When you’re new to investing, it’s easy to get overwhelmed by the thousands of investment books, blogs, and forums you can read. The worst part is you can read all of this information and wind up more confused than you started. Luckily, investing doesn’t have to be that complicated. Most of what has been said about investing can be boiled down to concise and impactful quotes. While the quotes are short, the wisdom they relay to us speaks volumes.
Some of these quotes conflict, and that doesn’t mean we should discount them; it means we should take into consideration that everyone has different time horizons, goals, and risk tolerances when it comes to investing. Also, it shows that even the best investors need to maintain a sense of uncertainty when investing because even the best investment decisions can result in losses. A healthy sense of skepticism towards your investing ideas can help you spot weaknesses in your thinking, so unforeseen risk doesn’t blindside your investments.
The following is a list of my favorite investing quotes.
10 Impactful Quotes That Could Change the Way You See Investing
1. “The first principle is that you must not fool yourself and you are the easiest person to fool.” —Richard P. Feynman
We all believe in our unique ability to be better than the rest. We assure ourselves we can outperform other investors. Sadly, only a few lucky monkeys will be able to do so. For those of us who don’t, you must temper your confidence and assume you’re no better than anyone else who invests. Master your ego, so when others egos get the best of them, you can profit.
2. “There’s so much disagreement about investing, and it’s because nobody knows.” —Robert J. Shiller
Numerous investment philosophies dictate when and how to buy and sell stock, bonds, real estate, and other assets, but none of these philosophies are universally true. You have to develop a philosophy that work best for you. Every philosophy has its own strengths and weaknesses because none of them are guaranteed to work in every market cycle.
3. “Worry is not a sickness but a sign of health—if you are not worried, you are not risking enough.” —The Zurich Axioms: The rules of risk and reward used by generations of Swiss bankers
“Set it and forget it” investing is a nice concept. Buy a house, find a property manager, and off to the beach for margaritas. Unfortunately, investing isn’t that easy. The best investors are always vigilant for risk. You must consider future risks that can put your investments in jeopardy. Have you developed a contingency plan if your investment begins to fail? What happens if you can only collect 60 percent of projected rents? What do you do if the tenant trashes your unit? Or if you invested in a stock, what happens to your stock if its upcoming product launch is a failure? These are all valid questions to ask if you want to prepare yourself for the worst and for how to act—and most importantly, not act—if the market overreacts to bad news.
Worrying is not a bad thing; the lack of worry is what is troubling. Most failed investors never worried about failure. Instead, they planned to fail.
4. “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
However, should all your investments be causing you worry? Shouldn’t your finances be so well diversified that they provide you with solace knowing your financial nest egg is in a position for success? We have enough to worry about regarding our careers and families. Should we also be concerned about our investments? That question is up to you.
5. “Be fearful when others are greedy. Be greedy when others are fearful.” —Warren Buffett
Many of you have read success stories of those who have made millions by investing, but for each success, numerous others have failed. One of the reasons people fail is they become greedy when the market is overpriced and fearful when the market is collapsing. To be successful, you must check your greed and realize that fortunes can’t be built overnight (well, actually, a few lucky gamblers can make them overnight if you roll the dice and are willing to YOLO your life savings). It takes years of hard work and effort to be successful in the investment game. Your goal is to survive long enough to take advantage of the ups and downs of market cycles.
6. “… I point out that many of the more successful entrepreneurs seem to be suffering from a mild form of Asperger’s where it’s like you’re missing the imitation, socialization gene.” —Peter Thiel
A successful investor has their own set of beliefs and convictions they stick to based on their criteria. Many investors will chase fads and never find the time to gain adequate experience in a particular investing style. You need to spend dedicated time to specific investment area to develop the expertise necessary for success in the markets. After spending enough time learning, you’ll improve your ability to spot great investments and protect yourself from the emotional swings of the boom and bust cycles in markets.
Related: 21 Quotes to Keep You Going — Even When the Entrepreneurial Life Gets Tough
While the market can undervalue an asset in the short-term, you could have purchased it and profited handsomely for having the conviction to take the plunge. Alternatively, the market could be right, and maybe you’re buying an asset that will soon be completely worthless. Risk is the name of the game.
7. “As a bull market continues, almost anything you buy goes up. It makes you feel that investing in stocks is a very easy and safe and that you’re a financial genius.” —Ron Chernow
I’ve seen many people get crushed in a bull market. We get lulled to sleep by great market returns. Instead of diversifying into other asset types, they continue to buy the same overpriced assets because of their euphoric view of markets. Inevitably, there will be a correction, and the euphoric investor can get crushed.
8. “In poker, the bulk of what goes on is watching. An experienced player will choose to play only about 20% of the hands they are dealt, forfeiting the other 80% of the hands before even getting past the first round of betting. That means about 80% of the time is spent just watching other people play.” —Annie Duke, World Series of Poker Tournament of Champions Winner
Much of investing is sitting and waiting. And waiting is the hardest part. To spot an opportunity, you should compare the investment to other investments in the same market. Relative comparisons give you a rough idea if the investment is worth the money. By seeing enough investment opportunities, you develop the ability to spot overpriced or underpriced assets. The only problem with this is if the entire market is overpriced, you could be overpaying for the value you are receiving. It comes down to is how much future earnings you think the asset can generate. If you think the market is undervaluing the asset’s potential revenue stream, you might have found a winner.
9. “Human behavior cannot be predicted. Distrust anyone who claims to know the future, however dimly.” —The Zurich Axioms
It makes us feel comfortable to read an economist’s predictions on where she thinks the economy will be in a year. If you took economists’ forecasts for 2007, most would have said the economy would continue to grow at a healthy pace. Well, those forecasts were wrong because the numbers blinded the economists. Focusing on the numbers is great for the short-term, but you have to understand the factors that drive the underlying economy. Those can’t be determined by starting at an Excel spreadsheet. One must be active in the market, speak to people who have first-hand knowledge of what drives an industry, and see what other veterans in the market think. A mixture of understanding the numbers and what drives the numbers provides us with a complete view of what’s happening in the economy.
10. “Going through chemo is like investing money in a retirement account. You feel the hit right now, but later in life, you get to reap the benefits—by still being alive.” —Regina Brett
It can be painful to put money into your 401k’s boring index fund when you can speculate on stocks and real estate, but 50 years from now when you retire, you’ll thank yourself for making at least some conservative investment decisions. Your retirement money should be well diversified because you never know if the house you buy or stock you purchase is in a market that will never grow (think of the people who bought in permanently depressed economies). I’m sure all of those people were certain their market would grow, but it worked against them. Even worse are the people who made the same bets but were successful. Just because the results of investment were profitable doesn’t mean the same decision will lead to the same results. Don’t judge investment decisions on market results because you don’t know if you’re dealing with a lucky monkey. Focus your time on how to make better investment decision’s and the results will come.
What’s your favorite investing quote?
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.