Quotes About Investing

So the twentieth century has seen three severe drops in stock prices, one of them catastrophic. The message to the average investor is brutally clear: expect at least one, and perhaps two, very severe bear markets during your investing career. Long-term

Bonds are even worse, since their returns do not mean revert—a series of bad years is likely to be followed by even more bad ones, as happened during the 1970s. This is the point made by Jeremy Siegel in his superb treatise, Stocks For The Long Run. Professor Siegel pointed out that stocks outperformed bonds in only 61% of the years after 1802, but that they bested bonds in 80% of ten-year periods and in 99% of 30-year periods. Looked

Eighty years ago, John Maynard Keynes put it best: I do not feel that selling at very low prices is a remedy for having failed to sell at high ones. . . . I would say that it is from time to time the duty of the serious investor to accept the depreciation of his holdings with equanimity and without reproaching himself.

When stocks perform poorly, in order to raise living expenses you will be selling bonds, since their allocation will rise. Just do not forget to replenish the bond bucket with the proceeds of stock sales and to also take your living expenses from the stock bucket as well when times are flush.

Looked at from another perspective, in the 30 years from 1952 to 1981, stocks returned 9.9% and bonds returned only 2.3%, while inflation annualized out at 4.3%. Thus, during this period, the bond investor lost 2% of real value on an annualized basis, while the stock investor made a 5.6% real annualized return. The last fifteen years of that period were years of high inflation, so this is just another way of saying that stocks withstand inflation better than bonds. Short-term

Why the correlation between popular interest and subsequent low returns? Simple: Driving the price of any asset higher requires the entry of new buyers, and when everyone is invested in stocks, real estate, or gold, there's no one left to join the party; the entry of naïve, inexperienced investors usually signals the end.

During bull markets, everyone believes that he is committed to stocks for the long term. Unfortunately, history also tells us that during bear markets, you can hardly give stocks away. Most investors are simply not capable of withstanding the vicissitudes of an all-stock investment strategy. The

Great intelligence and good luck are not required. The essential characteristics of the successful investor are the discipline and stamina to, in the words of John Bogle, "stay the course." Investing is not a destination. It is an ongoing journey through its four continents—theory, history, psychology, and business.

There is, in fact, a rich and informative scientific literature about what works and what doesn't in finance; it is routinely ignored. Instead of depending on the Journal of Finance (the investing equivalent of The New England Journal of Medicine), they get their advice from USA Today or worse, from their stockbroker. Of

Thus, the logic of the market suggests that: Good companies are generally bad stocks, and bad companies are generally good stocks. Is this actually true? Resoundingly, yes. There have been a large number of studies of the growth-versus-value question in many nations over long periods of time. They all show the same thing: unglamorous, unsafe value stocks with poor earnings have higher returns than glamorous growth stocks with good earnings. Probably

Always favor expected returns calculated from the Gordon Equation over past returns, no matter how long of a period they cover.

If you find yourself stimulated in any way by your portfolio performance, then you are probably doing something very wrong. A superior portfolio strategy should be intrinsically boring.

The easiest way to get rich is to spend as little as possible.

La mejor época posible para invertir es cuando el cielo amenaza tormenta, puesto que los inversores descontarán los ingresos futuros de las acciones a una tasa muy elevada.

The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you're wrong.

write to Securities Research Company, 27 Wareham Street, #401, Boston, MA 02118, and purchase one of the company's long-term wall charts. Also, in 2008, Daily Graphs, Inc., created a 1900 to 2008 stock market wall chart that shows major market and economic events.

A great trader once noted there are only two emotions in the market: hope and fear. "The only problem," he added, "is we hope when we should fear, and we fear when we should hope." This is just as true in 2009 as it was in 1909.

Charts plus earnings will help you tell the best stocks

Successful long-term investors like Warren Buffett know that bear markets are buying opportunities.

When you look at the results on an after-fee, after-tax basis, over reasonably long periods of time, there's almost no chance that you end up beating the index fund.

Supremely rational investors take the further step of acting against consensus, rebalancing to long-term portfolio targets by buying the out-of-favor and selling the in-vogue.

In fact, wealth-maximizing individuals compare the after-tax costs of debt with the after-tax returns from bonds, liquidating bond positions to pay off loans when the costs of debt exceed the returns from bonds. Rational investors consider liability positions when making asset allocations.

Finally, David Swensen has made it fun to work on investing for Yale—recruiting a team of exceptionally talented Yale graduates

The stock market really isn't a gamble, as long as you pick good companies that you think will do well, and not just because of the stock price.