Jeff Bezos, founder of Amazon; Warren Buffett, CEO of Berkshire Hathaway; and Peter Lynch, of Magellan fame, each has something to say about investing and business.
Here are three (there are many) of my favourite investing quotes from these financial heavyweights.
"I'm a better investor because I'm a businessman and a better businessman because I am an investor." – Warren Buffett.
You might not think it, judging by all of the whiz-bang 'chartists' and 'technical analysts' floating around these days, but shares are just part ownership of a business. To value a business' shares and determine whether or not you are being offered a bargain requires you to think like the owner. How much cash does it generate? What does the balance sheet look like?
Does it have an advantage over its peers? You can only answer these questions if you can understand the business.
"There is no reason to boast about your accomplishments in business – people will figure it out." – Jeff Bezos
This is a great quote about ego, accomplishment and business, and it comes from a guy that earlier this month became the world's richest person for just a few moments.
Like any of Australia's and the world's greatest investors, most of them are hobbits who live in underground caves and have hairy feet. Just kidding, not all of them are hobbits.
But some (most?) of the best investors are unassuming and outside of the limelight. You will not on catch them on Sky Business or Bloomberg today, or in the AFR tomorrow.
Take American investor, Michael F. Price. You probably haven't heard of him. In the early 70's, his investment fund compounded at over 100% for four years. Yet, it wasn't until the 1980's that his investment fund began to gain appeal with investors. By then, the money invested with him was rising at a rate of 50% per year until his tiny fund grew to $15 billion.
There is no time in business or investing to stop and pump up your own tyres. Just get on with it.
"In this business, if you're good, you're right six times out of ten. You're never going to be right nine times out of ten." – Peter Lynch
This is the classic quote from Lynch, whose fund achieved a near 30% annual return for a long time. He's not a billionaire (he's worth 'only' $446 million) but his advice is timeless for investors.
Being right about investments six times out of 10 reinforces the idea that no matter how smart you are, or how much research you do, there is a chance you will get it wrong.
It is a humbling idea and will keep you comfort the next time one of your investments goes into a nosedive.
