PRESERVE CAPITAL

“The first rule of investment is don’t lose money. And the second rule of
investment is don’t forget the first rule. And that’s all the rules there are” Warren
Buffett

“As Warren Buffett has advised, the first rule of investing is, don’t lose money.
The second rule is, don’t forget rule number one” Christopher Browne

“Avoiding loss is the most important prerequisite to investment success” Seth

Klarman

"Avoiding permanent loss of capital is the number one rule" Bruce Berkowitz

“The possibility of permanent loss is the risk I worry about, Oaktree worry
about and every practical investor I know worries about” Howard Marks

"We feel the first and foremost responsibility of every investor is preservation
of capital" Seth Klarman

“The trick in investing is not to lose money. That’s the most important thing. If
you compound your money at 9% a year, you’re better off than investors whose
results jump up and down, who have some great years and horrible losses in
others. The losses will kill you. They ruin the compounding rate and
compounding is the magic of investing” Jim Rogers

“My goal was to keep losses down, and if I could catch a few stocks going up,
compound returns would work their magic” Walter Schloss

"Loss avoidance must be the cornerstone of your investment philosophy." Seth

Klarman

"Greedy, short-term orientated investors may lose sight of a sound mathematical

reason for avoiding loss; the effects of compounding even moderate returns
over many years are compelling, if not downright mind boggling" Seth Klarman

"Return of capital is more important than return on capital" Mohnish Pabrai

"Most investors focus on how much they're going to make rather than how much
they could lose. Our focus is on the downside" Marc Lasry

"Safety. Considering the downside is the single most important thing an

investor must do. This task must be dealt with before any consideration can be
made for gains" Irving Kahn

“Avoid big losses. That’s the way to really make money over the years.” Julian
Robertson
“It’s ingrained in my DNA to think about the downside before any upside
potential” Allan Mecham

“The trick is to avoid losers. Losers are terrible because it takes a success to
offset them just to get back to break-even. We strive to preserve capital on
each investment. It does not always work out that way, but that is the goal” David
Einhorn

“The definition of a great investor is someone who starts by understanding the

downside. You must make the judgement in advance as to how
much downside risk you are willing to take” Sam Zell

“When it comes to compounding, I’m not sure everyone understands that

percentage losses and gains are not equal. I’ve always managed to avoid the
large losses. Imagine something as simple as that being one of your secret
sauces” Frank Martin

“The chance of gains means very little to us until we have attempted to rule out
the probability of permanent loss” Chris Begg

"We believe in the power of compounding and the simple math is that you can't
compound very well if you suffer too much on the downside.” Tom Perkins

“Makes sure that the probability of the unacceptable (ie the risk of ruin) is nil”
Ray Dalio

"People love focusing on the upside. That's where the fun is. What amazes me is
how superficially they consider the downside. For me, the calculation in making
a deal starts with the downside. If I can identify that, then I understand the risk
I'm taking. What's the outcome if everything goes wrong? What actions would I
take? Can I bear the cost? Can I survive it?" Same Zell

"As Warren Buffett said "In order to succeed you must first survive". You need
to avoid ruin. At all costs" Ed Thorp

“It’s our clear belief that one of the most effective ways to compound wealth is
to minimize drawdowns” Charles de Vaulx

“Don’t focus on making money, focus on protecting what you have” Paul
Tudor Jones

“Remember, winning in the investment game means not losing” Christopher

Browne

“A market downturn is the true test of an investment philosophy” Seth Klarman

“People find insuring their house a necessity, not something to be judged

against a financial strategy, but when it comes to their portfolios, because of the
ways things are framed in the press, they don’t look at them in the same way.”
Nassim Taleb
“When I buy or sell something, I always try to make sure I’m not going to
lose any money first. If there is good value, then I’m probably not going to lose
much money even if I am wrong” James Rogers

“I have no appetite for losses” Michael Platt

"I'll tell you a secret of mine. I don't like to lose money. I like to make money, of
course, but I really don't like to lose it" Israel Englander

