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Investing Wisdom from the Greats

Some quotes from the world’s most famous investors that can help improve your results.

Investing Wisdom from the Greats

Stock Market Analysis Video

In Case You Missed It


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I’ve always been a big fan of quotes and working at Cabot has given me some new (investing-themed) favorites. One, which is inscribed on our office mantel, says “Markets are never wrong; opinions are.” This bit of market wisdom comes from Jesse L. Livermore, a trader famous for making and losing several million-dollar fortunes in his lifetime and whose life Edwin Lefevre wrote about in the investing must-read Reminiscences of a Stock Operator.

Today, I’m going to share some quotes from the world’s most famous investors. I hope they help you become a better investor and keep in mind the important lessons the market teaches us, especially in more volatile times like we just experienced.

“When reward is at its pinnacle, risk is near at hand.”—John (Jack) Bogle, founder of the Vanguard Group.

“Look at market fluctuations as your friend rather than your enemy. Profit from folly rather than participate in it. ”—Warren Buffett, the Oracle of Omaha and the third richest man in the world.

“Psychology is probably the most important factor in the market—and one that is least understood. ”—David Dreman, a contrarian investor and author.

“I don’t want a lot of good investments; I want a few outstanding ones. ”—Philip A. Fisher, growth investor and author of Common Stocks and Uncommon Profits.

“Even the intelligent investor is likely to need considerable willpower to keep from following the crowd. ”—Benjamin Graham, the Father of Value Investing and author of Security Analysis and The Intelligent Investor.

“If you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them. ”—Peter Lynch, managed Fidelity Magellan Fund from 1977 to 1990, beating the S&P 500 Index in 11 of those 13 years, achieving an annual return of 29%.

“Successful stocks don’t tell you when to sell. When you feel like bragging, it’s probably time to sell. ”—John Neff, averaged annual total return of 13.7% (versus S&P 500’s 10.6%) while managing Vanguard’s Windsor Fund from 1964 to 1995.

“Since the market tends to go in the opposite direction of what the majority of people think, I would say 95% of all these people you hear on TV shows are giving you their personal opinion. And personal opinions are almost always worthless ... facts and markets are far more reliable. ”—William J. O’Neil, growth stock investor, CANSLIM author and founder of Investor’s Business Daily.

“Change is the investor’s only certainty. ”—Thomas Rowe Price Jr., growth stock investor and founder of T. Rowe Price investment firm.

“Most cannot spare the time and money to research smaller stocks. You are therefore more likely to find a bargain in this relatively underexploited area of the stock market, ”—Julian Robertson, had the best hedge fund record during the 1980s and 1990s, with a compound rate of return of 32%.

“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much money you lose when you’re wrong. ”—George Soros, ran the Quantum Fund, which generated an average annual return of more than 30%.

“Invest at the point of maximum pessimism. ”—John Templeton, of the Templeton investment funds. In 1939, he famously bought $100 of every stock trading below $1 on the New York and American stock exchanges, totaling 104 stocks, of which 34 went bankrupt. He invested a total of $10,400 and sold four years later for more than $40,000.

“My only sound reason for buying a stock is that it is rising in price. If that is happening, no other reason is required. If that is not happening, no other reason is worth considering.”—Nicholas Darvas, author of How I Made $2,000,000 in the Stock Market.

“Remember, the market is designed to fool most of the people most of the time. ”—Jesse Livermore

If you didn’t see your favorite bit of investing wisdom here, please reply to this email to send it in. I’d love to add it to my own collection and share it with your fellow Cabot Wealth Advisory readers in a future issue.

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In this week’s Stock Market Analysis Video, Cabot China & Emerging Markets Report editor Paul Goodwin discusses the good week in the stock market and the positive action in Cabot’s market timing indicators. Paul also discusses loss limits and the ruling reason—a one-sentence explanation of why you want to buy a certain stock. Stocks discussed: Whole Foods (WFMI), Shutterfly (SFLY), Sina Corp. (SINA) and AT&T (T). Click here to watch the video.


In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.

Cabot Wealth Advisory 3/28/11 – Sentiment Analysis: The Third Leg of the Table

On Monday, Rick Pendergraft discussed the three main types of stock selection analysis: technical, fundamental and sentiment. Rick wrote about how sentiment analysis may be the most least-used, but most useful, form of analysis. Featured stock: Astoria Financial (AF).


Cabot Wealth Advisory 3/29/11 – 10% Yielding Perpetual Cash Machines

On Tuesday, we heard from Carla Pasternak of StreetAuthority as she discussed perpetual cash machines, or stapled products, a rare investment class that provides two separate sources of income.


Cabot Wealth Advisory 3/31/11 – The Third and Fourth Dimensions

On Thursday, Michael Cintolo discussed how the fundamentals of the economy and a stock can provide important background information, though they don’t tell you precisely where the market or a stock is headed. Mike also discussed why you shouldn’t invest scared and he recommended a stock that’s a play on the U.S. oil industry. Featured stock: Brigham Exploration (BEXP).

Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory

Elyse Andrews, is a contributor and former editor of Cabot Wealth Daily, focusing on educational topics on finance, the stock market and individual stocks.