Dividend University
Investing is by no means a simple process; there are countless considerations that must be paid, and infinite risks along the way. But sometimes the best advice is extremely simple to digest. A few choice words can summarize winning strategies and rules of thumb quite nicely. Below are 41 of the most insightful and useful concise quotes about investing.
“Price is what you pay. Value is what you get.”
“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
“Risk comes from not knowing what you’re doing.”
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”
“Cash combined with courage in a time of crisis is priceless.”
“If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don’t need extraordinary intelligence to succeed as an investor.”
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.”
“Wide diversification is only required when investors do not understand what they are doing.”
“If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes.”
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”
[see also The Unofficial History of Warren Buffett]
“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.”
“Behind every stock is a company. Find out what it’s doing.”
“Twenty years in this business convinces me that any normal person using the customary three percent of the brain can pick stocks just as well, if not better, than the average Wall Street expert.”
“Know what you own, and know why you own it.”
“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.”
“In the long run, it’s not just how much money you make that will determine your future prosperity. It’s how much of that money you put to work by saving it and investing it.”
“Go for a business that any idiot can run – because sooner or later, any idiot probably is going to run it.”
“Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part-ownership of a business.”
[see the Ten Commandments of Dividend Investing]
“While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.”
“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.”
“Generally, the greater the stigma or revulsion, the better the bargain.”
“Investing is the intersection of economics and psychology.”
“Value investing is at its core the marriage of a contrarian streak and a calculator.”
“While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.”
“The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.”
“The individual investor should act consistently as an investor and not as a speculator.”
“If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.”
“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.”
“In the short run, the market is a voting machine, but in the long run it is a weighing machine.”
“Buy not on optimism, but on arithmetic.”
“As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.”
“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.”
“Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.”
“All intelligent investing is value investing — acquiring more that you are paying for. You must value the business in order to value the stock.”
“Based on my own personal experience – both as an investor in recent years and an expert witness in years past – rarely do more than three or four variables really count. Everything else is noise.”
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.”
“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions. You can’t be a good value investor without being an independent thinker – you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value you do. The back and forth that goes on in the investment process helps you get at that.”
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
The Bottom Line
Even though the quotes above come from some of the most intelligent people on Wall Street, the ideas behind them are both quite simple and insightful.
