The financial markets have seen several success stories of those who struck it rich by sticking to their investment philosophies.
Investing, in many ways, is like playing golf. You seize the opportunities, measure the risks, constantly improve yourself, and listen to the pros. The financial markets have seen several success stories of those who struck it rich by sticking to their investment philosophies.
Here are 10 pieces of investment advice from 10 of the best investment minds in the world.
"Stay true to your strategy and don't be influenced by the noise." John Paulson focuses on how to persist with your investment strategy. You can listen to the market without getting influenced. Paulson should know because he made $15bn in a single trade shorting sub-prime assets, when the entire world was rushing to buy it.
"If you cannot accept stock market corrections, then it is not the place for you." Peter Lynch of Fidelity retired at 38 just to watch is daughters grow. He could afford that but the message from Lynch is that volatility is a part and parcel of the stock market game.
"I buy on the assumption that markets could shut for the next 5 years." Warren Buffett obviously did not mean that literally because IBM made even Buffett jittery. The point is investors must not give too much credence to the price ticker. It is the strength of the underlying business that matters.
"Big money is made by being on the right side of big moves." These words of Martin Zweig may sound quite elementary but look at the wisdom of it. Quite often, the market gives a hint that is contrary to our thinking. We end up sticking up to our thinking and lose money. The idea is to listen to the market with humility.
"Stock market bubbles don't grow out of thin air." George Soros may be less of an investor and more of a trader. But, look back at the bubbles of 1992, 2000, or 2008 and there was a genuine underlying story which was distorted by people.
"An intelligent realist buys from the pessimists and sells to the optimists." When it came to value investing, there are few voices more authoritarian than Benjamin Graham. The idea is that you must treat your investments like a bargain or an attic sale. Try to squeeze the best value when you buy the stock.
"Four most dangerous words in the stock markets are 'this time it is different'." In a way, Sir John Templeton summarized the creation and bursting of every bubble in history. The more things appear to change, the more they remain the same.
"I am a cynic about corporate democracy and boards." What Carl Icahn meant was that investors should be sceptical about the ability of boards to do wonderful things. Focus more on your ability to manage the risk.
"Don't buy for the needle in the haystack but buy the haystack." John Bogle may be a surprise selection considering his passive approach to investing. However, he manages $4.5tn and is bang on target when it comes to the power of diversification.
"Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world." By this, Charlie Munger suggested like many others that one should stay put with their select investments and not be disturbed by every single move in the markets.