“An investor is more likely to do well by achieving consistently good returns with
limited downside risk than by achieving volatile and sometimes spectacular
gains but with considerable risk of principal. An investor who earns 16%
annual returns over a decade, will perhaps surprisingly, end up with more money
than an investor who earns 20% a year for nine years and then loses 15% the
tenth year” Seth Klarman

“The power of compounding is so great that our first job as investors is to avoid
anything that might short circuit it” Ira Rothberg

“An investor needs to do very few things right as long as he avoids big
mistakes” Warren Buffett

“In my book, trying to avoid losses is more important than striving for great
investment success” Howard Marks

“Most equity investors are optimists and focus on what can go right, but
big drawdowns are the primary enemy of long term compound returns”
Kevin O’Brien

“First off, we operate out of fear of losing. We institutionalise a lot of

processes, especially risk management, and the risk function is framed by how
much we can lose” Kyle Bass

"Preservation of capital is key to survival in this business" Christopher

Parvese

"Our first priority is always capital preservation, so we are usually playing

defence, even if it means we sometimes trail the market when it's ripping
upward" Whitney Tilson

“What we care about is avoiding the permanent loss of capital and,

increasingly relevant today, the permanent loss of purchasing power” David Iben

“Investing is a probabilistic business. For every commitment of capital we make,

we compare our estimation of the likelihood of success with the probability of
failure. We then assess how much we can make in a successful outcome with our
best estimate of what we can lose in an unsuccessful outcome. We are willing
to take more risk in a situation that offers more reward” Bill Ackman
“The most important rule of trading is to play great defence, not great offense”
Paul Tudor Jones

“Never set yourself up for the knockout punch” Kyle Bass

“Risk control is invisible in good times but still essential, since good times can
so easily turn onto bad times” Howard Marks

“Thoughtful investors can toil in obscurity, achieving sold gains in good years
and losing less than others in the bad. They avoid sharing in the riskiest
behaviour because they’re so aware of how much they don’t know and because
they have their egos in check. This, in my opinion, is the greatest formula for long
term wealth creation – but it doesn’t provide much ego gratification in the short
run” Howard Marks

“I learned that if I can simply survive in the market, just like surviving in the
war, and not lose money, eventually I will make something” Walter Schloss

“One thing I’m sure of is that an absolute prerequisite for success in this business
is survival. Some people who invest aggressively at the wrong time
don’t survive.” Howard Marks

“I spend most the day watching my losers because if those are being managed
correctly the winners take care of themselves” Steve Cohen

“If you’re not thinking about how much capital you have at risk i.e.
the downside, then I think you’re leaving out a very important part of the
equation” Daniel Krueger

“The core tenets defining out trading philosophy – total focus on absolute
return, risk control, liquidity and drawdown – will remain constant. These
tenets have served us well through the financial convulsions of the past four
years” Andrew Law

“The speculator has to be his own insurance broker, and the only way he can
continue in business is to guard his capital account and never permit himself
to lose enough to jeopardise his operations at some future date when his market
judgement is correct” Jesse Livermore

“To paraphrase Ben Graham, the dean of fundamental securities analysis,

the return of one’s capital is just as important as the return on one’s capital”
Larry Pitkowsky

“What we learned at Drexel underpins our investment philosophy: Protect

your downside and don’t lose money” Jon Sokoloff

“Your first thought must be how to protect your capital and make your trading
as safe as possible” William D Gann
“The notion of understanding the first rule of life is important: don’t lose
money” Mario Gabelli

"We have two principles. The first is : Don't lose money. The second is: Don't
forget principle No. 1" Albert Nicholas

“Risk management is the most important thing to be well understood” Bruce

Kovner

“Preserving private capital for long periods of time is the exception, not the
rule, in history” Paul Singer

"We think if we stick to our philosophy and protect people on the downside, we
can produce a pretty good record. The past 40 years has proved that" Albert
Nicholas

"We truly believe the key to investment success is losing less than the market
during declines - losing small is more important than winning big. The math
works and it keeps you in the game when you should be" Brian Krawez

