Investing Wisdom

There’s a lot to learn from luminaries in the investing world. Here are some nuggets to digest: • Benjamin Graham: “The investor’s chief problem — even his worst enemy — is likely to be himself.” Don’t let panic over a market drop prompt you to sell, and don’t let greed tempt you to pile into overvalued stocks. • Peter Lynch: “The best stock to buy is the one you already own.” If you’ve invested in the best stocks you could find, consider adding to those positions with new money. Don’t spread yourself thin. Aim to hold 10 to 20 stocks and focus your dollars on your best ideas. Alternatively, just stick with simple, low-fee index funds. • Warren Buffett: “When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.” Tremendous stock gains tend to happen over many years. Patience can be profitable. • Peter Lynch: “Know what you own, and know why you own it.” Don’t just buy into stocks on hot tips. Do your homework and get to know your holdings well. Keep up with their developments, too. • Charlie Munger: “The No. 1 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.” It’s best to favor promising companies that have sustainable competitive advantages, such as a strong brand, economies of scale, or superior technologies or production processes. • Warren Buffett: “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” You don’t need to be a genius to make a lot of money investing. You can outperform most professionally managed mutual funds just by buying and holding shares of a low-fee broad-market index fund. As long as you know what you’re doing and you stick by your strategy without acting impulsively on emotions, you’ll likely do well.