Four quotes that inspire us

10 October 2019

3 minute read

There are numerous well-known quotes which relate to investing – and some which have a less obvious link but can also provide some valuable lessons. Here, our experts reveal the quotes which have inspired them.

Who's it for? All investors

The value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek professional independent advice.

What you’ll learn:

  • Why investors need to be resilient.
  • How over-diversifying can make it hard to keep on top of your investments.
  • Why you should never invest in anything you don’t understand.

Lots of us remember quotes that resonate with us, perhaps because they motivate us or remind us to try to act in a certain way.

We asked our investment experts to share theirs.

William Hobbs – Chief Investment Officer

A few men talked of freedom, while England talked of Ale

GK Chesterton, English writer and philosopher.

This quote provides a healthy reminder that there is more to life than financial markets and economics for our customers. Our team is necessarily obsessed by the workings of the global economy and its interaction with world markets. We need to find ways to take advantage of all the opportunities out there, so we can get the best possible returns for customers.

It’s somewhat tragic to say it, but my team tends to be populated with people who find this work pretty gripping. That may not make us the best people to share the aforementioned pint of Ale with, but this passion for our subject hopefully will continue to make us very effective at what we do on behalf of customers.

The problem, and the relevance of the quote, comes more with a second strand to our job, which is that of communicating with customers about financial markets and the economy – the things that we find fascinating can leave others understandably a little cold! It‘s a constant reminder to us that we need to find ways to get people interested in the business of investing. The jargon used by much of the industry for many years goes a long way to explaining why much of the population continues to miss out on the opportunities investing has tended to provide.

Dr Peter Brooks - Head of Behavioural Finance

The market can remain irrational longer than you can remain solvent

Often attributed to British economist John Maynard Keynes, although there is evidence to suggest it may be a quote from American financial analyst A. Gary Shilling.

This quote reminds me of all the difficulties which come from attempting to time market movements. You might have done your research; come up with an incredible plan; chosen your investment; and committed your money. Only, nobody else sees the opportunity you did.

Even though you are convinced the rest of the world is missing a trick your investments continue to fall. The reality is that the market can behave in a way which makes it difficult to stay invested. Emotional resilience is an important feature of successful investors.

Mike Haslam – Head of Funds Distribution

Don’t diversify

Richard Buxton, UK Equity Fund Manager at Merian Global Investors

Richard Buxton has over 30 years’ investment experience, so he’s been through some of the most difficult market environments of recent times, and has enjoyed the sunny days as well. As a result, he’s somebody who is worth listening to, when sharing stories of his success.

The one phrase of his that sticks with me is "don’t diversify". Now that sounds contrary to everything you learn about investing, but it’s more about not over-diversifying. Put simply, no fund manager will be bursting with good ideas, so they shouldn’t just make investments because they look ‘okay’. Instead they should make investments based on their highest conviction ideas.

The other line I often quote from Richard is, "Put all your eggs in one basket and watch that basket very closely." What that means in practice is that he runs a fund of about 30-35 shares. This means he can direct all his time and resources to watching those companies very closely. Many successful equity fund managers take this kind of approach, by having a small number of holdings in their fund.

For an investor such as myself, the lesson I take from this quote is don’t go out and buy every single fund in the market. Instead, focus your efforts on finding a handful of good funds, and keep checking on how they’re performing on a regular basis. Or get help from a professional, such as a financial adviser or wealth manager, who can do that for you.

Clare Francis, Head of Learning and Discovery

Risk comes from not knowing what you are doing

Warren Buffett, American business magnate.

Risk is a word that is constantly bandied around in the world of investing and it can be very off-putting, especially for first-time investors. But it’s really important to understand exactly what risk means, and that’s why I like this quote.

For me, risk is about both uncertainty and not knowing what you are doing. When you invest, the hope is that over the long term you’ll achieve higher returns than you would if you kept your money in cash savings. But this isn’t guaranteed and you may not even get back what you put in.

That said, there are things you can do to reduce the chance of this happening. For example, the longer your money is invested, the chance of you losing money lessens because even if the stock market falls, you’re giving yourself time for it to recover. And spreading your money around between a number of different investments can also help reduce risk as you’re not just backing one horse.

When it comes to investing, you can’t totally eradicate risk, but it doesn’t mean it’s going to be a scary experience. Take a bit of time to understand what you’re doing and what you’re investing in. People spend loads of time researching where to go on holiday or what car to buy but when it comes to finance we often can’t be bothered. However, the benefits of doing so can be significant so challenge yourself to get to grips with investing if you’re not already confident about it.

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