Here is Part V of the Quotable Guide to Passive Investing. Part I is here. To accessfollow-on parts, click on links at the bottom of the each page.
The Intelligent Investor (Rev Ed)Benjamin Graham and Jason Zweig
“It is no difficult trick to bring a great deal of energy, study, and native ability into Wall Street and to end up with losses instead of profits.”
“Allocating at least 10% of your retirement assets to TIPS is intelligent.”
“The worse the future looks, the better it usually turns out to be.”
“The primary cause of failure is that investors pay too much attention to what the stock market is doing currently.”
“The key to rebalancing is having a predictable schedule”
“For most investors, intermediate bonds are the simplest choice, since they enable you to get out of the game of guessing what interest rates will do.”
“For most investors, bond funds beat individual bonds hands down.”
“If you had invested $1 in U.S. stocks in 1900 and spent all your dividends, your portfolio would have grown to $198 by 2000. But if you had reinvested all your dividends, your portfolio would have been worth $16,797.” (Stock indexes do not include dividends.)
“It is essential that (the intelligent investor) entrust himself only to firms of the highest reputation.”
If you find yourself trading more than twice a year–or spending more than an hour or two per month on your investments–then something has gone badly wrong.”
“If you started investing $100/month in September 1929, your money would have grown to $15,571 by August 1939. That’s the power of disciplined buying–even in the worst bear market of all time.”
“The knowledge of how little you can know about the future, coupled with the acceptance of your ignorance, is an investor’s most powerful weapon.”
“Alan Greenspan said on January 7, 1973: “It’s very rare that you can be as unqualifiedly bullish as you can now.” (1973 and 1974 turned out to be the worst years for the stock market since the Great Depression.)”
“A great company is not a great investment if you pay too much for the stock.”
The Intelligent PortfolioChristopher Jones
“Sadly, our educational system has been woefully behind the curve in preparing people for the heavy new financial responsibilities of a self-directed investment world.”
“Be careful of how your advisor gets paid. Conflicts of interest can yield advice that is not in your best interest.”
“There are many ways to measure risk other than looking at just the volatility of returns.”
“A study of investor behavior by the research firm DALBAR found that market timers in stock mutual funds lost -3.29% per year on average relative to investors who pursued a consistent strategy.”
Unlike a mutual fund, it is quite possible for a single stock to lose all its value by going bankrupt.”
“Never make the critical mistake of being too concentrated in your employer’s stock.”
“Fund expenses are like termites. They can quietly eat away at the returns of your investment without you even realizing there is a problem.”
“From the analysis of 22,472 mutual funds–only about one quarter of mutual funds were able to demonstrate performance that exceeded what you could achieve with a low-cost index fund.”
“Evaluate diversification at the household level, not at the individual account level.”
“If you own a home already, you probably have enough real estate in your household portfolio.”
Asset allocation explains more than 90% of the variation in returns for most mutual funds.”
“You are virtually guaranteed to outperform more than two-thirds of the actively managed funds with low-cost index funds.”
“It is very expensive to guarantee that you will have a certain amount of money in the future, but if you can tolerate some uncertainty, you can likely fund your future goal with significantly less savings.”
“The only way to be more confident of reaching a financial goal is to invest more conservatively and save more.”
“All other things held equal, it will cost a woman more to fund her retirement than a man of the same age due to her longer expected lifespan.”
“As an investor, you want to be cautious about investing in a fund just prior to it making a distribution to shareholders.”
The Individual Guide to the Top Mutual FundsAmerican Association of Individual Investors
“The most important factor when diversifying a portfolio is selecting investments whose returns are not highly correlated.”
“Bond mutual funds are attractive to investors because they provide diversification and liquidity, which is not as readily attainable in direct bond investments.”
“The higher the turnover, the greater the brokerage costs incurred by the fund.”
“The market risk measure used for common stocks is beta; for bond funds, average maturity is used.”
“Dollar-cost averaging works especially well with more volatile portfolios.”
“Top Performance lists are dangerous.”
“The classic response of funds that focus on small stocks is to migrate investments to mid-cap and large stocks when they start to achieve a large asset base.”
“Don’t forget that almost all fund performance data is reported without adjusting for front-end or back-end loads.”
“One reason beyond low expense ratios that make index funds are tough to beat is that they are always 100% invested in the market.”
To be continued …. here.
