When the best of the best in investing are talking, you better listen.
There is always something we can learn from what they have to say. And even if you have heard some of these quotes before, they are always good reminders.
But that’s enough from me. Let’s let the pros do the talking.
1. “Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger
Our first quote comes from Warren Buffett’s right-hand man Charlie Munger.
This is not only important investment advice but is valuable advice for anyone, doing anything.
Constantly learning will prepare you to make better decisions. On your investments. Your career. Again… pretty much anything in life.
So keep this in mind. And hey, look at you reading this. You’re already a bit wiser.
2. “Invest in yourself. Your career is the engine of your wealth.” -Paul Clitheroe
What comes to your mind when you think of “investing.” Most think about the stock market.
But many don’t seem to realize that investing in yourself often has much higher rates of return than the stock market.
Put in that extra time for a raise. Start a side business for an extra stream of income. Whatever you can do to increase your purchasing power.
You can take that extra money to invest more, and earn more on those returns.
3. “The four most dangerous words in investing are: ‘this time it’s different’” – Sir John Templeton
I would not say that this quote applies to all investing. However, it does apply to the cyclical nature of the markets.
Whether someone is saying, “This bull market will never end!” Or, “This is it! This recession is taking everything down! Get to your bomb shelters!”
Neither has ever been right.
Don’t base your investments on your emotions.
4. “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett
Our first quote from the most famous investor in the world on this list. And it comes right back to controlling your emotions.
Many investors pull out of the market when there is a recession (after they have lost all their money) and come back in when a bull market is in full swing (when everyone is getting greedy).
Do you see the problem here?
They literally sell low and buy high. If you have read anything on investing, you know that this is not ideal…
When the market is down, a lot of companies are undervalued. Save up in the bull market, and get your shares at a discount later.
5. “The stock market is filled with individuals who know the price of everything, but the value of nothing” – Philip Fisher
The true value of a stock will always show itself in the end.
Knowing the actual value of a stock is more important than whatever “the market” says the price is.
So yea that stock price seems high. Especially with how little profit it has. But if you are confident that stock will make money down the line, then that price could go even higher.
If you are good at determining the true value of a company, then you have a solid shot at beating the market (like a lot of these guys have).
6. “Every once in a while, the market does something so stupid it takes your breath away” -Jim Cramer
The host of CNBC’s mad money is talking about emotion (anyone else noticing some patterns?). The stock market is manipulated by it every day.
Focus on the why, not the price. Why is the stock market doing what it’s doing, and does it really matter in the long run?
Remember, the true value will always show itself in the end.
7. “Risk comes from not knowing what you’re doing.” – Warren Buffett
The best chance you have at mitigating your investment risks is to know what you are doing. This is why Buffett also states, “Wide diversification is only required when investors do not understand what they are doing.”
If you know the industries that you are investing in well, there is not as much risk. Diversifying to minimize an already minimal risk is overkill, and will eat into your returns.
8. “Know what you own, and know why you own it” – Peter Lynch
Speaking of knowing your industries, a surprising amount of investors invest in a company without actually knowing what it does.
If you don’t know what you own, you don’t know what you are doing. You are putting yourself at risk.
The second part of this quote is important as well. Do you want this stock to make you rich? Then you may need to pick a company that is growing rapidly and take on a bit more risk.
Do you want a stock that will keep your money safe? Invest in a company that is stable and has a consistent revenue stream.
9. “In investing, what is comfortable is rarely profitable” – Robert Arnott
If you don’t try it, you will never find out if it works. If you want to make some big gains in investing, you have to be willing to take risks.
Many people (including myself) get stuck in the analysis. Trying to understand every single aspect about a decision before they make it, in the hopes that they can prevent anything bad from possibly happening.
At one point, it is better to take the leap. If things go well? Great! If they don’t? You learn what not to do next time (and at a much faster rate than any analysis will teach you).
10. “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.” – Peter Lynch
This theme has come up a few times before already, but every investor needs this reminder more than once. There are going to be periods of time throughout your life where you are going to lose a significant percentage of your portfolio value.
“Periods of time”
But the market has always come back better than ever, and your money will too.
If you have read all the way to here, you have probably seen some recurring themes. If you haven’t, no worries. I have three major takeaways for you right here:
One. The stock market goes down but has always come back up. Be prepared for the downswings.
Two. Your emotions are really bad at investing. Don’t listen to them.
And three. You should always be striving to learn and improve yourself. It will make you a better investor and a better person.
Jason Ramach is an SEO content writer and marketer that has always had a soft spot in his heart for trading. He specializes in finance writing but is always looking to expand his horizons.