I could be wrong. I need to make sure I can survive being wrong.
It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong.
The way to build superior long-term returns is through preservation of capital and home runs. You can be wrong 30% of the time and still make a fortune if you cut losses and let winners run.
The 2008 crisis taught us that liquidity management is as important as return generation. Surviving to fight another day matters more than any single trade.
The number one rule is: cut your losses short. Everything else is secondary. If you can do that one thing, you can survive long enough to get good.
The most important rule of trading is: play great defense, not great offense. Every day I assume every position I have is wrong.
Losers average losers. Never add to a losing position. It is the single most reliable path to disaster.
Know your risk before you enter the trade. Not after. After is too late.
Most traders fail because they don't have a daily max loss limit. The moment you remove that guardrail, one bad day can erase months of progress.
Cut losses quickly. I cannot stress this enough. The people who blow up their accounts are always the ones who held a losing position too long.
Trade small. Trade often. Diversify across underlyings. Never let one position define your year. That is the whole framework.
Never risk more than 2% of your portfolio on a single trade. That rule has saved me more than any stock pick.
When I go to sleep at night, I'm thinking of everything that could go wrong — not everything that could go right.
We didn't limit what we thought could go wrong to what had gone wrong recently. We tried to think about what could go wrong that hadn't gone wrong recently.
Cutting losses is not a sign of weakness. It is the most important discipline in trading.
Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I'm getting out before I get in.
I know where I'm getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.
We don't try to predict when the next crisis will come. We prepare so that when it does, we can act while others are frozen.
The secret to surviving in real estate for 120 years is simple — do not borrow too much money. Every developer who went bankrupt did it the same way. They overleveraged.
I develop in Miami, New York, DC, and LA. If one market dips, the others carry you. Geographic diversification is the oldest trick in real estate and most developers still do not do it.
We do not win by hitting home runs. We win by not striking out. Consistency beats brilliance over any meaningful time horizon.
Credit investing taught me that the most important question in any deal is not how much you can make but how much you can lose.
The best risk management in credit is simple: only lend to companies that can pay you back. Everything else is window dressing.
The best investments are the ones where the downside is limited and the upside is unlimited. That requires patience most people don't have.
We bought credit default swaps when everybody thought we were crazy. The $340 million premium was the best insurance policy we ever wrote.
Risk management isn't about avoiding risk. It's about making sure no single risk can destroy you.
Poker taught me more about risk management than any finance textbook. In both games, position sizing is everything.
Position sizing is the most underrated skill in investing. It's not what you own — it's how much.
Risk management matters more than return generation. If you control the downside, the upside takes care of itself.
Position sizing is everything. Being right on direction means nothing if you’re sized wrong.
You have to be willing to make mistakes regularly. The trick is to make small mistakes and ride big winners.
Consistency is the hardest thing in investing. Anyone can have a great year. Having no losing years requires a completely different approach.
In life, you must always have a backup to a backup.
A client who leaves me, it hurts my heart. And my wallet.
Banking is the simplest business in the world. You take money from people who have it and lend it to people who need it. The hard part is doing it at scale without losing it.
The balance sheet is not a strategy. It is a constraint. You manage it like a fuel gauge — you never let it hit empty.
Accepting losses is the most important single investment device to insure safety of capital.
The whole secret to winning and losing in the stock market is to lose the least amount possible when you are not right.
Position sizing is where most traders make or lose the most money. You can have the best system in the world and blow up your account with wrong-sized positions.
I've always liked low P/E stocks. They have a limited downside.
The ability to say 'I don't know' is the most underrated skill in investing.
The most dangerous position is being right about a stock but wrong about the timing. Technicals tell you when, fundamentals tell you what.
Never hold a Stage 4 stock and hope it turns around. Stage 4 stocks can go much further down than you think possible.
Risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade.
Amateurs go broke taking large losses. Professionals make their fortune by taking small ones.
Diversification is not just about sectors. It is about being in the right jurisdictions with the right regulatory environments and the right management teams.
One is listen to the markets, a second one is politics and policy matters and the third one is risk control.
You guys realize this is like going to the electric chair.
The world is changing. We have to rethink our business model.
I discovered that it was much better to use multiple models than a single best model.
The last thing that we think about at KKR in this kind of a rising rate environment is we sit on $115 billion of dry powder across the firm.