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January 30, 2024
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Quotes of Wisdom from Great Investors
Are you having investment strategies crumble moment? Or it had been a bad strategic planning day? Here are the top investment quotes every investor should know to inspire you through your potential investment slump.
1. Understand the Stock
“Behind every stock is a company. Find out what it’s doing.”
“Invest in what you know,” is Peter Lynch most famous statement. The principle helps individual investors find good undervalued stocks. In “One Up Lynch” explains how he invested in Dunkin’ Donuts after being impressed by their coffee as a customer and not by the company’s potential portfolio in The Wall Street Journal.
This is similar to any well-performing stocks in the market: AAPL, NFLX, SBUX, and AMZN are some examples of well-loved products accepted by the public. Companies with good products tend to perform similarly on the exchanges.
2. Think Long-Term. Every stock is more than just a just stock tick
Ray Dalio is one of the most successful investors in history. He started Bridgewater Associates in 1975 right from his doorstep in New York and had turned the company into one of the largest hedge funds in the world. His investing style is by understanding the best way to position the portfolio from a macro-investing approach. Where this method, is to understand the condition of the overall economy, derive the risk involved, and how they will crisis turn once the economy and financial with a fold.
“Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part ownership of a business.”
When long-term investors start to think of their investment like an owner, they will start looking at the intrinsic value of a company. Which can compound value over time.
“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
3. Self- Restraint
“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 behavioral discipline that are likely to get you where you want to go.”
Fear and greed can tend to lead investors to rush entry in and out of the market at inopportune times.
“In many ways, the stock market is like the weather in that if you don’t like the current conditions all you have to do is wait a while.”
Investing in a good valuation company often leaves investors with the hardest decision-making position. After buying a stock at the best price, you just don’t want to sell it because of its good business nature. Plus, if you think that it is ahead of its price basis, it might be worth holding on to it for a little longer.
4. Diversify is the best potion
“Diversifying well is the most important thing you need to do in order to invest well.”
Diversification is a strategy of mixing a wide variety of investment medium within a portfolio. The action of adding non-correlated components in a portfolio such as stocks, bonds, real estate, or cryptocurrency will help in reducing overall risk. In addition, it makes the portfolio risk-to-return ratio more captivating. It aims to mitigate risk and maximize returns.
"It is better to be roughly right than precisely wrong"
The expression “do not put all your eggs in one basket” is the best to represent diversification. Different basket can be best represent with different vehicles, industries, companies, and other categories across the investment spectrum.
The whole stock market nature is very volatile and filled with unexpected outcomes. Thus, diversification can help investor to weather the storm. By having a variety of investments, when one of your underperforming securities, it won’t significantly impact the entire portfolio. This is possible as those different eggs in your investments are not all acting in the same way.
5. Don’t Time The Market
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”
Everyone feels the temptation to try to time the stock market. However, the nature of investment markets will constantly move up and down. Tomorrow’s dip may still be higher than today’s pricing.
As an example, the crash of Bitcoin in mid-March 2020, lead to as low as $3,596. The largest cryptocurrency later recovers and hits its an all-time high on November 8, 2021, with a price of $67,567. Bitcoin experienced another crash in June 2022, with the BTC price falling below $20,000. This explains that even if you purchase the coin in 2020, it is relatively still lower than its crash price in 2022.
"So, you should never try to time the market. In fact, nobody has ever done this successfully and consistently over multiple business or stock market cycles. Catching the tops and bottoms is a myth. It is so till today and will remain so in the future. In fact, in doing so, more people have lost far more money than people who have made money,"
6. A Market Correction is an Opportunity
“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.”
The best one could have in investing is to buy an exceptional company at a deeply discounted share price. However, always have in mind being undervalued is not an all-telling sign that a stock is a good buy.
“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.”
As purchasing stocks at undervalue can provide a great deal, it is important to learn more about the companies and the great investment opportunities they help to carry.
“You make most of your money in a bear market, you just don’t realize it at the time.”
Extension of fear and greed tends to result in overreaction. Overreaction is probably the most common effect of human behavior on the capital market. The correction in crude oil prices due to negotiation failure between Opec and Non-Opec producers on increasing/extending the production cuts to balance the global oil market usually results in a global market with a price correction of 25-35% from their peak.
7. Markets Fluctuate. Don’t Panic !
"The individual investor should act consistently as an investor and not as a speculator"
The stock market will always continue to be volatile. It will always rebound and continued an upward trend in the long run.
Trust the investment nature and always try your best to stay on the course. Panic selling will only leave you with more fear and that leads you to be in doubt. Typically, investors will tend to exit the market sooner than they should or enter with the greed of making money on discounts. Investors enter rashly, as they fear losing out on the biggest gains, which typically occur early in a rally.
Read more on How To Invets During Bear Market
“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.”
8. Start The Race
“I love quotes… but in the end, knowledge has to be converted to action or it’s worthless.”
– Tony Robbins.
"The biggest risk of all time is not taking one"
In this context, it is always better to invest rather than none. Investing early can help in combating the inflationary market. Over time, inflation will erode the value of the the dollar and a person’s overall wealth.
“Investing puts money to work. The only reason to save money is to invest it.”
Bottom Line
Investing takes patience and extensive research. Always do your research. Make decisions after you had carefully weighed the pros and cons and are ready for any outcome. Investors’ behavior had changed drastically with millennials and GenZ, where they are more willing to ride out the storm and some were ready to add more to their portfolios during the bad phase of the market.
None of the material above or on our website is to be construed as a solicitation, recommendation or offer to buy or sell any security, financial product or instrument. Investors should carefully consider if the security and/or product is suitable for them in view of their entire investment portfolio. All investing involves risks, including the possible loss of money invested, and past performance does not guarantee future performance.
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