If you’re a trader, your most pressing concern might be to gather information about the industry you’re trading in to help you make decisions and give you an edge. And rightly so. Doing your research enables you to avoid being caught off guard by avoidable market forces. However, as much as keeping on top of daily happenings in your industry is essential, regularly looking back and reading what some of the greats had to say about their experiences is also an excellent idea.
Traders like Warner Buffett, Peter Lynch, and Benjamin Graham have some of the best nuggets about the trading industry and life. Furthermore, other than doing your due diligence, like picking the best UK trading platforms and learning your ABCs of trading, internalising some of their quotes will make you a better trader. So join us as we dissect five quotes from a few legendary investors.
Quote: “We’ve long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”
We think what Warren Buffett was trying to get at here was that if you’re investing in stocks, you’re buying into a company and the management team. Therefore, you should trust them to do their job and grow the company over time. Furthermore, periods of short-term spikes and dips are part of running a business and trading, and it makes more sense to ride them out as long as the overall trend is upwards.
Quote: “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”
Simply one of the best trading and life advice you will ever hear. To add more context to Graham’s quote, if you know where you’re going, you’re more likely to get there. Winning a few times is not the problem; doing it repeatedly and consistently is. The only way to ensure you can have repeated results is by building processes and habits that let us do so. We also believe this is how you become a master at something.
Quote: “Thousands of experts study overbought indicators, head-and-shoulder patterns, put-call ratios, the Fed’s policy on money supply…and they can’t predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.”
Peter Lynch is trying to hint at not letting fear stop you from trading or doing what you want. Many traders bury their heads deep in research and try to analyse every piece of data or information they can get their hands on. There is nothing wrong with this, but you also need to remember that you lose all the trades you don’t place at the end of the day.
Quote: “A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.”
Ordinarily, we would tell you not to buy into a company’s stock, but we agree with Warner Buffett in this instance. If your interest is to own part of a company you’re interested in for the long-term gains like he is. Then this is excellent advice; it’s a good idea to increase your holding in a well-managed company during a market downturn when prices are low.
Quote: “The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has.”
Even though technology has significantly advanced, and our ability to predict when to enter and exit trades has improved. Jack Bogle is still right; there is still no magical bell to help you do so. You just need to trust your instinct and use the tools and knowledge you have accrued over the years to help you make good trades.