Value investing is a fairly simple concept. Executing it on the other hand can prove quite difficult for investors. If you’re ever feeling intimidated or on the wrong track it’s always a great idea to listen to experienced people. So with that I’ve compiled my 10 favorite quotes on investing.
“All intelligent investing is value investing – acquiring more than you are paying for.” -- Charlie Munger
Simple and to the point. This quote stands out to me because no matter what style of investor you are you can agree with it. At it's core, successful investing is all about acquiring pieces of great businesses at discount prices.
“Go for a business that any idiot can run - because sooner or later, any idiot probably is going to run it.” -- Peter Lynch
One of my all time favorite quotes from one of my all time favorite investors. Mr. Lynch didn't sugarcoat it with this quip, arguing that the individual investor should be able to understand the business they are investing in.
“We don’t have to be smarter than the rest. We have to be more disciplined that the rest.” -- Warren Buffett
An excellent statement and one that average investors shouldn't forget. You don't have to have a sky-high IQ in order to be a successful investor. Anybody can do it as long as you have the emotional fortitude to keep at it.
“It is impossible to produce superior performance unless you do something different from the majority.” -- John Templeton
Speaking of emotional fortitude. It takes strong will to not go with the flow and do what everyone else does. Sometimes value investing can be lonely, but if you stick to it, you have a much greater chance of success.
“The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests.” -- Benjamin Graham
Mr. Market, an allegory created by Graham, represents the emotional swing of the stock market. Rather than completely ignore him, the individual investor must realize he can take advantage of him at times.
“The greatest long-range investment profits are never obtained by investing in marginal companies. Investors desiring maximum gains over the years had best stay away from low profit-margin or marginal companies.” -- Philip Fisher
As I mentioned earlier, investors of all types often practice value principles. Philip Fisher, a notorious growth investor, offers a few words of the wise that would make Benjamin Graham proud.
“The single greatest edge an investor can have is a long term orientation.” -- Seth Klarman
Simply put, this quote is the truth. Historically speaking, investing in stocks, especially using a value investing approach, has proven to be the best strategy. And if you can wait out the valleys, troughs, and depressions... you'll do just fine.
“The number one idea is to view a stock as an ownership of the business and to judge the staying quality of the business in terms of its competitive advantage. Look for more value in terms of discounted future cash-flow than you are paying for. Move only when you have an advantage.” -- Charlie Munger
Using a little more elaboration than his first quote, Charlie Munger highlights one of the key pillars of value investing, competitive advantages, or moats. Find a company that has one and your chances of success improve dramatically.
“While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.”
The entire value investing philosophy is tough to explain in one sentence, but Mr. Klarman sure does a great job with this quote. In fact, if you're entire strategy was this statement, you'd be better off than most of the "experts".
“Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business who’s earnings are virtually certain to be materially higher five, ten and twenty years from now.” -- Warren Buffett
This is the quote that really made me have a light-bulb moment and realize investing in stocks is not as hard or intimidating as I had always thought. If you ever feel like you're in over your head when it comes to intrinsic value, fundamental analysis, or stocks in general... remember this quote.