“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” – Sir John Templeton
This is a great quote! Even Warren Buffett says that you have to swim against the current most times to make money in the market. Our goal in life and investing is to buy low and sell high. That’s why I love market crashes like the one we just saw. There were some great companies that were trading at a discount to their intrinsic value, what they are truly worth. The stock market follows the herd mentality. Even many mutual fund managers have been accused of following the crowd too. When people are down on the market as a whole, it is usually the best time to buy stocks. And, like Templeton says in the quote above, the height of the frenzy and optimism is your selling cue.
“If we become increasingly humble about how little we know, we may be more eager to search.” – Sir John Templeton
This quote ties in great with what we are all trying to do here by reading blogs and learning about investing and personal finance. We do not know it all of course, but half of the fun is the search for more knowledge, ideas, tips, tricks, etc.
The four most dangerous words in investing are ‘This time it’s different.'” – Sir John Templeton
Wow! How many times have we heard that saying during this recession? How many times have we heard it about the recovery? How many naysayers have said that we won’t see the normal recovery after the bear market? How many “experts” have said that we will never see the historical stock market return of 8% ever again? This time it will be different. This time we will see the drop coming. This time we will see the rise in stock prices coming. How many people were out of the market totally in March when the bottom hit? How many of those investors have missed the over 50% rise in the S&P 500 since then because they were scared to be invested? You can’t blame them, but that’s not how you make money in the stock market. You have to be invested to make money. Buy low, sell high…not the other way around. This time it’s different. We won’t our emotions get in the way! Yeah, right.
Who Is Sir John Templeton? The Templeton Growth Fund, launched in 1954, was a pioneer in the global nature of it’s investments. The fund achieved annual returns of 15% a year until Templeton retired in 1992. That same year he sold his firm to the Franklin Group. Templeton preferred to use fundamental analysis rather than technical analysis in his investment decisions. He is famous for making investment decisions counter to what the herd is doing. Templeton, an active philanthropist, set up the Templeton Prize in 1972 and the John Templeton Foundation in 1987, the same year he was knighted
Do you have your own favorite investing quote or a favorite investor that you would like to see in this series? I would love to hear it. Please drop me a line in the comment section below or e-mail me.
Note – This is a series of posts on Wednesdays with quotes on investing from famous investors and people in finance. Check out the entire series of Famous Investors’ Quotes.