--- title: "Meaning & Key Takeaway of: Investors should be skeptical of…" description: "\"Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and t..." image: "https://sms4smile.com/quotes/i/da3/warren-buffett-183_assumption_investors-should-be-skeptical-of-history_2878511.png" --- # Investors should be skeptical of history-based models… ![“Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the models. Beware of geeks…” quote by Warren Buffett](https://sms4smile.com/quotes/i/da3/warren-buffett-183_assumption_investors-should-be-skeptical-of-history_2878511.png) [Download](https://sms4smile.com/quotes/i/da3/warren-buffett-183_assumption_investors-should-be-skeptical-of-history_2878511.png) [Open image](https://sms4smile.com/quotes/i/da3/warren-buffett-183_assumption_investors-should-be-skeptical-of-history_2878511.png) > “Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the models. Beware of geeks bearing formulas.” [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Warns that models based on historical data can be misleading without scrutinizing assumptions. **In simple terms:** History models can mislead; check assumptions. Key Takeaway Question model assumptions before trusting. Themes finance skepticism analysis Mood cautious analytical Type financial advisory When to use this quote - investment decisions - risk assessment - portfolio management Key Concepts model risk statistical fallacy Questions to Reflect On - What hidden assumptions exist in your models? - How can you test model robustness? A Different Perspective Models may not predict future anomalies; overreliance risky. ★ ★ ★ ★ ★ No ratings yet [Assumption](https://sms4smile.com/quotes/about/assumption/) [Customer](https://sms4smile.com/quotes/about/customer/) [Esoteric](https://sms4smile.com/quotes/about/esoteric/) [Geek](https://sms4smile.com/quotes/about/geek/) [Investing](https://sms4smile.com/quotes/about/investing/) [Investment](https://sms4smile.com/quotes/about/investment/) [Investors](https://sms4smile.com/quotes/about/investors/) [Priesthood](https://sms4smile.com/quotes/about/priesthood/) [Skeptical](https://sms4smile.com/quotes/about/skeptical/) ## Related quotes > [Like most passionate nations, Texas has its own history based on, but not limited by, facts.](https://sms4smile.com/quotes/john-steinbeck/like-most-passionate-nations-texas-has-its-own-history-based-on-but/) [John Steinbeck](https://sms4smile.com/quotes/author/john-steinbeck/) > [We've got to teach history based not on what's in fashion, but what's important.](https://sms4smile.com/quotes/ronald-reagan/we-ve-got-to-teach-history-based-not-on-what-s-in-fashion-but-what-s/) [Ronald Reagan](https://sms4smile.com/quotes/author/ronald-reagan/) > [I was thinking of writing a little foreword saying that history is, after all, based on people's recollections, which change with time.](https://sms4smile.com/quotes/frederik-pohl/i-was-thinking-of-writing-a-little-foreword-saying-that-history-is/) [Frederik Pohl](https://sms4smile.com/quotes/author/frederik-pohl/) > [Ben's Mr. Market allegory may seem out-of-date in today's investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and…](https://sms4smile.com/quotes/warren-buffett/ben-s-mr-market-allegory-may-seem-out-of-date-in-today-s-investment/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better…](https://sms4smile.com/quotes/warren-buffett/to-invest-successfully-you-need-not-understand-beta-efficient-markets/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [No formula in finance tells you that the moat is 28 feet wide and 16 feet deep. That's what drives the academics crazy. They…](https://sms4smile.com/quotes/warren-buffett/no-formula-in-finance-tells-you-that-the-moat-is-28-feet-wide-and-16/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [It was very early, and we were still like beta or alpha stage, and so we started receiving a ton of download. The server…](https://sms4smile.com/quotes/shawn-fanning/it-was-very-early-and-we-were-still-like-beta-or-alpha-stage-and-so/) [Shawn Fanning](https://sms4smile.com/quotes/author/shawn-fanning/) > [“Finished ought to be an F-word for all of us. We are all works in progress. Each day presents an opportunity to learn more,…](https://sms4smile.com/quotes/anonymous/finished-ought-to-be-an-f-word-for-all-of-us-we-are-all-works-in/) [Anonymous](https://sms4smile.com/quotes/author/anonymous/) > [In a show that has so many neurotic, broken beta characters, it's always fun to bring in a character who's really