Words of wisdom that can help your 401(k)

Every day I tweet a memorable investment quote from a market guru. Here are my all-time favorite concise words of wisdom to help you guide your retirement funds.

1. “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” – Sir John Templeton

Frequent readers may recall this pearl from my previous columns. It’s the best single depiction of evolving bull markets and sentiment. Templeton was a legendary, pioneering global investor – a great, gentle human and a font of wisdom. He wasn’t alone. Stock market history offers abundant visionaries who could see the way ahead for you with words worth heeding. Like:

2. “Investment decisions should focus first and foremost on markets or asset classes. Over time, that’s going to explain roughly 90% of investment returns.” – Gary Brinson

Brinson, a long-retired top-tier money management guru, pioneered the theory that asset allocation – how you divide your assets between stocks, bonds and other securities –and subsets thereof, matters more than which single stocks you own. Get those big decisions mostly right, diversify and forget needling in haystacks.

3. “Ninety percent of what passes for brilliance or incompetence in investing is the ebb and flow of investment style – growth, value, small, foreign.” – Jeremy Grantham

Grantham has built a long, successful career in institutional asset management based on getting the big picture right. As I detailed on my July 21 column, most active managers’ outperformance comes down to capitalizing on index quirks. When their preferred style wins, they win.

4. “The market is always making mountains out of molehills and exaggerating ordinary vicissitudes into major setbacks.” – Ben Graham

Take it from the legendary, “father of security analysis”: Don’t get hung up on wiggly wobbles. That most people around you will be too short-term focused makes it no less wrong.

5. “Read Ben Graham and Phil Fisher, read annual reports, but don’t do equations with Greek letters in them.” –Warren Buffett

Indeed. Don’t overcomplicate things. Simplicity wins, almost always.

6. “Your ultimate success or failure depends on your ability to ignore the worries of the world long enough to allow your investments to succeed. It isn’t the head but the stomach that determines the fate of the stock-picker.” –Peter Lynch

Lynch’s legendary stock-picking, and Buffet’s, too, had consistently amazing symmetry with Brinson’s and Grantham’s quotes.  

7. “When markets are down, I’m a much happier person. When we hear about recessions, disasters, revolutions, we know there will be an opportunity.” – Mark Mobius

Mobius, arguably the original Emerging Markets pioneer, working under John Templeton for 30 years, epitomized buying, “when there’s blood in the streets – even if it’s your own.” (That’s from Baron Nathan Rothschild’s famous 18th-century quote.)

8. “I know you believe you understand what you think I said, but I’m not sure you realize that what you heard is not what I meant.” – Alan Greenspan

Investors hung on this former Federal Reserve head’s every word. This quote evidences why you shouldn’t. Central bank fixation is a myopic error violating what virtually all our investment greats believed. Think big picture. Think long term. Recall this whenever folks get excited about the utterances of current Fed head, Jay Powell.

9. “Any man who is a bear on the future of this country will go broke.” – J.P. Morgan

As long as free enterprise and relatively free markets exist, bull markets will always follow bear markets. Emergent opportunities will always arise. Bet against that and you lose.

Today’s final gem from the legend I opened with:

10. “The four most dangerous words in the world of investing are, This time it’s different.” – Sir John Templeton