10. Peter Lynch
“I’m always fully invested. It’s a great feeling to be caught with your pants up.”
American investor Peter Lynch turned Fidelity’s Magellan Fund into the best performing mutual fund in the world during the time he managed it from 1977 to 1990.
So it’s safe to say Lynch knew what he was talking about when he wrote the book One Up On Wall Street in 1989.
In this passage, Lynch explains how the summer of 1982 was a devastating time in the stock market. Having just bought a new home, he was worrying about how he’d be able to manage his high mortgage payments.
But his fortunes turned around practically overnight. The market shot up at a wild rate, taking investors off guard as they fumbled to buy back into the stocks they’d left for dead. Everyone but Lynch.
Lynch was fully invested still — as he always is. That’s because he keeps his eyes on the horizon. He doesn’t get distracted by the everyday ups and downs — or even the exceptional ups and downs.
9. Paul A. Samuelson
“I'd rather see someone with a gambling tendency go to Las Vegas and drop $200 than betting on pork bellies, the silver market or new issues market. You shouldn't speculate except with money you can afford to lose.”
Samuelson was the first American to win the Nobel Prize for economics in 1970. It was in an interview with the New York Times in 1971 that he offered up this bit of wisdom.
The academic was lamenting that uninformed investors often fall into the trap of seeking advice from self-motivated money managers, watching as the fees involved “whittle away” their initial investments over time.
However, he added, “unless you’re going to know something about what you’re doing,” you’re effectively gambling. In that case, it’s best to rely on professional advice to help you find investments that match your risk and provide tidy enough returns to keep ahead of inflation.
Thankfully, getting professional guidance is easier and more affordable than it was during Samuelson’s day.
8. Charlie Munger
“It's waiting that helps you as an investor, and a lot of people just can't stand to wait. If you didn't get the deferred-gratification gene, you've got to work very hard to overcome that.”
Munger is Warren Buffett’s right-hand man at Berkshire Hathaway. After 60 years of working closely together, they share a close friendship, similar investing strategy and a penchant for wry observations.
One essential factor that’s made them both billionaires is their seemingly unlimited stores of patience. Munger’s quote comes from an interview he did with The Wall Street Journal in 2014.
Like Buffett, Munger’s goal has always been to make a lot of money — but he’s never worried about how long it will take. Like many smart investors, he trusts long-term growth more than passing fads and doesn’t panic when his investments don’t take off right away.
While it can be hard to watch other people rake in cash when their gamble pays off, it’s hard to tell a man who has a net worth of $2 billion that his strategy doesn’t work.
7. John C. Bogle
“Don’t look for the needle, buy the haystack.”
John C. Bogle, founder of the Vanguard Group, wrote the book on investing — or at least one of the more popular ones. His tidbit above comes from his 2007 work, The Little Book of Common Sense Investing.
While it may sound like he’s telling you to indiscriminately invest in everything, he’s really talking up the power of index funds — something Bogle is often credited with inventing.
Instead of spending your time hunting for an undiscovered diamond in the rough, a single index fund will allow you to buy into a wide range of businesses.
This approach is not only less risky, it tends to be more profitable, too. Index funds have minimal fees and often perform better than fancy portfolios managed by professional stock-pickers.
You can get into index funds any number of ways — through your 401(k) at work, a mutual fund company, a discount broker — but the quick and easy route is to use one of today’s popular investing apps.
6. Mark Twain
“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”
Remember, you can learn just as much from failures as you can from successes. The legendary American author made a fortune with his writing, lectures and marriage but subsequently bankrupted himself through poor investments and get-rich-quick schemes.
Published years afterward in 1894, Twain’s The Tragedy of Puddn’head Wilson includes this sarcastic observation at the beginning of a chapter.
For something that started out as a throwaway line, the “Mark Twain Effect” has taken on a life of its own. This quote is often referred to when the stock market reports slower returns in the month of October.
Looking back, the Wall Street Crash of 1929, Black Monday of 1987 and the Financial Crisis of 2008 each started in October or at the very end of September.
The takeaway is that investors must always be prepared for everything to go sideways in October — or July, January, September, April, November, May, March, June, December, August or February.
5. Benjamin Graham
“The individual investor should act consistently as an investor and not as a speculator.”
