The modern world has introduced new challenges to investing. While the basics of the trade still remain the same, investors are faced with present opportunities, options, and dilemmas that can make or unmake their chances of success.
It’s true that most investors learn their lessons the hard way, but it can be equally productive to also discover new and useful things from the best players on the field. Here are some of the most important pieces of advice from the world’s greatest investors and how you can use them to your advantage.
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett
In his letter to his shareholders in 1989, Warren Buffett, an American investor, philanthropist, chairman, and CEO of Berkshire Hathaway, and perhaps the greatest investor of his time, revealed one of the most important tenets that shaped his investment strategy: invest in companies that you can fully understand, regardless of its present finances. More importantly, it should be one of which their intrinsic value is self-evident.
“Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count. Good [investment] ideas should not be diversified away into meaningless oblivion.” – Bill Gross
PIMCO co-founder, Bill Gross, also manages one of the world’s largest bond funds, PIMCO Total Return Fund. Here, he speaks about his ultimate rule in portfolio management and diversification. It’s a common rule that when investing in stocks, never put all your capital into one name – but what Gross emphasizes that if you want to make money in the stock market, make research-based decisions and informed ideas when choosing one or more stocks.
“If you have trouble imaging a 20% loss in the stock market, you shouldn’t be in stocks.” –Jack Bogle
Jack Bogle is the founder and former chief executive of the Vanguard Group. As a veteran in the trade and an expert in investing in the stock market, he points out one truth that most of the time, intimidates young investors: Losses are a part of reality in investing in the stock market. If you don’t have the grit and the courage to face them, then you shouldn’t be in stocks in the first place.