Be Patient and Think Long Term
Keep Emotions in Check
Disregard Short-Term Forecasts
Do not Try to Time the Market
Markets Fluctuate. Stay the Course.
A Market Correction is an Opportunity
In another post we have seen that the:
- “The investor’s chief problem – and even his worst enemy – is likely to be himself.”.
- Individual investor returns are well below the financial market returns, for all asset classes and time horizons.
- This poor investment performance is due to behavioural biases or a fight between logic reasoning and emotions.
- There is a small set of 6 very basic rules to invest well that can be learned from successful investors practices.
In this post we will learn these 6 rules from popular quotes made by successful investors.
Be Patient and Think Long Term
Shelby M.C. Davis: “Invest for the long haul. Don’t get too greedy and don’t get too scared.”
Benjamin Graham: “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go.”
Charlie Munger: “Waiting helps you as an investor and a lot of people just can’t stand to wait. If you did not get the deferred-gratification gene, you’ve got to work very hard to overcome that.”
Warren Buffett: “The stock market is a device to transfer money from the impatient to the patient.”
Keep Emotions in Check
Benjamin Graham: “The investor’s chief problem—and his worst enemy—is likely to be himself. In the end, how your investments behave is much less important than how you behave.”
Charlie Munger: “A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.”
Jack Bogle: “Your success in investing will depend in part on your character and guts and in part on your ability to realize, at the height of ebullience and the depth of despair alike, that this too, shall pass.”
Disregard Short-Term Forecasts
Peter Lynch: “Thousands of experts study overbought indicators, head-and-shoulder patterns, put-call ratios, the Fed’s policy on money supply…and they can’t predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.”
John Kenneth Galbraith: “The function of economic forecasting is to make astrology look respectable.”
Warren Buffett: “I make no attempt to forecast the market—my efforts are devoted to finding undervalued securities.”
Do not Try to Time the Market
Peter Lynch: “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”
Jack Bogle: “The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has.”
Christopher Davis: “Though tempting, trying to time the market is a loser’s game. $10,000 continuously invested in the market over the past 20 years grew to more than $48,000. If you missed just the best 30 days, your investment was reduced to $9,900.1”
Markets Fluctuate. Stay the Course.
Shelby M.C. Davis: “History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.”
Christopher Davis: “A 10% decline in the market is fairly common—it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealth building power of stocks.”
Benjamin Graham: “In the short run, the market is a voting machine. In the long run, it is a weighing machine.”
A Market Correction is an Opportunity
Warren Buffett: “A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.”
Benjamin Graham: “The intelligent investor is a realist who sells to optimists and buys from pessimists.”
Shelby Cullom Davis: “You make most of your money in a bear market, you just don’t realize it at the time.”
