The Things They Say
"Our favourite holding period is forever" Warren Buffett
An investment should be one that you wouldn't mind holding forever if you had to. That way you know you've got something worthwhile and valuable.
"Becoming wealthy is not a matter of how much you earn, who your parents are, or what you do. It is a matter of managing your money properly." Noel Whittaker
Well said.
"I've found that when the market's going down and you buy funds wisely, at some point in the future you will be happy. You won't get there by reading 'Now is the time to buy'." Peter Lynch
One of the most successful fund managers of all time highlighting the importance of buying and holding investments, because market timing is a fool’s game.
"Stocks have reached a permanently high plateau" Irving Fisher, economics professor at Yale University, 1929
It doesn't matter how clever you are or what you think you know the fact remains that, over the long term, shares have continued to rise and provide returns above other assets such as bonds, property, cash, savings etc.
"If stock market experts were so expert, they would be buying stock, not selling advice." Norman Augustine
Good point.
"Forecasting is like trying to drive a car blindfolded, following directions given by a person who is looking out of the back window"
If someone tells you they can show you the way or can promise you great returns, or even any sort of return for that matter, be aware.
All forecasting is based on what has happened in the past and what might happen in the future. That's never the best recipe for success.
"Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well." Warren Buffett
Buying low and selling high is probaby the hardest thing to do in investing. But the fact is the price will be low when no one is interested and everybody is fearful about the markets. The price will be high when everyone is making money and it feels 'right' to invest.
The easiest way to invest, and what successful investors do, is drip feed their money into the markets and hold it forever, or until they need the money.
"All of these developments, in different ways, seeking to satisfy the demand for yield uplift, and all predicated on the belief that by slicing and dicing, structuring and hedging, using sophisticated mathematical models to understand and manage risk, we can “create value” by offering investors combinations of risk and return which are more attractive than those available from direct purchase of the underlying credit exposures." Lord Adair Turner, Chairman, Financial Services Authority
This is an excellent observation of why the financial industry has lost the support of its customers. For too long product providers have made, what should be simple financial products, complicated to understand and expensive to receive advice on, and at the same time offered unrealistically high returns to excite potential investors, when in fact just simple investing in simple funds would achieve the same result for a lot less hassle and costs.
"An investor without investment objectives is like a traveller without a destination." Ralph Seger
The most important aspect of investing that many people fail to address altogether is their investment objective. Never consider investing until you know why you are investing in the first place. If you don't know what return you are looking for then how will you define success?
"Money is like manure. If you spread it around it does a lot of good. But if you pile it up in one place it stinks like hell." Junior Murchison
Investing wisely is about putting the right amount of money in the right places. That means having a cash reserve, having some short term money to spend and having your investments spread across different industries, countries and sizes of company all in a way that suits your need for risk and return. Having your money spread around doesn't need to be stressful if it is under control and easy to access for updates.
"If you don’t follow the stock market, you are missing some amazing drama." Mark Cuban
It is exciting watching the market and that is what grips many people, in the same way gambling is exciting. Make sure you invest for gains and not for excitement.
"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway." Warren Buffett
If the experts were so good they’d be retired on an island in the sun by now. DIY investing with the right tools and information can be just as good if not better than the professionals, and it's certainly cheaper.
"Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas." Paul Samuelson
Slow and steady wins the race.
"You had a lot of novice investors who got into the market looking for easy money, without any regard to the fundamentals. These stocks were running on fumes." Bernard Madoff
The billion dollar American fraudster should know a thing or two about making money when the going is good. But he manages to talk a lot of sense about why you should only invest in what you know. A lot of people lost a lot of money when the tech bubble burst because they didn’t understand why the prices were rising so quickly.
"I am indeed rich, since my income is superior to my expense, and my expense is equal to my wishes." Edward Gibbon
Just makes a lot of sense.
"When buying shares, ask yourself, would you buy the whole company?" Rene Rivkin
Invest in what you understand and in what you are comfortable with. Investing should make you happy that you have the money to put to such use, not worried about what's going to happen to it.