confident in themselves.](https://sms4smile.com/quotes/elizabeth-meriwether/in-a-show-that-has-so-many-neurotic-broken-beta-characters-it-s/) [Elizabeth Meriwether](https://sms4smile.com/quotes/author/elizabeth-meriwether/) > [“Maybe your unspeakable defects give you power too?”](https://sms4smile.com/quotes/rachel-cohn/maybe-your-unspeakable-defects-give-you-power-too/) [Rachel Cohn](https://sms4smile.com/quotes/author/rachel-cohn/) > [Beta and modern portfolio theory and the like - none of it makes any sense to me.](https://sms4smile.com/quotes/charlie-munger/beta-and-modern-portfolio-theory-and-the-like-none-of-it-makes-any/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [“Beta testing is a symptom of weak testing practices and poor communication with customers.”](https://sms4smile.com/quotes/kent-beck/beta-testing-is-a-symptom-of-weak-testing-practices-and-poor/) [Kent Beck](https://sms4smile.com/quotes/author/kent-beck/) > [The enzyme beta-glucoronidase is necessary to ...'trigger off'.. laetrile…after the laetrile injection, we injected directly into the tumor...beta-glucoronidase. The result was white slough which…](https://sms4smile.com/quotes/sir-arthur-harris-1st-baronet/the-enzyme-beta-glucoronidase-is-necessary-to-trigger-off-laetrile/) [Sir Arthur Harris, 1st Baronet](https://sms4smile.com/quotes/author/sir-arthur-harris-1st-baronet/) > [Cute. I'm on the waitlist to beta a new product, and have been offered the chance to move up in the list if I…](https://sms4smile.com/quotes/ethan-zuckerman/cute-i-m-on-the-waitlist-to-beta-a-new-product-and-have-been-offered/) [Ethan Zuckerman](https://sms4smile.com/quotes/author/ethan-zuckerman/) > [“Therefore, alpha and beta testing are Product Development functions that belong to engineering. They are about validating the product technically, not the market.”](https://sms4smile.com/quotes/steven-gary-blank/therefore-alpha-and-beta-testing-are-product-development-functions/) [Steven Gary Blank](https://sms4smile.com/quotes/author/steven-gary-blank/) ## More by Warren Buffett > [To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual…](https://sms4smile.com/quotes/warren-buffett/to-invest-successfully-over-a-lifetime-does-not-require-a/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [“Be fearful when others are greedy, and be greedy when others are fearful.”](https://sms4smile.com/quotes/warren-buffett/be-fearful-when-others-are-greedy-and-be-greedy-when-others-are/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Making money isn't the backbone of our guiding purpose; it is the by-product of our guiding purpose.](https://sms4smile.com/quotes/warren-buffett/making-money-isn-t-the-backbone-of-our-guiding-purpose-it-is-the-by/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [We set no volume goals in our insurance business generally-and certainly not in reinsurance-as virtually any volume can be achieved if profitability standards are…](https://sms4smile.com/quotes/warren-buffett/we-set-no-volume-goals-in-our-insurance-business-generally-and/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Everybody's got a different circle of competence. The important thing is not how big the circle is. The important thing is staying inside the…](https://sms4smile.com/quotes/warren-buffett/everybody-s-got-a-different-circle-of-competence-the-important-thing/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [It is better to point out your own mistakes than have somebody else do it.](https://sms4smile.com/quotes/warren-buffett/it-is-better-to-point-out-your-own-mistakes-than-have-somebody-else/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [I've read about all the sales today. If you're an auto dealer, you're feeling it. If you're a furniture retailer like we are, you're…](https://sms4smile.com/quotes/warren-buffett/i-ve-read-about-all-the-sales-today-if-you-re-an-auto-dealer-you-re/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to…](https://sms4smile.com/quotes/warren-buffett/i-was-lucky-enough-to-be-born-in-a-time-and-place-where-society/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to…](https://sms4smile.com/quotes/warren-buffett/the-most-common-cause-of-low-prices-is-pessimism-some-times-pervasive/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The reaction of weak management to weak operations is often weak accounting.](https://sms4smile.com/quotes/warren-buffett/the-reaction-of-weak-management-to-weak-operations-is-often-weak/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [What