Sunday, May 24, 2015

10 Non-Investing Quotes With Great Investing Lessons

As much as I enjoy reading investing books, some of the most valuable investing lessons I've learned have come from non-investing sources. Here are a few that I've written down over the years.
  • What has been will be again, what has been done will be done again; there is nothing new under the sun. - Ecclesiastes 1:9
    • The specific circumstances change (tulips, dotcom stocks, Nifty Fifty) but investor behavior repeats itself. By studying market history, and history in general, you can get a sense of when investors are acting irrationally and invest accordingly. 
  • Of all losses, time is the most irrecuperable for it can never be redeemed. - The Tudors
    • Time is a precious commodity in many parts of life, including investing. If we're lucky, our investing time horizon stretches a few decades. The longer you delay investing, the less time your money has to compound. Start saving and investing now. 
  • Whenever you find yourself on the side of the majority, it is time to pause and reflect. - Mark Twain
    • If you find that your investment thesis is shared by many investors, it's probably reflected in the stock price. It always pays to ask yourself, "And who doesn't know that?" when considering the key points of your thesis. (h/t Howard Marks)
  • If you can't explain it to a six year old, you don't understand it yourself. - Albert Einstein
    • Stay within your circle of competence. If you can't break down the company's business into simple terms, you shouldn't buy the stock.  
  • When jarred unavoidably by circumstances, revert at once to yourself, and don’t lose the rhythm more than you can help. - Marcus Aurelius
    • When we're stressed or anxious, we tend to act in ways that we normally wouldn't. The markets will rattle you from time to time, but it's important not to act until you're calm and collected. 
  • Patience is bitter, but its fruit is sweet. - Various
    • Remaining patient in periods of market turbulence isn't easy, but if we're able to keep calm and make rational decisions in irrational times, we have the opportunity to realize superior returns.
  • It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts. - Arthur Conan Doyle, Sherlock Holmes
    • Buying a stock without first collecting and considering the facts and figures is pure folly. Don't buy something on story alone and always be aware of any biases you have before you start researching the company. 
  • Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much. - Luke 16:10
    • A good one to keep in mind when evaluating management's track record and integrity. 
  • The only thing worse than not getting what you want is someone else getting it. - Roger Sterling, Mad Men
    • It's one thing to miss out on a stock, but it's made a whole lot worse when others around you have capitalized on it (Apple comes to mind for me). Tip your cap to those who were successful and move onto the next idea. 
  • Man is not a rational animal, he is a rationalizing animal. - Robert A. Heinlein
    • One of the key assumptions of the Efficient Market Hypothesis is that all market participants are rational, but investors' decisions are full of behavioral and cognitive biases that cloud or sway their otherwise rational judgement. If we're aware of these biases and can recognize them in ourselves and in others we can improve our results.
What non-investing quotes have influenced your investing? Let me know in the comments section or on Twitter @toddwenning.

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Stay patient, stay focused.



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