to the same conclusion, that conclusion is just about always wrong.