Below is a collection of quotes from my investing heroes that I find particularly insightful. Do not be deceived by their simplicity; they often carry profound significance. However, like all quotes, their value depends on the context in which they are applied. Some quotes may overgeneralise and may not always be relevant. The key lies in understanding them and knowing when to apply them appropriately.
To make money in stocks you must have ‘the vision to see them, the courage to buy them and the patience to hold them.’ Patience is the rarest of the three.
— Thomas W. Phelps, 100 to 1 in the Stock Market
You can’t take the same actions as everyone else and expect to outperform.
— Howard Marks, ‘Dare to Be Great’ Memo
The stock market is a device for transferring money from the impatient to the patient.
— Warren Buffett
All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.
— Peter Lynch
The four most dangerous words in investing are: ‘This time it’s different.’
— Sir John Templeton
I try to get rid of people who always confidently answer questions about which they don’t have any real knowledge.
— Charlie Munger
Good investing is a minority sport, which means that in order to earn returns better than everyone else we need to be doing things different to the crowd. And one of the things the crowd is not, is patient.
— Nick Sleep, Nomad Investment Partnership 2006 Annual Letter
In the short run, the market is a voting machine but in the long run, it is a weighing machine.
— Benjamin Graham, The Intelligent Investor
You should remember that good ideas are rare—-when the odds are greatly in your favor, bet heavily.
— Charlie Munger
The strategy of putting all your eggs in one basket and watching that basket is less risky than you might think.
— Joel Greenblatt, You Can Be a Stock Market Genius
The stock market is filled with individuals who know the price of everything, but the value of nothing.
— Philip Fisher
In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.
— Peter Lynch
Investing is about predicting the future, and the future is inherently unpredictable. Therefore, the only way you can do better is to assess all the facts and truly know what you know and know what you don’t know. That’s your probability edge.
— Li Lu
Knowing what you don’t know is more useful than being brilliant.
— Charlie Munger
My view is that an investor is better off knowing a lot about a few investments than knowing only a little about each of a great many holdings. One’s very best ideas are likely to generate higher returns for a given level of risk than one’s hundredth or thousandth best idea.
— Seth Klarman, Margin of Safety
So one way to create an attractive risk/reward situation is to limit downside risk severely by investing in situations that have a large margin of safety. The upside, while still difficult to quantify, will usually take care of itself. In other words, look down, not up, when making your initial investment decision. If you don’t lose money, most of the remaining alternatives are good ones.
— Joel Greenblatt, You Can Be a Stock Market Genius
The biggest hurdle to making 100 times your money in a stock may be the ability to stomach the ups and downs and hold on.
— Chris Mayer, 100 Baggers
Take your losses quickly and your profits slowly because your objective is not just to be right but to make big money when you are right.
— William O’Neil
You just can’t copy other people’s insights. Sooner or later, the position turns against you. If you don’t have any insights into the business, when it goes from $100 to $50 you aren’t going to know if it will go back to $100 or $200.
— Li Lu
During a lifetime, you will likely own 10-20 big winners and hundreds of failed impostors. Time and interest are the primary components of the power of compounding. The hard part is we don’t know how much time we have. Identifying the losers in your portfolio is as important as holding winners because losers dilute your returns. Losers are a waste of your time.
— Ian Cassel