Timeless Investing Wisdom: Key Quotes Every Investor Should Know
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Ben Felix distils decades of market experience into a concise set of quotations that every Australian investor—whether accumulating super or drawing a pension—can apply today. Below are the essential take-aways, grouped by theme and paired with immediate actions.
1. Start With Saving, Not Returns
- Quote: “Pay yourself first.”
- Action: Automate transfers from salary to super or a low-cost index fund the day after each pay cycle. Even 5–10 % of income compounds meaningfully over 30 years.
- Retiree angle: If you are already drawing down, ensure your cash buffer (12–24 months of living expenses) is replenished before chasing yield.
2. Psychology Beats Analysis
- Quote: “The investor’s chief problem … is likely to be himself.” — Benjamin Graham
- Quote: “The four most expensive words are ‘this time is different.’” — Sir John Templeton
- Action: Write an Investment Policy Statement (IPS) now—before the next 20 % drawdown. Include your equity/bond mix and a rule that you will rebalance, not retreat, when headlines scream “unprecedented”.
3. Conviction Over Perfection
- Quote: “The most important thing about an investment philosophy is that you have one that you can stick with.” — David Booth
- Action: If a 100 % global index portfolio keeps you awake, blend in 20 % short-duration bonds or a dividend-tilted ETF. Consistency trumps theoretical optimality.
4. Market Timing Is Costly
- Quote: “Far more money has been lost preparing for corrections than in corrections themselves.” — Peter Lynch
- Action: Dollar-cost average any lump sum within six months. Historical data on the ASX 200 show that delaying entry to “wait for a dip” underperforms roughly two-thirds of the time.
5. Use the Market Portfolio as a Benchmark
- Quote: “You have to talk yourself out of the market portfolio.” — Eugene Fama
- Action: Begin with a global cap-weighted mix (≈ 45 % equities, 25 % bonds, remainder real assets). Then justify each deviation—e.g., overweight ASX franked shares for tax efficiency, but cap any single-country tilt at 40 % of equities.
6. Redefine Risk
- Quote: “Risk is not having the money you need when you need it.” — Charles Ellis
- Action: Map upcoming cash needs (home renovations, school fees, aged-care deposits) and ring-fence that amount in a high-yield cash ETF or term deposits. Invest the surplus.
7. Fees Are the One Certainty
- Quote: “We get precisely what we don’t pay for.” — John Bogle
- Action: Check your super statement. If total fees exceed 0.50 % p.a. for a passive global option, switch. On a $500 k balance, saving 0.75 % in fees adds roughly $94 k over 20 years (5 % real return).
8. Diversification Is the Free Lunch
- Quote: “Diversification is the only free lunch in investing.” — Harry Markowitz
- Action: Hold at least 3 000 stocks via a global ETF (e.g., VGS or IWLD) plus 5–7 years of Australian government bonds. Add 5–10 % gold or listed property for inflation protection.
9. Humility Over Hubris
- Quote: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” — Mark Twain
- Action: Before any new position, ask “What is my exit if I’m wrong?” and size the trade so a 50 % fall does not derail your plan.
10. Beware the Lions
- Quote: “When having dinner with lions, make sure you’re at the table, not on the menu.” — John Cochrane
- Action: Reject structured products, capital-protected notes, and any fund charging performance fees above 1 %. If you cannot explain the product to a friend in two minutes, walk away.
These ten principles, drawn from the greatest minds in finance, form a checklist that fits neatly on one page. Print it, stick it to the fridge, and revisit it before every major portfolio decision.