warren buffett: Teachers’ Day: 5 timeless investing lessons from the masters of stock market

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Whether you are dependent on the services of a financial advisor to manage your money or you prefer to do it yourself (DIY), it is imperative to understand some of the key principles behind the world of savings and investing. As we celebrate Teachers’ Day in India today, here’s a look at what some of the masters of the game said on investing, taking risks and relying on advisors:

Warren Buffett

Many companies, of course, will fall behind, and some will fail. Winnowing of that sort is a product of market dynamism. Moreover, the years ahead will occasionally deliver major market declines – even panics – that will affect virtually all stocks. No one can tell you when these traumas will occur – not me, not Charlie, not economists, not the media.

During such scary periods, you should never forget two things: First, widespread fear is your friend as an investor, because it serves up bargain purchases. Second, personal fear is your enemy. It will also be unwarranted.

Jim Rogers

I learned early in my career that if you read the annual reports, you’ve done more than 90 per cent of the people on Wall Street. If you read the notes to the annual report, you’ve done more than 95 per cent of the people on Wall Street, and if you actually sit down and do a spreadsheet, you’ve done more than 98 per cent of the people on Wall Street.

Charlie Munger
Widespread incentive-caused bias requires that one should often distrust, or take with a grain of salt, the advice of one’s professional advisor, even if he is an engineer. The general antidotes here are: (1) especially fear professional advice when it is especially good for the advisor; (2) learn and use the basic elements of your advisor’s trade as you deal with your advisor; and (3) double check, disbelieve, or replace much of what you’re told, to the degree that seems appropriate after objective thought.

Peter Lynch
Whatever methods you use to pick stocks, your success will depend on your ability to ignore the worries of the world long enough to allow your stocks to succeed. No matter how intelligent you are, it isn’t the head but the stomach that will determine your fate.

Benjamin Graham

It has been an old and sound principle that those who cannot afford to take risks should be content with a relatively low return on their invested funds. From this there has been developed the general notion that the rate of return which the investor should aim for is more or less proportionate to the degree of risk he is ready to run. Our view is different. The rate of return sought should be dependent, rather, on the amount of intelligent effort the investor is willing and able to bring to bear on his task. The minimum return goes to our passive investor, who wants both safety and freedom from concern. The maximum return would be realised by the alert and enterprising investor who exercises maximum intelligence and skill.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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