you really want to do in investments is figure out what's important and knowable. If it's unimportant or unknowable you forget about it.](https://sms4smile.com/quotes/warren-buffett/what-you-really-want-to-do-in-investments-is-figure-out-what-s/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [I don't measure my life by the money I've made. Other people might, but certainly don't.](https://sms4smile.com/quotes/warren-buffett/i-don-t-measure-my-life-by-the-money-i-ve-made-other-people-might-but/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [I mean the truth is, I've never had it so good in terms of taxes. I am paying the lowest tax rate that I've…](https://sms4smile.com/quotes/warren-buffett/i-mean-the-truth-is-i-ve-never-had-it-so-good-in-terms-of-taxes-i-am/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the…](https://sms4smile.com/quotes/warren-buffett/the-most-important-quality-for-an-investor-is-temperament-not/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) > [Investors, of course, can, by their own behavior make stock ownership highly risky. And many do. Active trading, attempts to "time" market movements, inadequate…](https://sms4smile.com/quotes/warren-buffett/investors-of-course-can-by-their-own-behavior-make-stock-ownership/) [Warren Buffett](https://sms4smile.com/quotes/author/warren-buffett/) [Explore all 984 Warren Buffett quotes ](https://sms4smile.com/quotes/author/warren-buffett/) ## More Assumption quotes > [Next to the assumption of power was the responsibility of relinquishing it.](https://sms4smile.com/quotes/benjamin-disraeli/next-to-the-assumption-of-power-was-the-responsibility-of/) [Benjamin Disraeli](https://sms4smile.com/quotes/author/benjamin-disraeli/) > [It's difficult for people to come to the understanding that only a small minority of the people ever really get the word about life,…](https://sms4smile.com/quotes/earl-nightingale/it-s-difficult-for-people-to-come-to-the-understanding-that-only-a/) [Earl Nightingale](https://sms4smile.com/quotes/author/earl-nightingale/) > [Much like teaching art to young art students age 10 to 15 or so on, you have to break it down into bite-sized pieces,…](https://sms4smile.com/quotes/kehinde-wiley/much-like-teaching-art-to-young-art-students-age-10-to-15-or-so-on/) [Kehinde Wiley](https://sms4smile.com/quotes/author/kehinde-wiley/) > [Neither novels or their readers benefit from any attempts to divine whether any facts hide inside a story. Such efforts attack the very idea…](https://sms4smile.com/quotes/john-green/neither-novels-or-their-readers-benefit-from-any-attempts-to-divine/) [John Green](https://sms4smile.com/quotes/author/john-green/) > [The risk of developing carcinoma of the lung increases steadily as the amount smoked increases. If the risk among non-smokers is taken as unity…](https://sms4smile.com/quotes/richard-doll/the-risk-of-developing-carcinoma-of-the-lung-increases-steadily-as/) Richard Doll > [Fortunately, the mind is restless; when it uncovers a layer of its own deception, gives up an illusion, exposes a lie, it does not…](https://sms4smile.com/quotes/kim-chernin/fortunately-the-mind-is-restless-when-it-uncovers-a-layer-of-its-own/) [Kim Chernin](https://sms4smile.com/quotes/author/kim-chernin/) > [The possibility of saying anything about a thing rests on the assumption that it preserves its identity, or continues to be the same thing…](https://sms4smile.com/quotes/frank-knight/the-possibility-of-saying-anything-about-a-thing-rests-on-the/) [Frank Knight](https://sms4smile.com/quotes/author/frank-knight/) > [She spent hours drawing on her own, trying to perfect her craft. And when she got into music, she had that same diligence in…](https://sms4smile.com/quotes/laura-joplin/she-spent-hours-drawing-on-her-own-trying-to-perfect-her-craft-and/) [Laura Joplin](https://sms4smile.com/quotes/author/laura-joplin/) > [If they are, then the only ultimate truths are the particulars of concrete experience, and no postulate or general assumption is inherent in science…](https://sms4smile.com/quotes/chauncey-wright/if-they-are-then-the-only-ultimate-truths-are-the-particulars-of/) [Chauncey Wright](https://sms4smile.com/quotes/author/chauncey-wright/) > [If he's - the inference is that somehow he thinks slavery is a - is a noble institution I would - I would strongly…](https://sms4smile.com/quotes/george-w-bush/if-he-s-the-inference-is-that-somehow-he-thinks-slavery-is-a-is-a/) [George W. 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