"Much of investing is about not losing just as much of life is about not dying. It
is avoiding those places where you can die. That's why I'm not a really big fan of
parachuting" Bruce Berkowitz

"What I believe in is compounding and not losing money" Colm O'Shea

"I have an intense dislike for losing money" Phil Fisher

"Once we know that our downside is protected, then we look at the upside
potential." Marc Lasry

"When I was in my early 30s at Bear Stearns, I’d have drinks after work with a
friend of my father’s who was an entrepreneur and owned a bunch of companies.
“Never worry about what you might earn on the upside,” he’d say. “Always worry
about what you might lose on the downside.” And it was a great lesson for me,
because I was young. All I worried about was trying to get a deal done, for my
investors and hopefully for myself. But you know, when you’re young, oftentimes
you don’t worry about something going wrong. I guess as you get older you worry
about that, because you’ve had a lot of things go wrong." Henry Kravis

"Always understand your downside before you focus on your upside" Steve
Major

"One of the things I think has really made us good is that we have not just done
very well picking stocks, but we've done a great job of avoiding losers." Jamie
Dinan

“Consistency is the key. It is close to impossible to get a good, long-term, rate of

return if you suffer serious negative numbers en route. It’s the math. A
single year that is down 30% means you have to get 30% per year positive returns
for the next four years to get back on track for 15% annual average. Or, if you
score 20% annually for four years, and then suffer a 30% decline, your five year
average return is only 7%” Ken Fisher

“One of the tricks of this business is, keep your losses down and then, if you
have a few good breaks, the compounding works well for you” Walter Schloss

"When selecting securities, it's important that investors underwrite defensively to

help protect capital" Matthew McLennon

"A very important data point for me is to try to avoid permanent loss of capital"
Mohnish Pabrai

"Look down, not up, when making your initial investment decision. If you
don’t lose money, most of the remaining alternatives are good ones."Joel
Greenblatt

"Watch out for the downside. Don't worry about the upside" Jim Tisch

"We believe in focussing on the preservation of capital before considering the

return on it" Steven Romick

"I am more concerned with preserving the Fund's capital than its recent
profits, so that I tend to become more liberal with self-imposed limits when my
investment concepts seem to be working" Geroge Soros

"Since you don't get advance warning about what kind of environment is coming
next, you should always be concerned about preserving your money" Seth
Klarman

"The most important thing for me is that defence is ten times more important
than offence. The wealth you have can be so ephemeral; you have to be very
focussed on the downside at all times" Paul Tudor Jones

"Making capital preservation our first order of business is the best way to
grow capital over time. To most effectively compound returns you have to
mitigate your downside - that's just basic math." Mark Thompson

"We truly believe that preservation of capital comes before all other
aspirations. In other words, 'To win, first you must notlose'" Frank Martin

"In general, survival is the only road to riches. Let me say that
again: Survival is the only road to riches. You should try to maximise return
only if losses would not threaten your survival" Peter Bernstein

"My whole perspective on investing has been, and hopefully will continue to
be, not to lose" Craig Effron
"The number one job of the money manager is not to make a lot of money, it's not
to beat the market, it's not to be in the top quartile, the number one job is not
to lose money, and it's to control risk" Howard Marks

"We prioritize the avoidance of catastrophic loss first and foremost and
focus on potential gains second" Zeke Ashton

“Capital preservation is always far more important than capital enhancement”

Seth Klarman

"I emphasize that our first goal is to control the risks of permanent loss. When
we analyse a security, we first look for the attributes that will protect us against
incurring a loss that cannot be recovered within a reasonable period of time. We
will not commence analysing the positive attributes of a security until we are
convinced that the risks of permanent loss in the security are relatively low" Ed
Wachenheim

"Howard Marks is a really good thinker. He has always maintained that as an

investor, you should focus more intently on the downside than the upside. Be
very grudgingly, he says, about risking losing money. I agree. I don't want
to lose capital." Barton Biggs