Quotes About Stocks

When the trend of the market is down, the sophisticated investor will use put options not only to make money, but also to protect the value of her stock in case prices begin to fall.

There are sophisticated investors who never buy or sell stocks. They trade only in options.

Investing in stocks is too slow. I can make much more money with less money investing in options.

if the price of the investor's stock is $50 per share, a sophisticated investor may have a call option placed at $52 per share and a put option in place at $48 per share.

If the market suddenly goes up to $62 per share, the investor has the right to still buy his or her shares at $52. If the market goes down to $42, the investor has the right to sell his or her shares at $48, minimizing the loss.

If the stock's market price is at $42 and the investor has a put option, which is the option to sell a stock at $48, that option suddenly becomes very valuable—in some cases, much more valuable than the stock itself.

When someone shorts a stock, that literally means they are selling something they do not own.

Keep in mind that it's not the asset class that makes a person rich or poor. For example, when a person asks, Is real estate is a good investment? I reply, I don't know. Are you a good investor? Or if they ask, Are stocks a good investment? again my answer is the same, I don't know. Are you a good investor?

There are more mutual funds than there are companies that mutual funds invest in.

Investing in stocks is an art, not a science, and people who've been trained to rigidly quantify everything have a big disadvantage.

A great stock, though with small profits, generally increases faster than a small stock with great profits. Money, says the proverb, makes money. When you have a little, it is often easier to get more. The great difficulty is to get that little.

When by an increase in the effectual demand, the market price of some particular commodity happens to rise a good deal above the natural price, those who employ their stocks in supplying that market are generally careful to conceal this change.

I examined the buy-and-hold returns of almost 9,000 IPOs issued between 1968 and 2001. I calculated the returns based on whether investors purchased the IPOs either at the end of the first month of trading or at the IPO offer price and held these stocks until December 31, 2003.25 There is no question that the losing IPOs far outnumber the winners.

Jeremy J. Siegel

The first actively traded U.S. stocks, floated in 1791, were issued by two banks: the Bank of New York and the Bank of the United States.

Chapter 6 showed that over holding periods of 20 years or longer, stocks have both a higher return and lower after-inflation risk than bonds. The

There is a good reason why stocks are not reacting to Fed policy as they have in the past. Investors have become so geared to watching and anticipating Fed policy that the effect of its tightening and easing is already discounted in the market. If investors expect the Fed to stabilize the economy, this will be built into stock prices long before the Fed even begins to take its stabilizing actions.

Tilt your portfolio toward value by buying passive indexed portfolios of value stocks or, fundamentally weighted index funds. Chapter

Investors can take advantage of this mispricing by buying low-cost passively managed portfolios of value stocks or fundamentally weighted indexes that weight each stock by its share of dividends or earnings rather than by its market value.

In fact, for someone in the highest tax bracket, short-term Treasury bills have yielded a negative after-tax real return since 1871, even lower if state and local taxes are taken into account. In contrast, top-bracket taxable investors would have increased their purchasing power in stocks 288-fold over the same period.

Yet one must be aware of the political, institutional, and legal framework in which these returns were generated. The superior performance of stocks over the past two centuries might be explained by the growing dominance of nations committed to free market economics.

Although those who wait long enough will eventually recoup losses on a diversified portfolio of stocks, buying stocks at or below their historical valuation is the best way to guarantee superior returns.

value stocks have actually done better than growth stocks during both bear markets and economic recessions, so it is doubtful this is the answer.

The superior performance of the original S&P 500 firms surprises most investors. But value investors (as described in Chapter 12) know that growth stocks often are priced too high, and excitement over their prospects often induces investors to pay too high a price. Profitable firms that do not catch investors' eyes are often underpriced. If investors reinvest the dividends of such firms, they are buying undervalued shares that will add significantly to their return.