Blogs & Comment
Quotable guide to passive investing (V)
By Larry MacDonald
Here is Part V of the Quotable Guide to Passive Investing. Part I is here. To accessfollow-on parts, click on links at the bottom of the each page.
The Intelligent Investor (Rev Ed)Benjamin Graham and Jason Zweig
“It is no difficult trick to bring a great deal of energy, study, and native ability into Wall Street and to end up with losses instead of profits.”
“Allocating at least 10% of your retirement assets to TIPS is intelligent.”
“The worse the future looks, the better it usually turns out to be.”
“The primary cause of failure is that investors pay too much attention to what the stock market is doing currently.”
“The key to rebalancing is having a predictable schedule”
“For most investors, intermediate bonds are the simplest choice, since they enable you to get out of the game of guessing what interest rates will do.”
“For most investors, bond funds beat individual bonds hands down.”
“If you had invested $1 in U.S. stocks in 1900 and spent all your dividends, your portfolio would have grown to $198 by 2000. But if you had reinvested all your dividends, your portfolio would have been worth $16,797.” (Stock indexes do not include dividends.)
“It is essential that (the intelligent investor) entrust himself only to firms of the highest reputation.”
If you find yourself trading more than twice a year–or spending more than an hour or two per month on your investments–then something has gone badly wrong.”
“If you started investing $100/month in September 1929, your money would have grown to $15,571 by August 1939. That’s the power of disciplined buying–even in the worst bear market of all time.”
“The knowledge of how little you can know about the future, coupled with the acceptance of your ignorance, is an investor’s most powerful weapon.”
“Alan Greenspan said on January 7, 1973: “It’s very rare that you can be as unqualifiedly bullish as you can now.” (1973 and 1974 turned out to be the worst years for the stock market since the Great Depression.)”
“A great company is not a great investment if you pay too much for the stock.”
The Intelligent PortfolioChristopher Jones
“Sadly, our educational system has been woefully behind the curve in preparing people for the heavy new financial responsibilities of a self-directed investment world.”
“Be careful of how your advisor gets paid. Conflicts of interest can yield advice that is not in your best interest.”
“There are many ways to measure risk other than looking at just the volatility of returns.”
“A study of investor behavior by the research firm DALBAR found that market timers in stock mutual funds lost -3.29% per year on average relative to investors who pursued a consistent strategy.”
Unlike a mutual fund, it is quite possible for a single stock to lose all its value by going bankrupt.”
“Never make the critical mistake of being too concentrated in your employer’s stock.”
“Fund expenses are like termites. They can quietly eat away at the returns of your investment without you even realizing there is a problem.”
“From the analysis of 22,472 mutual funds–only about one quarter of mutual funds were able to demonstrate performance that exceeded what you could achieve with a low-cost index fund.”
“Evaluate diversification at the household level, not at the individual account level.”
“If you own a home already, you probably have enough real estate in your household portfolio.”
Asset allocation explains more than 90% of the variation in returns for most mutual funds.”
“You are virtually guaranteed to outperform more than two-thirds of the actively managed funds with low-cost index funds.”
“It is very expensive to guarantee that you will have a certain amount of money in the future, but if you can tolerate some uncertainty, you can likely fund your future goal with significantly less savings.”
“The only way to be more confident of reaching a financial goal is to invest more conservatively and save more.”
“All other things held equal, it will cost a woman more to fund her retirement than a man of the same age due to her longer expected lifespan.”
“As an investor, you want to be cautious about investing in a fund just prior to it making a distribution to shareholders.”
The Individual Guide to the Top Mutual FundsAmerican Association of Individual Investors
“The most important factor when diversifying a portfolio is selecting investments whose returns are not highly correlated.”
“Bond mutual funds are attractive to investors because they provide diversification and liquidity, which is not as readily attainable in direct bond investments.”
“The higher the turnover, the greater the brokerage costs incurred by the fund.”
“The market risk measure used for common stocks is beta; for bond funds, average maturity is used.”
“Dollar-cost averaging works especially well with more volatile portfolios.”
“Top Performance lists are dangerous.”
“The classic response of funds that focus on small stocks is to migrate investments to mid-cap and large stocks when they start to achieve a large asset base.”
“Don’t forget that almost all fund performance data is reported without adjusting for front-end or back-end loads.”
“One reason beyond low expense ratios that make index funds are tough to beat is that they are always 100% invested in the market.”
To be continued …. here.