Quotes About Investing

Sensible taxable investors reach an obvious conclusion: invest in low-turnover, passively managed index funds.

For periods of one to two years or less, investors ought to favor bank deposits, money-market funds or short-term bond funds.

Sensible investors take great care to minimize the tax bill associated with moving assets from the high-risk, long-term portfolio to the low-risk, short-term portfolio. Although the tax code introduces many complexities to investment decision making, as a starting point consider moving taxable long-term assets to the low-risk portfolio, thereby allowing tax-deferred holdings to continue to receive shelter from taxes.

While astute mutual-fund investors avoid loads, all holders of mutual funds pay management fees.

Table 1.2 Markets Occasionally Crush Concentrated Portfolios Source: Ibbotson Associates. Stocks, Bonds, Bills, and Inflation 2004 Yearbook (Chicago: Ibbotson Associates, 2004).

Market timing fails to make an important contribution to institutional portfolio results, because investors quite sensibly show reasonable constancy in holdings of various asset types.

If an investor pursued an exclusive strategy of day trading stock index futures, investment results for the portfolio would have nothing to do with asset allocation or security selection and everything to do with market timing. The lack of widespread frenetic trading by investors stems either from a general sensibility of the investing populace or from a Darwinian winnowing of the day traders' ranks.

Table 4.1 Equities Generate Superior Returns in the Long Run Wealth Multiples for U.S. Asset Classes and Inflation December 1925–December 2005 Asset Class Multiple Inflation 11 times Treasury bills 18 times Treasury bonds 71 times Corporate bonds 100 times Large-capitalization stocks 2,658 times Small-capitalization stocks 13,706 times Source: Ibbotson Associates, Stocks, Bonds, Bills and Inflation, 2006 Year Book.

Two factors explain the individual's predicament. The first problem stems from the investment choices available to individuals. High costs and poor execution doom the vast majority of offerings. The second problem concerns responses by individuals to markets. Research shortcomings, rearview-mirror investing, and investor fickleness (in the face of both adversity and opportunity) cripple most investment programs.

Market studies focusing only on returns for securities in the United States miss important information. Recent academic work by Will Goetzmann and Philippe Jorion on investor experience in other countries reduces confidence in the long-run superiority of equity investing.

Passive investors who select Russell style-based indices lose a substantial share of the transactions-cost benefits of index-fund investing.

Chapter 8, Obvious Sources of Mutual-Fund Failure, concludes that, in the highly efficient securities markets, mutual-fund managers lose by the amount that it costs to play the game.

If you defer investing your time and energy until you see that you need to, chances are it will already be too late.

When he had explained why investors who wanted low risk and moderate returns should put their capital into national debt shares, Daisy had interrupted him by asking, "Father, wouldn't it be wonderful if hummingbirds had tea parties and we were small enough to be invited?

Vanguard never would have happened if I hadn't been fired as CEO of Wellington Management Company, the firm that did the investing for the Wellington fund and eight sister funds.

Owning a variety of asset classes means that some part of your portfolio will be doing well when the cyclical turmoil arises. A broadly diversified portfolio includes large capitalization stocks, small cap, emerging markets, fixed income, real estate and commodities.

Hedge fund managers charge so much more than mutual fund managers; alpha is even harder to come by. They end up selling a variety of things beyond mere outperformance.

We continue to advise that investors remain committed to a patient, long-term outlook and that the best way to do well in stocks is to use a disciplined, time-tested strategy that has the benefit of empirically tested results over a variety of market environments.

The exact details of how you practice value investing will vary investor to investor, but the fundamental principle of scouring the world, looking for dollar bills that you can buy for 50 cents or at some big discount - that is universal to value investing.

It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office.

When I first started as an angel investor, I was excited to start investing in startups - but I didn't know much. I couldn't tell the good ones from the bad; I didn't understand all these venture capital terms, so I would invest somewhat blindly.

The secret to global investing is gaining an insight into the hopes and desires of the people who live and work in the countries you invest in.

Either make your money work for you or you will always have to work for your money.

My life is like a series of comic strips, which is why I like investing: I really like new stuff.