Shortly before his death in 1976, the “father of value investing” gave an interview with the Financial Analyst Journal, sharing the insights of a 60-plus-year career.
Of the three rules he offered that individual investors should follow, the above quote was No. 1.
Graham explained that every decision an investor makes must be attributable to “impersonal, objective reasoning” that shows they’re getting more than their money’s worth for the purchase. Speculators, on the other hand, often trust their gut.
Even if you have impeccable instincts or great luck, Graham would argue that’s not a solid foundation on which to build a portfolio. Eventually it will fail, and your house may come crashing down around you.
If you’re looking to build on solid ground, there are lots of stable assets that still offer strong growth potential. You might consider investing in farmland, a profitable asset that has, until now, been difficult to buy into.
4. Jeff Bezos
“Given a 10% chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of 10. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs.”
Bezos, the billionaire founder of Amazon, has been jockeying for the title of richest man in the world for the past year. Even if he’s lost the top spot, with a net worth of $193 billion, he’s surely got some valuable insights on building your fortune.
The biggest lesson he can pass on — other than taking a great idea, having excellent timing and building it up in your garage — is to accept risk. One of the first steps he took in founding today’s e-commerce juggernaut was to quit his job.
Amazon, which originally focused on books, could have flopped. But as he wrote in his 2015 letter to shareholders, betting on something you see value in can pay off. And while striking out is always a possibility, every failure is also an opportunity to learn, experiment and refine your strategy.
If you decide to take a risk on an individual stock, make sure it's a measured one. Some apps offer "fractional trading," which allows you to invest in even the most expensive stocks with as little as $1.
3. William J. Bernstein
“There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know what they don’t know. Then again, there is actually a third type of investor — the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends on appearing to know.”
As a neurologist and cofounder of Efficient Frontier Advisors, an investment management firm, Bernstein’s mixed background no doubt offers him a unique insight.
But he’s far from the only expert to warn investors to stay away from anyone overly confident about the future of the market.
What you can take from this quote — published in his 2001 book, The Intelligent Asset Allocator — is that it’s important to acknowledge what you don’t know.
Investing is like riding a bull: The second you get comfortable with a certain rhythm, you’ll get tossed off. But if you know you could be headed for a fall any minute, you’ll be on your guard and better able to react.
2. Sir John Templeton
“The investor who says, ‘This time is different,’ when in fact it’s virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing.”
This quote, published in Templeton’s 1993 article 16 Rules For Investment Success, emphasizes the importance of learning from your mistakes.
That’s not to say Templeton — who became a billionaire investing in emerging markets worldwide — thought it possible to avoid mistakes entirely. In his mind, the only way to escape missteps is not to invest at all, which would be an even larger mistake.
Instead, he recommended keeping a cool head when you do make a wrong move. Instead of taking larger risks to dig yourself out of the hole, evaluate the situation, figure out what you did wrong and make sure you avoid that same trap in the future.
As the saying goes, the definition of insanity is doing the same thing over and over and expecting a different result. When you’re investing, remember what history has taught you and be open to trying different approaches.
1. Warren Buffett
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”
Warren Buffett is perhaps the king of cheeky and insightful investing quotes. This particular nugget is pulled from his book, The Essays of Warren Buffett: Lessons for Corporate America.
While he’s known for making smart picks as the “Oracle of Omaha,” Buffett is proudly outspoken about his long-term value-based strategy for investing, which has helped him amass his $100 billion fortune.
Buffett often jokes that his favorite holding period is “forever.” For example, he first bought shares of Coca-Cola back in 1988 and has never sold a single one.
To invest like Buffett, take a slow-and-steady approach, building and holding a diversified portfolio of companies with strong business models. One way to do that is to use an app that automatically invests your "spare change".
Generating regular income should be a top priority for risk-averse investors.
And you don’t have to limit yourself to the stock market to do that.
For instance, some popular investing services let you lock in a steady rental income stream by investing in premium commercial real estate properties — from R&D campuses in San Jose to industrial e-commerce warehouses in Baltimore.
You’ll gain exposure to high-end properties that big-time real estate moguls usually have access to.
And the best part? You'll receive regular passive income in the form of cash distributions without any headaches or hassles.