The Motley Fool Singapore?s Facebook Page crossed a new milestone over the weekend by garnering its 10,000th ?like?. In celebration of this five digit achievement, I would like to share 10 investing quotes which may help you in investing.
So, here goes!
1. ?Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part-ownership of a business.? – Peter Lynch
The quote above may seem obvious at first glance. But as Lynch puts it, stock market participants often forget that when a share is purchased, it represents part-ownership of a business and not a piece of paper to be traded…
The Motley Fool Singapore’s Facebook Page crossed a new milestone over the weekend by garnering its 10,000th “like”. In celebration of this five digit achievement, I would like to share 10 investing quotes which may help you in investing.
So, here goes!
1. “Although it’s easy to forget sometimes, a share is not a lottery ticket… it’s part-ownership of a business.” – Peter Lynch
The quote above may seem obvious at first glance. But as Lynch puts it, stock market participants often forget that when a share is purchased, it represents part-ownership of a business and not a piece of paper to be traded the next day.
So, it is worth keeping this in mind when our shares happen to fall by 20% or more: Our eyes should be on the company and its business. Ultimately, it’s the underlying performance of the business which will matter in the long term.
2. “When it comes to investing, my suggestion is to first understand your strengths and weaknesses, and then devise a simple strategy so that you can sleep at night!” – Walter Schloss
Beyond recognizing that shares are small ownership stakes in a business, we should also take time to figure out our own goals for investing and the style of investing that fits us.
Broadly speaking, the different styles may be value investing, growth investing or income investing. Or even something in between. Above all, think long-term when it comes to investing. Or as the next quote would suggest:
3. “Finding good companies and holding those positions tenaciously over time can yield multiples upon multiples of your original investment. That’s what great investors do.” – David Gardner, co-founder of the Motley Fool
Our job, as Foolish investors, is to hold good companies tenaciously to give time for their management teams to execute and grow the business for the long term. Holding tenaciously may also mean ignoring the day-to-day movement of share prices, which brings me to the next quote:
4. “When all is said and done, none of us will remember how our money did on any given day. We’ll even have trouble remembering our performance in any given year.
But from saving methodically and investing avidly, the odds are very high we’ll have increasing levels of financial independence such that we can live our days freely as we choose.” – Tom Gardner, co-founder of the Motley Fool
Ultimately, we do not learn much from the day to day movement of share prices. Our time is better spent learning about the businesses behind the ticker. Don’t know where to start?
Well, try reading the annual report of a company. Here’s a five-part series on how one can make sense of a company’s annual report with ComfortDelgro Corporation Limited’s (SGX: C52) 2013 annual report being used as an example. And don’t worry about turning into an expert immediately. Instead listen to Warren Buffett’s take on his illustrious right hand man, Charlie Munger.
5. “Charlie, as a very young lawyer, was probably getting $20 an hour. He thought to himself, ‘Who’s my most valuable client?’ And he decided it was himself.
So he decided to sell himself an hour each day. He did it early in the morning, working on these construction projects and real estate deals. Everybody should do this, be the client, and then work for other people, too, and sell yourself an hour a day.” — Warren Buffett on Charlie Munger
Knowledge, like our own investments, can build and compound over time. All we may need is to give a bit of time for ourselves to learn. If you study a company over a decade, you may be surprised at how much better you might know a company compared to analysts.
6. “Price is what you pay, value is what you get” – Ben Graham
When it comes to buying a stock, the price you pay for the stock and the value of the stock are two different things. Ideally, you want to purchase a stock when its price is below its estimated real economic value. The larger the gap between the intrinsic value of the stock and its price, the better the margin of safety you have.
7. “As many advisors have told us, your investment portfolio is like a bar of soap. The more you handle it, the smaller it gets” – William Smead
Dancing in and out of stocks may sound like a smart idea, but it just isn’t so in reality. As my Foolish colleague Ser Jing notes: Missing the 10 best days of the Straits Times Index (SGX: ^STI) between 1 May 1992 and 18 December 2013 would have turned your returns from 3.48% per annum into a dismal 0.12% per year.
So, keep the long term in mind and leave the dancing shoes behind.
8. “When you buy anything it’s an arrogant act. You’re saying to markets are gyrating and somebody wants to sell this to me and I know more than everyone else so I’m going to stand here and buy it. That’s arrogant. You need humility to say ‘I might be wrong’.” – Seth Klarman, hedge fund manager
To be sure, holding a company for the long term does not mean that we should ignore information which runs contrary to our own investment thesis. As Klarman puts it, it pays to be both confident and humble at the same time.
That’s also why Foolish investors do not shy away from looking at both the bull and bear cases that a company has, just like what was performed here with Dairy Farm International Holdings Ltd (SGX: D01). The broader we think, the better our conclusions.
9. “It’s not always easy to do what’s not popular, but that’s where you make your money.” – John Neff
Investing is not a popularity contest. There will be times when Foolish investors may look dumb for buying a company when its share price is falling. But again, it’s the business behind the ticker that matters. If the business continues to perform, the share price may eventually follow suit. And, what looks “foolish” may become Foolish instead.
The last quote I’m going to share is a single word:
10. “Learn” – Dato’ Cheah Cheng Chye
“Learn” also happens to be the signature of Dato’ Cheah, the Chairman of Value Partners, the largest asset management firm in Asia.
It is in Cheah’s deep passion for learning that he has led his Value Partners Classic Fund to deliver an extremely impressive compound annualized return of 17% over the past 21 years. I believe Foolish investors will be well served as lifelong students of the investing game.
My Foolish best to all readers and thank you for reading and the 10,000 Facebook likes!
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Dairy Farm International Holdings and Vicom.