12 Investing Quotes That Teach Great Lessons
Hitting a wall in trading is something that happens to everyone sooner or later. Maybe you just cannot seem to get your system to generate the results you need, or perhaps you have not had a good trade in weeks. No matter what challenges you are up against, it can be helpful to take a few minutes to glean some inspiration and soak up some wisdom from the giants who have come before you.
Here are some awesome quotes from famous investors to get you focused and motivated.
“The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.” – Benjamin Graham
This quote is a great reminder that what you are ultimately striving for in trading is consistency, and that many well-researched and developed systems will stand the test of time. The basic principles of trading also never change: smart money management, discipline, patience, and systematic execution.
Markets do shift over time, however, and you will have to make adaptations. But the basic principles that you are adapting should remain pretty steady. If you can build that firm foundation, you will be well positioned to embrace the changes you need to make to survive.
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” – Charlie Munger
This quote reminds us that often times the key to success lies as much in the mistakes we avoid as it does in the great trades that we take. All the bad trades you forego are just as important. After all, you could take more great trades than you do now and still make less money if you were also taking more bad trades! If you have the discipline to avoid the temptation to overtrade or go on tilt, you have already fought and won half the battle. That is something to remember when you are feeling antsy because you haven’t traded in a while!
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” – Robert G. Allen
Now and again, you are going to be subjected to someone who gives you a barrage of reasons why you should stick with a “safer” investment like a savings or CD account, and stay away from binary options. The people who give you this advice think they are helping you to be responsible and avoid likely defeat. After all, most binary options traders fail.
Of course, all people who invest through a savings account or CD account will ultimately fail, and therein lies the flaw in this thinking. Unless you already have a huge amount of money, you cannot make hardly anything from the interest in a savings account. So you can take a risk by investing in binary options and maybe win, or you can take no risk at all and guarantee failure. It is up to you!
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” – George Soros
This is another wonderful reminder during those slow times that you may actually be right on track and doing exactly what you need to be doing in order to move forward successfully. Sound investment decisions are very routine, and they result in routine, predictable profits. That is the entire point. You want trading to be dull and predictable. You do not want unpleasant surprises.
So if trading is a daily thrill, it is probably because you are doing it wrong. When you have no idea whether you are going to win or lose, over time, you will lose more and more often. Then trading will eventually become predictable, and not in a good way.
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in a one-night stand a romantic.” – Warren Buffett
This is an amazingly apt description of the difference between someone who trades pell-mell and someone who actually knows what they are doing. If you are trying to find a great partner who you can build a life with, one-night stands are not the best approach. This is like using a shotgun instead of a rifle; you are not honing your aim, and all you are doing is going through a huge volume of prospective partners who may have nothing whatsoever to offer you—except perhaps unwanted consequences.
Similarly, just taking a huge number of trades every day does not make you a real investor. It does not give you your best chance at building a life through trading. Once more, you are not taking aim at investments that could really contribute to your portfolio. You are instead only risking unwanted consequences.
There is nothing about the simple act of clicking “High” or “Low” that by itself makes you a trader. What makes you a trader is knowing when to hit “High” or “Low”—and sometimes, when to do nothing at all.
“The four most dangerous words in investing are: ‘this time it’s different.’” – Sir John Templeton
When you are right about to break your system rules, there is probably some line of justification going through your head. And it may very well be, “This time it’s different.” You persuade yourself that for one reason or another, it is okay to stray from your method this time, that this time is somehow exceptional.
More often than not, this time is exactly like most times, and you are about to lose money. If you are really in doubt about what is going on and you think something is really changing, maybe this time is one you should sit out, not experiment with. Observe and take notes. Cautiously shift your approach if you need to, but do it based on evidence, not supposition.
“I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have.” – Paul Tudor Jones
This comes back to the same focus as Charlie Munger’s quote about avoiding stupidity. If you simply focus on doing everything you can never to lose a trade (not freezing up entirely, of course), you will often find your profits pile up on their own. Think about it. Every time you lose money, you have to make that money back up all over again before you can start adding to your net profit again. So in a sense, you have to win twice for every loss. Wouldn’t it be better to just avoid losing?
“In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” – Peter Lynch
If you are desperately shooting for that elusive 90% win percentage and not hitting it, maybe you shouldn’t despair. If you are achieving 80% or even 70%, you are actually doing fantastically well. Even at 60% you may be able to make a good living trading. It is easy to lose sight of this sometimes. Ambition is essential for a trader, but sometimes it can blind us to the success we are already achieving.
Another thing I like about this quote is that it is a great reminder that some things are too good to be true. Ninety percent is possible, but very few traders will ever achieve anything like it. So if you have someone selling you on a service or system promising 90% returns, you may already want to question what you are seeing. If they are promising even higher, say 98%, run the other direction; they are trying to sell you a bill of goods.
“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading.” – Victor Sperandeo
If you look around for investment quotes, you will find many that repeat this assertion that you do not need a high IQ to trade, that what you need is discipline. Trading does require a certain degree of book smarts, but I tend to agree that it requires at least as much emotional intelligence as it does any other ingredient.
Victor Sperandeo is right—emotional control is much harder to come by than the book smarts required. If you have the ability to reign in your emotions and restrain yourself from impulsive behavior, then you are that much ahead of everyone else.
“In investing, what is comfortable is rarely profitable.” – Robert Arnott
True growth rarely takes place inside our comfort zones. We have to step outside of our comfort zones to push the envelope of our capabilities and explore new opportunities. This is true in every aspect of life, but especially true in trading!
While trading is a world where routines are profitable, it is also one where you sometimes have to adapt, as discussed earlier. And when it comes time to adapt, you will have to step outside the solutions you have already developed and test new ones. That is never a cozy process, but it is sometimes the only way to keep profiting!
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” – Peter Lynch
Not only do you get recessions and stock market declines (which can of course really throw off your trading), but you get other types of declines too. There are numerous factors that can impact your trading performance, and the point here is that you are going to have losing days. Sometimes you will have losing weeks, maybe even losing months.
You cannot expect to survive in business if you do not come prepared for those times when things are not going as smoothly as you would like. Every successful investor has had to deal with drawdown. You need to be ready to psychologically weather those hurdles if you want to stay in the game.
“Invest in yourself. Your career is the engine of your wealth.” – Paul Clitheroe
There are so many services and products which can tempt a binary options trader, especially one just starting out. “My system will make you $10,000 a month, guaranteed!” “Amazing Auto-Trading Bot Generates $500 a Day!” Slogans and promises like these for signal services, trading robots, and systems tug at our most desperate hopes and dreams.
But the best place for you to put your money is not in these products and services, but in yourself. This is not to say that there are not some great systems and services that are well worth paying for, but ultimately you can only trade for a living by becoming a trader! And becoming a trader means investing time and energy into learning how to trade. It means standing on your own two feet. It means learning how to rely on yourself first and foremost.
I hope that you found these quotes inspirational, and that they help you to focus on the best trading principles and practices. You might even consider tacking one or two to your wall to serve as a reminder. When you are questioning your discipline or your motivation, you will have something to keep you on target for success.
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