Famous Investing Quotes and Cliches, in Reality

How legit are they to begin with?

Ann Inw
Ann Inw
Nov 8, 2020 · 5 min read
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If only I had a dollar for every time someone blurted out some random Warren Buffet quotes. The world investing is no stranger to inspirational quotes, just like in the self-development world. Investment quotes are meant to help you create a proper investing mindset.

But often, people say them too much the words become become annoying, cliche-y, and straight up chessy. I generally don’t like random quotes, be it in investing or other areas of life. Without contexts, I find it shallow, short sighted, and unhelpful. If only life problems go away with just a simple sentence. That’s my general stance toward motivational quotes.

So, what about investing quotes? Are they even legit to begin with? In which context they can become useful?

Be fearful when others are greedy, be greedy when others are fearful

Famously said by Warren Buffet, this piece of advice is probably the most quoted words in investing. It recommends you to be the market’s anti-mainstream. Oh, there’s a sell-off? Why not double down your position? After all, that’s what Warren Buffet said.

But sadly the reality is not as simple as it was in one sentence. I remember voicing the fear and doubt in February 2020, during the initial sell-off before the crash in March. But there were a group of people who decided it was the right time to apply the quote above. It was just a correction, they said, dismissing my concern.

These people, probably only just heard there’s a city called Wuhan for the first time in their life, were underestimating the effect of the would-be pandemic. Their greediness over others’ fearfulness, as proved several weeks later, was not at the right time.

I am no Warren Buffet, but I have a better version of this quote. Be non-emotional during all kinds of market situations. Don’t be greedy nor consumed by fear. Assess what is happening with a clear mind. Collect the necessary information, then make a decision.

Invest in yourself first

I believe in this one. It’s basically the core inspiration on how I develop the ultimate investment strategy. Successful investors from the likes of Warren Buffet to any guy who wrote books about “getting rich with trading” advise you this. And it’s indeed a legit piece of advice.

To summarize in one word: Learn. Investing is a skill. The more it’s sharpened, the better your performance would be. Everyone can get lucky in the financial market. But only the ones with a skill who get lucky consistently.

Cut your losses short, let your profit run

Another golden advice, only many people don’t take it as a whole.

The hard one is the part about cutting a loss quickly. This is what many people ignore. Our brain seems to against doing it. Psychologists call it anchoring bias, where investors hope the price of a stock will go back up after a period of a slump. Sadly, it is not always the case, especially if there’s something fundamentally wrong with the company itself. In this case, closing your position early will save you from a bigger loss.

Weirdly enough, the second part of the advice about letting a profit run is relatively easy to follow. The motivation behind it is clear: Human greed. There’s no such thing as too much gain.

But experienced investors know after a period of the rally, there will be a period of profit-taking. That is the nature of the market. And this time is when the advice becomes important. If your time frame is long, there’s no reason to be tempted to also follow the temporary profit-taking selloffs. After the expected dip, let your profit run upwards even bigger.

Buy on rumors sell on news

Quite a legit advice circulating out there in the world of trading and investing. When you heard Tesla is going to roll out a sick version of car batteries, that’s when you buy the stocks. Months later, when Tesla is officially announcing the said battery concept, you sell the stock.

Although legit, applying this strategy is not as easy as it sounds. First, there’s a grey line where a rumor starts and when it ends. When a rumor ends and it becomes news, what if there’s another rumor coming up? You would be confused as heck. Second, a rumor may not be well received by the market, so it’s just passing wind. Spotting potential rumors and legit news are tricky, and often the market reaction would be not what you hope for. I personally believe there are just a lot better and easier ways to spot buy/sell signals.

So, what’s the better take of this quote? When you believe in the company, occasional rumor and news are just noise. It can be a hint for a buy point, but in my experience, it’s always confusing as selling signals. There are other more accurate indicators, like the classic transaction volumes to see if a stock is undergoing a distribution.

The rich stay rich by spending like they’re poor and the poor stay poor by spending like they’re rich

I heard this often in anything related to “achieving financial freedom” advice.

Nope, the rich spend like rich people do: Luxuriously, liberally, and whatever the heck they want. And nope, spending spree is not the reason what the poor stay poor. Things are more complicated than that.

This quote is meant to encourage people to be more mindful of their spending. I got nothing against that. But the quote itself is too narrow and a bit misleading.

What I don’t like about this quote is it ignores that privilege matters. It ignores systemic inequality and the fact that being poor isn’t just because of a series of bad decisions. It also ignores the fact that being poor costs more.

The stock market is a device for transferring money from the impatient to the patient

This one, I also agree, how much I am sick on how cheesy it sounds being so often mentioned in any investing advice.

If someone asks me only one secret in getting big returns in stocks, I would answer, “Be patient.” It’s the most important thing. Because no matter how good the company, or how cheap your buying price, it doesn’t matter if you don’t have the ability to sit it out over a long period of time, unfazed by the ups and downs of the market.

Despite my mixed feeling with investing quotes, many are useful if applied properly. They serve as a reminder during a specific situation, and context always matters. No quote or advice is one-size-fits all, after all.

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Ann Inw

Written by

Ann Inw

Updates: ✉️ anninw.substack.com/subscribe. Trying to storytell investing, money, tech, and everything in between. Software engineer, learner, entrepreneur.

Data Driven Investor

empower you with data, knowledge, and expertise

Ann Inw

Written by

Ann Inw

Updates: ✉️ anninw.substack.com/subscribe. Trying to storytell investing, money, tech, and everything in between. Software engineer, learner, entrepreneur.

Data Driven Investor

empower you with data, knowledge, and expertise

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