When Australia’s federal Treasurer Joe Hockey said recently that, with interest rates at new record lows, “now is the time to borrow and invest”, he joined a long line of senior public figures through history who have shared a view on investment strategy and market timing.
Many turn out to be right occasionally, but only a select few turn out to be mostly right, most of the time.
Surely, though, there must be some kind of reasoning behind why some people can start trading with nothing and end up with US$20 billion or so in the bank, and others start with nothing and end up with, well, nothing.
“Successful investing is anticipating the anticipation of others,” were the words of one of the 20th century’s most influential economists, John Maynard Keynes.
Inventor and businessman Thomas Edison said, “don’t call it a mistake, call it an education.”
Sticking with a consistent approach, Benjamin Graham, considered the father of value investing, once said: “Successful investing professionals are disciplined and consistent and they think a great deal about what they do and how they do it.”
According to stockmarket great Jesse Livermore, “in the stockmarket, time is not money. Time is time and money is money. Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune. Patience, patience.”
Famed American economist Paul Samuelson shared a similar approach. “Investing should be like watching paint dry or watching grass grow. If you want excitement, go to Las Vegas.”
Perhaps it’s a lonely world at the top. As Carl Icahn said, “you learn in this business: if you want a friend, get a dog.”
As one of the greatest stockmarket investors of all time, Warren Buffet, once said, “only when the tide goes out do you discover who’s been swimming naked.”
So if it’s not the party animals who are staying on top, it makes the idea that a vast amount of America’s new billionaires are coming from Silicon Valley, make more sense.
“Introverts listen better, they assess risks more carefully, they can be wiser managers,” says technology author Jeffrey Kluger. “It’s not for nothing that the Silicon Valley billionaires are so often retiring types.”
But with many investors talking about another bubble in technology investments, the words of Sir John Templeton are worth bearing in mind.
“The four most dangerous words in investing are: ‘this time it’s different’.”
So what is necessary to make it then? Marty Schwartz said: “A great trader is like a great athlete. You have to have natural skills, but you have to train yourself how to use them.”
Meanwhile, Alisher Usmanov puts a lot of his $18 billion fortune down to intuition. “First of all I trust my own instinct, experience that I gained over years, and feeling when the moment is right for buying shares. That is what one calls intuition.”
Paul Tudor Jones once said “The concept of paying one-hundred-and-something times earnings for any company for me is just anathema.”
Perhaps the best thoughts on the matter then are those of investor Peter Lynch, who said: “Go for a business that any idiot can run, because sooner or later, any idiot probably is going to run it.”