Today I've got five of my favorite investing quotes for longterm investors. I use these quotes for inspiration during volatile markets. I keep them in a file on my computer to remind me of all the things that we're working for together when we go through long term investing.
This post originally appeared as a video on the 40 Finance YouTube Channel
The first quote here is from an Indian American investor, Mohnish Pabrai. And Mohnish says, “You don't make money when you buy stocks, and you don't make money when you sell stocks. You make money by waiting.” And this to me is so true, and sometimes when you look at your portfolios, particularly when they're down and you want to sell everything to protect your cash. This quote kind of grounds me in the sense that when we're buying and holding and all those things, it's a long term journey. And particularly when we're buying, we haven't done anything yet. We're just capturing value while we can, and waiting for that value to go up over time.
The next quote is from Philip Fisher, who's a legendary investor and author. “The stock market is filled with individuals who know the price of everything, but the value of nothing.” This quote reminds me of how much research and understanding we need to do as investors. Just knowing that Coca Cola is $52 dollars or whatever it is for the day, doesn't make us good investors. We have to understand the business of Coco Cola, and be able to describe in a few words what makes it worth our time for investing. What does the future hold for Coco Coca? Today's price is irrelevant if it's not stacked to another metric like growth or earnings. Price alone tells us very little.
Next up is famous Warren Buffett. “Price is what you pay, value is what you get.” This reminds me to ask myself what I expect to get when I pay a certain price for this stock? Usually I'm looking for a slightly downtrodden stock that has the opportunity to go up over time. But this quote right here makes me ask the question to myself, “If I bought XYZ company at $10, what do I think that share is actually worth? Am I getting a good deal?” When you take a breath for a second and you ask yourself that question, you can prevent a lot of mistakes, and you can force yourself to look outward a couple years before you push the buy button.
The next quote is from Peter Lynch, who's another legendary investor. “Know what you own, and know why you own it.” This is some advice I could have used much earlier in my life to understand what I'm buying, and why do I even want it in the first place? It's so hard when you first get into investing to avoid chasing shiny objects. Even today when I have a little bit more ease of access to money to invest, I read website articles, social media, and stock ticker names flying all over the place. It plays into your mind like, “Ooh, ooh, ooh, shiny object syndrome.”
One way to look past the hype is to look back to Peter Lynch's quote, “Know what you own, know why you own it.” Why did you buy Google stock, or Apple stock, why? What do you think will happen if you get it at X price? Did you buy it for the dividends? Did you buy it for the growth? Do you believe in their business plan going forward? Those are all acceptable answers, but you have to know why you bought it. And the answer can't be… to make money. You have to know, even with dividends, you have to have the conviction to say, “I believe Apple will be making significant earnings over the long term, therefore I believe their dividend structure will increase over time.” Convince yourself to make the investment much like you would at a store when you're comparing two products, and if you get back to this quote right here, it really will make you feel good when you make the purchase.
Alright last quote of the day, a little bit of a long one, but it's one of the first investors that I studied. He's more into real estate investing, Robert Kiyosaki. “It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” This quote really resonates with me. My family, although we've always had enough money to put dinner on the table and live in a good home, there hasn't been any cross generational wealth. You think about some of the things that you read about in books, whether it's the Rockefellers or Bill Gates, or whoever, and how many generations in the future their business endeavors have supported.
I certainly don't expect to get to Bill Gate's wealth level in my life. However, I would like to pass along a good start for my three children. Even if it is a small amount that gives them options after high school, whether it's going to college, starting a business, whatever. I would love to provide them a head start so that they can succeed and continue the tradition of investing wisely and setting their children up for a strong future too. Kiyosaki's point about how many generations you keep it for really makes a lasting impression on me.
These are my five investment quotes for longterm investors. I read all of them throughout the year to refresh my memory on the goals of investing. From what my strategy is, to how I look at companies, to even understanding what I'm investing in. These quotes for me, they just ground me and give me a quick reminder of what it is I'm aiming for.
As an expert and enthusiast, I have access to a wide range of information and can provide insights on various topics, including investing. While I don't have personal experiences or emotions like humans do, I can provide factual information and analysis based on available data.
Now, let's discuss the concepts mentioned in the article you provided.
Long-term investing refers to a strategy where investors hold onto their investments for an extended period, typically years or even decades, with the expectation of achieving higher returns over time. This approach is based on the belief that the value of investments will increase over the long run, despite short-term market fluctuations. Long-term investors often focus on fundamental analysis, considering factors such as a company's financial health, growth potential, and competitive advantage.
Value investing is an investment strategy popularized by Benjamin Graham and later followed by Warren Buffett. It involves identifying undervalued stocks that are trading below their intrinsic value. Value investors believe that the market sometimes misprices stocks, providing opportunities to buy them at a discount. They typically look for companies with strong fundamentals, such as low price-to-earnings ratios, solid balance sheets, and sustainable competitive advantages.
Research and Understanding
The article emphasizes the importance of conducting thorough research and understanding the businesses in which one invests. Simply knowing the stock price is not enough; investors need to analyze factors such as a company's financials, growth prospects, competitive landscape, and industry trends. This knowledge helps investors make informed decisions and avoid being swayed by short-term market fluctuations.
Knowing What You Own and Why
Peter Lynch's quote, "Know what you own, and know why you own it," highlights the importance of understanding the investments in one's portfolio. Investors should have a clear understanding of the reasons behind their investment choices, whether it's based on the company's growth potential, dividend income, or other factors. This knowledge helps investors stay focused on their long-term goals and avoid impulsive decisions driven by market noise.
Wealth Preservation and Generational Wealth
The last quote from Robert Kiyosaki emphasizes the importance of not only making money but also preserving and growing it over time. Kiyosaki highlights the idea of creating generational wealth, which involves building and passing on wealth to future generations. This concept underscores the long-term perspective of investing and the potential benefits it can bring to individuals and their families over time.
Remember, investing involves risks, and it's important to conduct thorough research, diversify your portfolio, and consider your own financial goals and risk tolerance before making any investment decisions.