The problem with bull markets is there is nothing much to do for the intelligent investor but there is everyone wanting to do something. Like the other day, even my father and my father-in-law now wants to invest in equity mutual funds. Which is not such a bad thing actually – but the timing suggests that it is time to repeat the same old stuff.
So as many times in the past, I went to the ‘Gita’ of value investing “The Intelligent Investor”, and again read some of the underlined writings that need to be repeated at times of such excitement in the markets.
So here goes – some excerpts that are especially to be remembered now. Nothing new, the same old stuff or “the exact same thing” as Jason Zweig says, again:
- No statement is more true and better applicable to Wall Street than the famous warning of Santayana: “Those who do not remember the past are condemned to repeat it”.
- We have not known a single person who has consistently or lastingly made money by thus “following the market”. We do not hesitate to declare this approach is as fallacious as it is popular.
- Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of good business conditions. The purchasers view the good current earnings as equivalent to “earning power” and assume that prosperity is equivalent to safety.
- The investor’s chief problem – and even his worst enemy – is likely to be himself
- Speculative stock movements are carried too far in both directions, frequently in the general market and at all times in at least some of the individual issues.
- The beauty of periodic re-balancing is that it forces you to base your investing decisions on a simple, objective standard.
- A great company is not a great investment if you pay too much for the stock.
- Even the intelligent investor is likely to need considerable will power to keep from following the crowd.
- 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.
- 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.
- High valuations entail high risks.
- Investment is most intelligent when it is most businesslike.
- Successful investing is about managing risk, not avoiding it. Without a saving faith in the future, no one would ever invest at all. To be an investor, you must be a believer in a better tomorrow.
And finally, this one which is right at the beginning of the book in the foreword by Buffett.
“By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.”