There’s a bewildering amount of advice on how to invest. People divide into camps, schools and strategies, then proselytize on the internet, in books, and on televisions.
It’s worthwhile, especially in today’s volatile markets, to take a look at what’s actually worked, as opposed to what people claim works.
We’ve collected some of the finest wisdom on markets from the most respected and successful investors, past and present.
John Templeton: This time is not different.
“The four most dangerous words in investing are ‘This time it’s different.'”
Barton Biggs: There are no relationships or equations that always work.
“Quantitatively based solutions and asset allocation equations invariably fail as they are designed to capture what would have worked in the previous cycle whereas the next one remains a riddle wrapped in an enigma.”
Benjamin Graham: Beware of forecasts.
“It is absurd to think that the general public can ever make money out of market forecasts.”
Source: The Intelligent Investor
Jack Bogle: Losses are a reality of the market.
Philip Fisher: Know the value of your investments.
“The stock market is filled with individuals who know the price of everything, but the value of nothing.”
Warren Buffett: Be greedy when others are fearful.
“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
Source: 2004 shareholder letter
Bob Farrell: Don’t join the herd.
An imagining of Bob Farrell
“The public buys the most at the top and the least at the bottom”
Jeremy Grantham: Recognize your advantage over professionals.
“By far the biggest problem for professionals in investing is dealing with career and business risk: protecting your own job as an agent. The second curse of professional investing is over-management caused by the need to be seen to be busy, to be earning your keep. The individual is far better-positioned to wait patiently for the right pitch while paying no regard to what others are doing, which is almost impossible for professionals.”
Ken Fisher: Keep history in mind.
“You can’t develop a portfolio strategy around endless possibilities. You wouldn’t even get out of bed if you considered everything that could possibly happen….. you can use history as one tool for shaping reasonable probabilities. Then, you look at the world of economic, sentiment and political drivers to determine what’s most likely to happen—while always knowing you can be and will be wrong a lot.”
Charles Ellis: Invest for the long run.
Bill Miller: Think about how the market reflects information.
“The market does reflect the available information, as the professors tell us. But just as the funhouse mirrors don’t always accurately reflect your weight, the markets don’t always accurately reflect that information. Usually they are too pessimistic when it’s bad, and too optimistic when it’s good.”
Source: 2006 Letter to Shareholders
George Soros: Good investing is boring.
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
Thomas Rowe Price Jr.: Know who’s running the business, and why.
“Every business is manmade. It is a result of individuals. It reflects the personalities and the business philosophy of the founders and those who have directed its affairs throughout its existence. If you want to have an understanding of any business, it is important to know the background of the people who started it and directed its past and the hopes and ambitions of those who are planning its future.”
Carl Icahn: The corporate governance system is not your friend.
“We have bloated bureaucracies in Corporate America. The root of the problem is the absence of real corporate democracy.”
Source: The Icahn Report
Peter Lynch: Do your homework.
John Neff: Do what’s smart, not what’s popular.
Henry Kravis: Be honest.
“If you don’t have integrity, you have nothing. You can’t buy it. You can have all the money in the world, but if you are not a moral and ethical person, you really have nothing.”
Source: Academy of Achievement
Ray Dalio: Understand the system.
“An economy is simply the sum of the transactions that make it up. A transaction is a simple thing. Because
there are a lot of them, the economy looks more complex than it really is. If instead of looking at it from the
top down, we look at it from the transaction up, it is much easier to understand.”
Source: How The Economic Machine Works