We thought the following quotes from some of the most successful money managers might be useful to get the extra confidence needed to stay with your long term plan as the markets exhibit the usual up and down movements. The key word in the first sentence being the “usual” volatility as stock market movements up and down are customary and should be expected.
“Look at (market) fluctuations as your friend rather than your enemy – profit from folly rather than participate in it.”
Warren Buffett of Berkshire Hathaway fame
Personal Implication: This is why the long term stock market returns are higher than a bank savings account which has no volatility or movement up and down. Understand volatility for better returns; this trade-off is a good one for long term investors.
If you watch a basketball game and at the end of the game you win with the score is 105 to 95, no one says, wait a second, in the third quarter, you lost 28 to 18. What was the story in the third quarter?
Peter Lynch of Merrill Lynch fame
Personal Implication: The goal in retirement is too insure you do not outlive your money by having your portfolio produces lifestyle sustaining income for you and your family. That requires concentrating on the whole game – not small time periods, like quarterly or yearly returns.
In the stock market, the only way to get a bargain is to buy what most investors are selling.
Sir John Templeton of Templeton Mutual Funds
Personal Implication: This is why it is important to have the disciplined approach of re-balancing your portfolio even when (especially when) it is contrarian to the current sentiment. Knowing the percentages of each asset classes that you will need to reach your goals will allow you to do what every investor wants to do: Sell high, and Buy low.
It is learning to listen to the gloom and doom at bottoms and question it, and to the exultation at tops and question this as well, that makes a sharp investor.
Jim Rogers of Quantum Fund
Personal Implication: This questioning is possible only if you have created an investment portfolio based of achieving a result. What we like to call “Being Successful on Purpose”. This allows your focus to be on having the right balance of investments independent of how they are currently performing. You need to understand what has always worked – not only what is currently working.
No matter how much or how little money you have flowing through your life, when you direct that flow with a soulful purpose, you feel wealthy. You feel vibrant and alive when you use your money in a way that represents you. Not just as a response to the market economy, but also as an expression of who you are. When you let your money move to things you care about, your life lights up. That’s really what money is for.
Lynne Twist of Soul of Money Institute
Personal Implication: Amen