Successful investing isn’t about picking big winner after big winner. The most successful investors are usually the ones who are the most consistent over time. If you are able to stick to a method which repeatedly generates consistent returns then you will outperform most people in the long run. One of the best things you can do to improve your own ability is to study those that have been successful already. To help you do that, I have put together a list of 7 great investing quotes which are well worth remembering:
“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffet
This is one of Warren Buffet’s most famous quotes and sticks with me probably more than any other. According to Warren Buffet there is no better time to buy than when everyone else is running for the hills. The first part of the message is to be cautious in times of stock market euphoria. Ego’s are big and prices are high. Don’t get carried away because the market will always correct itself. If you have overpaid for a stock then that correction could cause a lot of damage. The second part is to look out for opportunities in times of panic. If the price of a great company with a healthy balance sheet has been falling with the overall market then it presents an opportunity to buy at a discounted price. Just because the herd gets spooked and gallops off, doesn’t mean there is actually any danger.
“The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Phillip Fisher
We tend to focus so heavily on price that we often lose sight of value and can even get the two confused. When looking at a stock pick, try to find the value before you pay too much attention to the price. If the price is too high then hold off or look elsewhere. A good stock pick becomes average if you overpay for it. There will always be more opportunities, so don’t rush into anything. There’s a lot of noise in the investing world, don’t let it distract you from the fundamentals.
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” – Warren Buffet
Early on in his career, Warren Buffet would look for dirt cheap companies where he felt there was a quick profit to be made. This lead to him owning some pretty bad companies and after a few years he began to evolve his approach. Buffet realised (with the help of Charlie Munger) that it was better to pay a slightly more for a good company than own a poor company at a bargain price. This approach has helped make Warren Buffet one of the richest people on the planet.
“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” – Warren Buffet
Risk management is absolutely key when it comes to successful investing. If you are over-exposing yourself to risk then you are in serious danger of losing money. I went as far as basing an entire blog post around this famous Buffet quote because it’s so important, especially for those new to investing. You can’t make money if you don’t have any to invest so be sure to protect your principle.
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” Warren Buffett
If you invest in shares you will see positions in the red – without fail. If you have invested wisely then it shouldn’t matter. The real test for an investor is how they react when their shares are down. Can you ignore a sudden downturn or will it cause you to sell in panic? Good investors will look for opportunities to buy in downturns, not sell (see quote 1!). A calm temperament is a vital attribute for successful stock investing.
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” – Charlie Munger
This is one of my favourite quotes out of the many from Berkshire Hathaway duo of Buffet and Munger. A lot of people think that to be successful means being extraordinary. When it comes to investing (and many other things, I believe) you can succeed by simply making fewer mistakes than others. Floyd Mayweather didn’t become one of the best boxers of all time by chasing his opponents around the ring. His greatest skill is avoiding being hit. He avoids punches better than anyone and when the time is right he counters.
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” – George Soros
Sensible investing is not about thrill seeking, it’s very much a waiting game. There are many other areas of life to seek emotional highs. If you want to make money from investing then it’s best to keep the two separate. If you feel the need to make riskier investments in the hope of bigger returns then make sure it is only with a small portion of your overall capital.
The best way to improve at something is to seek out the most successful people in that field and study them. Listen to their words and remember the lessons they teach. If you take what they say on board and put it into practice, there’s a very good chance that you will also find success.