Feb 12

Some inspirations for investing in a New Year

Posted by Peter Marmara-Stewart at Monday, February 12, 2018

We often hear a lot of famous quotes referred to after historic events take place, and Mr. Warren Buffett is often referred as the world’s greatest investor.

This picture tells it all and shows just how well his surname speaks to his investment style.

Mr. Buffett is reported as spending time by himself reading financial reports for more than 6 hours every day, and has a reputation for ignoring market noise, using his patience to move money from the impatient to the patient effectively as his namesake suggests getting his meal by getting it himself from his own personal effort.

Mr. Buffett will tell you how to become rich, Close the doors, and be fearful when others are greedy, and be greedy when others are fearful, be prepared to invest in a falling price, and be prepared to get out in a market that is soaring.

Michael Glennon, the investment manager of the listed investment company GC1 that has had a track record of longterm investment out performance in small caps shared his thoughts for 2018 in a recent video available on the website. Michael has the belief Macro-economic growth is good and accommodative for equities, housing will not have the growth of previous years, disruptors are emerging particularly in Small caps, responsible Investment is moving towards mainstream and millennials are going to be a driver for growth and change.

Benjamin Franklin said an investment in knowledge pays the best interest. When you think of Warren Buffet reading for 6 hours per day every day to seek out knowledge to give him a point of advantage it says it all. The advice of Franklin is that when it comes to investing nothing will pay a higher yield than educating ourselves. When it comes to Buffet clearly study, and analysis are vital before making a buy or sell decision of an asset as complicated as a business in a field generally outside the buyer and sellers core competence. 

Phillip Fisher is a legend in US investment market history. He had 70-year career managing money, and was known for his belief in investing in well managed, high quality growth businesses over the long term. One of his most famous investments was Motorola, which he first bought in1955 and held that investment until he died in 2004. Fisher had a 15 rule policy he looked for in, but not dislike Michael Glennon’s philosophy the qualities of the board and management and the quality of the financial controls around accounting and margins dictated many of his decisions. His most famous quote was the backbone of much of my thinking about price and value. He claimed the stock market is filled with individuals who know the price of everything bit the value of nothing. He claimed research was far more than listening to popular opinion; in fact it was about knowing your own opinion. For the record Motorola increased in value by more than 30 times in the period, compared to the index return of 6.

Ben Graham, not the Geelong footballer is regarded as one the greatest investors of all time, and one of the teachers of Buffet. He argues we need to act consistently as an investor and avoid speculation. We cannot predict the future, so all our decisions need to base on real facts, and analysis rather than speculation. Arguably his most famous quote was not the one above but that price is what you pay, value is what you get.

Albert Einstein is not that well known for his investment advice, but one of the greatest quotes of all time in respect to investing is credited to the great inventor himself. His quote in respect to compound interest is a great lesson to all.

“Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn’t... pays it.”

Sir John Templeton

“The 4 most dangerous words in investing are: This time it’s different.”

“Bull markets are born on pessimism grown on scepticism, mature optimism and die on euphoria. The time of maximum pessimisn is the best time to buy, and the iime of maximum optimism it the best time to sell”