John Bogle once said, “Learn every day, but especially learn from the experiences of others. It’s cheaper!” It’s true. It is cheaper. It’s also a great way to learn.
About the only downside is that experiencing it ourselves tends to drive the point home much better. Losing money will do that. But it usually happens at a snail’s pace compared to the speed with which anyone can dedicate to learning from others.
The fun part is John Bogle said that at the end of a meeting of the minds. Charley Ellis gathered seven legends to share their thoughts and experiences on investing. Their lessons are timeless and worth revisiting as a reminder of what matters.
On Behavior
I would recommend being humble. Be open-minded, and do not be conceited. — John Templeton
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Humility is an enormously important quality. You can’t win without it. Survival, in the end, is where the winners are by definition, and survival begins with humility. — Peter Bernstein
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I’ve learned that extreme dislocations in markets inevitably occur, and they also inevitably correct themselves. One needs to learn from that the discipline of being patient and having the conviction of one’s own analysis. — Gary Brinson
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Develop a telling investment philosophy, and then stick to it. — John Neff
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Recognize that the reality is that precious few investors are going to beat the market over the long run… Focus on long-term investment and not short-term speculation — on the eternal vagueness of the intrinsic value of a corporation rather than on the momentary precision of the price of a stock. — John Bogle
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You can’t expect other people to do your thinking for you either. You have to really understand the businesses that you’re buying through the medium of stocks. And unless you’re willing to put a lot into that, you shouldn’t expect to get much out of it. — Warren Buffett
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Be realistic in defining your circle of competence. Try to figure out what you’re capable of knowing, stay within that, and forget about everything else. It means deciding which businesses you know enough to value and which ones you don’t know enough to value. — Warren Buffett
On Strategy
The unthinkable can always happen, and you have to run your affairs accordingly. — Peter Bernstein
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I have learned that the great opportunities are the places that have been neglected, where other people are not looking. — John Templeton
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The very best investors are the ones who invest according to their own psyche. You find that their investment styles are consistent with their personalities, their intellects, their approaches to work. It’s not somebody else’s style; it’s their own, and it’s deeply ingrained. — Dean LeBaron
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Only buy a stock that you’d be comfortable owning if they closed the stock exchange for three years tomorrow. Always leave a margin of safety, stick with what you understand, and quantify. — Warren Buffett
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Never forget that anything times zero is zero. No matter how many winners you’ve got, if you either leverage too much or do anything that gives you the chance of having a zero in there, it’ll all turn to pumpkins and mice. — Warren Buffett
On Basic Lessons
I bought my first stock when I was 11 — three shares of Cities Service Preferred at $38. My older sister bought three shares also. It went down promptly to $27. This is when the Dow was at 92 in June of 1942. As we walked to school every day, she reminded me of the most recent price. I was tired of hearing about it, so, when it got back to $40, I sold my shares and she sold hers. We each made $5. It went on to be called at $212 a share or something like that not long thereafter. So, I decided from there on not to talk to anybody about what I did and just think by myself. — Warren Buffett
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1958, when the stock yields got down below the bond yields, something that had never happened before. At that time, I had two older partners who were grizzled veterans of the Great Depression who assured me that this was an anomaly that would, in a short period of time, correct itself and that stocks would obviously have to yield more than bonds all the time. And I’m still waiting for that… It was a very dramatic moment, and it taught me that anything can happen. Things are always on the table for grabs. — Peter Bernstein
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I got three ideas out of Ben’s book that have been the cornerstone of everything I’ve done, which are to look at stocks as part of a business rather than simply little things that go up and down. And then I took to heart his Mr. Market saga, which I think is vital to having the right attitude toward market fluctuations. Then third, the margin of safety. — Warren Buffett
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The ultimate irony of the investment business is that there’s no question that an obstetrician will deliver babies better than the husband or the wife. Or if you take dentists as a whole, they will remove teeth or fill teeth better than if the patients try to do it themselves. But in the investment world, somebody who believes in American business — and who will seek out the lowest way to participate in business and do it consistently — will achieve results that exceed those of investment professionals as a group. It’s the only industry I can think of where the professional’s efforts subtract value from what the layman can do himself. — Warren Buffett
Source:
Living Legends
Related Reading:
Investing Lessons from the Banana Business
Investing Lessons From Ted Williams
