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Pearls of Wisdom From Investing Legends

For those of you who follow the financial markets, it’s perhaps not uncommon to hear or read about how some market commentators try to downplay the extreme success of some of the world’s most famous investors – ‘They’re just statistical anomalies whom Lady Luck has favoured greatly’ is a common refrain.

However, a closer look at those famous investors tends to reveal a similar investing philosophy that underlies their actions.

This thus raises the question: Is it just a lucky coincidence that these investors have gotten to where they are now because of similar philosophical underpinnings when it comes to investing? Or, did their luck come about because of certain shared-traits they have when it comes to investing? For me, the answer’s simple: they’ve gotten to where they are today because of their similar views toward investing.

And because of that, here are three pearls of wisdom from three great investors that could hopefully make us “lucky” as well.

“It’s Far Better to Buy a Wonderful Company at a Fair Price than a Fair Company at a Wonderful Price” – Warren Buffett

Buffett taught us how valuable a wonderful business with a strong moat can be. A company with a strong competitive advantage will have the ability to reinvest its earnings at a much higher rate of return, creating a magnificent compounding machine.

It’s perhaps for this reason that we find companies such as Jardine Cycle & Carriage (SGX: C07), ST Engineering (SGX: S63) and Starhub (SGX: CC3) – companies that have proven their business to the market for a long period of time – tending to enjoy a premium on their share prices awarded by the market.

“You learn in this business … If you want a friend, get a dog.” – Carl Icahn

Carl Icahn is a famous activist investor and has never been known for being an agreeable man. He understands that one’s able to pick up on what the market misses only by being a contrarian.

Furthermore, it might take years before a contrarian view is proven right. When all is said and done, investing can be a very lonely endeavour and to be a successful investor, it would mean you must have a certain self-conviction in yourself.

“The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Phillip Fisher

Media commentary on the stock market is rife with opinions. Prices of commodities and shares, among others, are quoted on an almost up-to-the-minute basis. But, that can’t help anyone form an informed investing decision.

Instead, we have to think independently and form our own views about issues that are important, such as the real value of  a business. Being caught up in market frenzies and chasing the next investment du jour is the last thing we want to do as investors.

A Foolish Take

To conclude, here’s another pearl of wisdom, this time from outside the investing arena. Gary Player, a golfing legend, once said in an interview, “The harder I work, the luckier I get.” I believe this is true in everything that we do, including investing. 

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.