Wall street is only motivated by two emotions: fear and greed.
I know this from my time investing in the stock market. Before I knew this powerful lesson, I was controlled by the emotions…mostly fear. I checked my stocks every day and endlessly racked my brain whether to sell or hold with the fear of a major drop.
Fear and greed led to sleepless nights to where I got out of the market altogether. That’s when I looked for more advice and understanding on how the market worked.
The greatest investors in the market, Peter Lynch, Warren Buffet, and his mentor, Benjamin Graham, give priceless lessons on how to do well against these emotions.
These lessons are compiled by author Bob Thomas in his classic book, The Wit And Wisdom Of Wall Street. So instead of going through thousands of documents and videos, this small book as all the advice in one place. Check out the book for more.
20 Priceless Lessons From The Greatest Mind Of Wall Street
1. “One of the best rules anyone can learn about investing is to do nothing, absolutely nothing, unless there is something to do. Most people always have to be playing – they always have to be doing something.” – Jim Rogers
2. “Be greedy when others are fearful and fearful when others are greedy.” – Warren Buffet
3. “If you’re compulsively checking up on the prices of your investments, you’re not only hurting your financial returns, you’re unnecessarily taking precious time away from the rest of your life.” – Jason Zweig
A watched stock never boils – Unknown
4. “It’s wise to remember that too much success in the stock market is in itself an excellent warning.” – Unknown
5. “What actually registers in the stock market: fluctuations are not the events themselves – but the human reactions to those events.” – Bernard Baruch
6. “Get inside information from the President and you’ll probably lose half your of your money – get it from the Chairman of the Board and you’ll lose all of it.” – Jim Rogers
7. “When in doubt – sell. When in doubt – stay out. It’s easier to stay out than to get out.” – Unknown
8. “The worst mistake investors make is taking their profits too soon and holding their loser too long.” – Michael Price
9. “Look at the stock as a business, instead of a piece of paper that moves up and down.” – William Ruane
If the business does well, the stock eventually follows
– Warren Buffet
10. “I don’t know what the 7 wonders of the world are, but I do know the 8th – compound interest.” – Baron Rothschild
11. “The intelligent investor is likely to need considerable willpower to keep from following the crowd.” – Benjamin Graham
You can’t control the market but you can control your reaction to it
12. “Sell for a reason, not just because the stock did well for 1 year – never jump off a moving train.” – Peter Lynch
13. “Price is what you pay – value is what you get.” – Unknown
14. “A small lost, when realized, becomes an opportunity for profit elsewhere. It gives you the chance to turn a liability into an asset, instead of just sitting there praying that your old stock will come back.” – Martin Zweig
15. “Even though you are familiar with a stock, you should be as willing to reject it as to accept it.” – Uknown
Don’t be loyal to your stocks – save that for your football team
16. “The time to buy securities is when the media is so full of doom and gloom that your trembling hand can barely hold the telephone to call your broker with a buy order.” – James Michaels
17. “The faster a stock has run up in value – the faster it is likely to run down” – Robert Menschel
18. “I guarantee that the stock market will be a lot higher in 15 years, and even higher in 25 – but I don’t know where it will be Monday.” – Peter Lynch
19. “Never, ever, ever, under any circumstances, add to a losing position – not ever, not never! Adding to a losing position is trader’s carcinogen; it is trading’s driving while intoxicated. It will lead to ruin. Count on it!” – Dennis Gartman
Historically, stocks only increase 11% a year on average – Uknown
20. “A prospectus is not designed to help investors, it is designed to disclose legal requirements.” – Michael Lipper
There you have it. These lessons have helped me understand the stock market better and I hope that they help you as well.
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