At times, these sayings may seem like throwaway quips yet much thought has probably gone into the creation of the best of them.
Often the sayings are about investor behaviour, the fallacies of trying to time markets, the irrationality of the share market and why a long-term approach to investing makes much sense.
Consider this offering from Buffett: "I will tell you how to become rich... Be fearful when others are greedy. Be greedy when others are fearful." You have probably heard it.
Buffett is warning investors about the dangers of following the investment herd. The herd tends to get caught up in the mood of the market – the euphoria when prices are rising and the pessimism when prices are falling. The bottom-line is that such crowd-following investors typically buy when prices are high and sell when prices are low.
Economist and commentator Shane Oliver appears to have taken a brief break from the pre-Budget speculation to gather 21 of these investment sayings, including the one above.
"Investing can be scary and confusing at times," Oliver writes in his newsletter. "But the basic principles of successful investing are timeless and quotes from some of the experts help illuminate these."
Here is just a small sample of the sayings that Oliver finds "most insightful":
"Investing should be like watching paint dry or watching grass grow. If you want excitement... go to Las Vegas." Paul Samuelson, late American economist and Nobel Prize winner, was emphasising that investment should be viewed as a long-term exercise, not a short-term flutter.
"The investor's chief problem and even his worst enemy is likely to be himself." Benjamin Graham, the late professional investor and investment theorist, was warning that investors who get caught up in the prevailing emotions of the markets – rather than taking a disciplined approach - potentially destroy their own wealth.
"Much success can be attributed to inactivity. Most investors cannot resist the temptation to buy and sell." This is another from Buffett. By adopting a disciplined approach to investing and adhering to an appropriate long-term asset allocation for their portfolios, investors are less vulnerable to being swayed by market emotions.
If you are in the mood for a few more of these sayings, get hold of a copy of The Little Book of Commonsense Investing by founder and former chief executive of Vanguard John Bogle. In this updated 2007 book, Bogle focuses on the attributes of index funds, giving particular emphasis to their low-cost advantage.
As Bogle writes: "The more the managers and brokers take, the less investors make." This can easily be overlooked when markets are performing strongly.
The best and most accurate investment sayings reinforce some of the most basic principles of sound investment practice. They are worth hearing time and time again.
By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia
14th May 2014
12th-July-2014 | 