Some stock market sayings impart true wisdom about investing. Others, like “buy low, and sell high,” don’t provide much insight at all.
We’ve picked four of our favorite Wall Street sayings that may be a bit less popular but have a strong underlying message that’s important for any investor.
“Remember (investing) isn’t about returns – it’s about getting to where you want to be when you want to get there.” wrote Mick Owens in his popular book Diamond of Life: The Five P’s of Success and Significance.
1. “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”
Having a financial strategy that reflects your risk tolerance and time horizon is the best way to pursue your investing goals. Speculating often leads to poor decision-making.
One landmark study showed that the average equity investor posted an average annualized return of 6.81% for the 30-year period ending on December 31, 2022. An impressive number, but well below the 9.65% return of the Standard & Poor’s 500 Index for the same period.¹
Put another way, the investor’s original investment of $100,000 increased to almost $722,000. But the S&P 500 account was worth more than double, at $1.59 million.¹
“Therefore, as God’s chosen people, holy and dearly loved, clothe yourself with compassion, kindness, humility, gentleness, and patience.” Colossians 3:12
The point is that individuals can be their own worst enemy when it comes to investing.
The study concluded, “Often succumbing to short-term strategies such as market timing or performance chasing, many investors lack knowledge and/or ability to exercise the necessary discipline to capture the benefits markets can provide over longer time horizons. In short, they too frequently react to market maturations and lower their longer-term returns.”
2. “The four most dangerous words in investing are, ‘it’s different this time.’ “
You can talk yourself into just about anything. Psychologists refer to it as “self-persuasion.” With investing, believing that “it’s different this time” can lead to making questionable decisions that have short-term and long-term consequences.²
Another of our favorite studies found that people who work with a financial professional tend to be happier than people who don’t. We believe that’s because they are more comfortable having a personal financial strategy and a better understanding of what they are looking to accomplish with their investments.³
3. “Be fearful when others are greedy. Be greedy when others are fearful.”
The Oracle of Omaha has many pearls of wisdom about investing, but this is one of our favorites. To us, it underscores the importance of following your investment strategy and not getting too caught up in the stock market’s gyrations.
4. “An investment in knowledge pays the best interest.”
We send out a monthly newsletter to educate and entertain our clients and prospects because we believe in what Benjamin Franklin is saying. An investment in knowledge does pay interest because knowledgeable investors tend to be more patient and more focused than those who haven’t taken the time to understand the markets.
If you have a favorite Wall Street saying, be sure to pass it along. We’d welcome the chance to see what wisdom or insight it provides.
- IFA.com, April 3rd 2023
Dalbar’s Quantitative Analysis of Investor Behavior Report, 2023: April 3, 2023. The Standard & Poor’s 500 stock index is not indicative of the past performance of particular investments. Individuals cannot invest directly in an index. The returns and principal values of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.
- PsychologyToday.com, June 7th 2022
- Herbers & Company, December 2021