You probably didn’t need me to tell you that – it’s all over the news. Even though logic dictates that what goes up must come down, the drops get our attention. And, despite the fact that it’s these very movements, these risks that create the market and the rewards we seeks as investors, we worry about them. So, how about a few “Buffettisms” to give us perspective?
The following excerpts are Warren Buffett’s advice for typical investors taken from letters to Berkshire Hathaway shareholders:
- Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard.
- If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.
- When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”
- Because there is so much chatter about markets, the economy, interest rates, price behavior of stocks, etc., some investors believe it is important to listen to pundits – and, worse yet, important to consider acting upon their comments.
- In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts). In the 20th Century, the Dow Jones Industrial index advanced from 66 to 11,497…[Note: The Dow closed 2018 at 23,327]
- The goal of the non-professional should not be to pick winners…but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal. That’s the ‘what’ of investing for the non-professional.
- The ‘when’ [of investing] is also important. The main danger is that the timid or beginning investor will enter the market at a time of extreme exuberance and then become disillusioned when paper losses occur. …The antidote to that kind of mistiming is for an investor to accumulate shares over a long period and never to sell when the news is bad and stocks are well off their highs.
- Following those rules, the ‘know-nothing’ investor who both diversifies and keeps his costs minimal is virtually certain to get satisfactory results.
And, if this common sense advice from one of the most successful investors in history isn’t enough, Buffett points to the classic Rudyard Kipling poem, “If”:
If you can keep your head when all about you are losing theirs …
If you can wait and not be tired by waiting …
If you can think – and not make thoughts your aim …
If you can trust yourself when all men doubt you …
Yours is the Earth and everything that’s in it.