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The Wisdom of Great Investors

August 15, 2014 | News

The longer we are in the business and the more investors we help, the more we see how people truly generate and preserve the wealth that God has entrusted to them.  It’s not by forecasting what the Federal Reserve is going to do or reducing your stock allocation because it feels safer.  The solution is sticking to investing fundamentals… even when the pressure (and fear) builds to cave to market timing.

Clipper Funds wrote an article titled, “The Wisdom of Great Investors”, where they did a great job of outlining these investing fundamentals from the investing greats.  Here is the summary:     

  1. “Avoid self-destructive investment behavior” – “Individuals who cannot master their emotions are ill-suited to profit from the investment process. – Benjamin Graham 
  2. “Understand that crises are inevitable” – “History provides a crucial insight regarding market crises: They are inevitable, painful and ultimately surmountable. – Shelby M.C. Davis 
  3. “Recognize that historically, periods of low returns for stocks have been followed by periods of higher returns” – “Despite inevitable periods of uncertainty, stocks have rewarded patient, long-term investors.” Christopher C. Davis  
  4. “Don’t attempt to time the market” –“Far more money has been lost by investors preparing for corrections or trying to anticipate corrections then has been lost in the corrections themselves.” – Peter Lynch  
  5. “Don’t let Emotions Guide your investment decisions” – “Be fearful when others are greedy. Be greedy when others are fearful.” Warren Buffett  
  6. “Understand that short-term underperformance is inevitable” – “The basic question facing us is whether it’s possible for a superior investment manager to underperform …. The assumption widely held is ‘no.’ And yet if you look at the records, it’s not only possible, it’s inevitable.” Charles D. Ellis  
  7. “Disregard short-term forecasts and predictions” – “The function of economic forecasting is to make astrology look respectable.” John K. Galbraith  
  8. “Be contrarian” – “You make most of your money in a bear market, you just don’t realize it at the time.” Shelby C. Davis   

The 4th fundamental above is currently relevant in regards to the correction everyone has been predicting while the 7th speaks to the rise in interest rates that hasn’t materialized yet. Want to learn more about our investment approach?  Click here to read more or call us today to schedule an appointment with one of our advisors.         

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