3 great quotes to make you a better investor

December is a great time to reflect and refocus for the year ahead.

This is especially important if you’re feeling discouraged by the spate of recent share price falls like Primary Health Care Limited (ASX: PRY), or Collection House Limited (ASX: CLH) where my own stake is plummeting.

A quick way to grow as an investor is to studying the advice of those who have walked these paths before. So here are three quotes to help boost your resolve and steady yourself for the year ahead.

1. “The single greatest edge an investor can have is a long-term orientation” Seth Klarman

In a world ruled by automated trading robots and million dollar fund managers, legendary U.S. investor and billionaire Seth Klarman reminds us of the value of having a long-term focus.

Warren Buffett has a number of similar quotes, but the message is the same; hold firm through the ups and downs, reinvest your dividends to compound your returns over time, and don’t worry about trying to outsmart the market.

2. “Know what you own, and know why you own it” Peter Lynch

This simple quote exemplifies Peter Lynch’s simple, rational approach to investing. It’s a good place to start when reviewing your current portfolio.

Knowing what you own means understanding the company’s business and how it makes money. If you own QBE Insurance Group Ltd (ASX: QBE), for example, you should know that almost half the company’s “insurance profit” actually comes from investing policyholders’ funds.

You should also be able to explain why you own a company. My investment in Collection House Limited (ASX: CLH) may look shabby after recent falls, but it pays an attractive dividend and the company recently announced a valuable agreement with the Australian Taxation Office (ATO) which should help to sustain earnings.

If you can’t explain why you own a company, or the original reason for buying it has changed, it might be time to cut ties and start fresh.

3.   Diversify your investments” – John Templeton

There is a reason this quote is cliché; when volatility strikes you’ll be glad your risk is spread across different companies. To help with this consider investing in a low cost index fund or a diversified managed fund like Contango Microcap Ltd (ASX: CTN).

And as the ASX flirts with 5,000, now is the time to take action. Some experts are even predicting a market crash...

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Motley Fool contributor Regan Pearson owns shares of Collection House Limited and QBE Insurance Group Ltd.. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Collection House Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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