Investing quotes to live by

The following is a contribution from an avid My Own Advisor reader – Cannew.  You can read other articles from Cannew including this one, about an average retirement plan to wealth here.  Cannew followed the investing path in that article to help him earn close to $100,000 per year in retirement income. Here are some of his favourite investing quotes his lives by.

“The novice investor looking for an income stock often starts and ends the search by seeking out the highest yielding stock. Wrong!  Heed the hoary advice: If it looks too good to be true, it probably is.” – Joseph Tigue, dividend-investing author

“If history repeats itself yet again, the current bear market trend is a signal to investors that they may be in for a fairly long stretch of disappointing returns, especially from price appreciation.” – Gary E. Stroik, Vice-President, Chief Investment Officer at WBI Investments Inc.

“If you are a saver and a buyer of shares–as most investors are and will continue to be for many years–your real long-term interest is, curiously, to have stock prices go down quite a lot and stay there so you can accumulate more shares at lower prices and therefore receive more dividends with the savings you invest.” – Charles Ellis, indexing guru; author

“To grow your wealth to a secure and comfortable retirement, you should invest in individual stocks in companies that dominate their industries and have a long history of high dividend growth.” – Roxann Klugman, dividend-investing author and advocate

“What makes rising income that comes from a growing dividend so attractive in a yield stock?  You not only receive greater income as the years go by, you also get a rising stock price – because the instrument producing the income (the stock) is worth more as the income it produces increases.” – Lowell Miller, dividend-investing author and advocate

“Historical research shows that investors can achieve higher long-term returns without taking on increased risk by focusing on the factors relating to the size and valuation of companies. Dividend yield has been one such factor and the price-to-earnings ratio has been another. Over time, portfolios of stocks with higher dividend yields and lower P-E ratios have outperformed the market more than would be predicted by the efficient markets hypothesis or the capital asset pricing model.  Nevertheless, investors should be aware that there is no strategy that will outperform the market all the time. Small stocks exhibit periodic surges that have enabled their long-term performance to beat that of large stocks, but most of the time their performance has fallen behind large stocks. Furthermore, value stocks have tended to do very well in bear markets, but often underperform growth stocks in the latter stages of bull markets. This means that investors must exercise patience if they decide to pursue these return-enhancing strategies.” – Jeremy Siegel, Professor of Finance, Wharton School; author

“The index, as Katsenelson says, might be the same after a few years, but as a dividend growth investor, my portfolio will have produced a growing income over the period.  In all probability it will not be back where it started. Why? Dividend growth begets capital growth…eventually.” –  Tom Connolly, notable Canadian dividend investor; author of The Connolly Report and owner of dividendgrowth.ca

“If you want the recipe for getting rich in the stock market, here it is: Find stocks with above – average appreciation potential and safe and growing dividends, and buy them at attractive prices.” – Charles B. Carlson, Chief Executive Officer of Horizon Investment Services; author and editor of DRIPInvestor newsletter

“The selection of common stocks for the portfolio of the defensive investor should be a relatively simple matter.   Here we would suggest four rules to be followed:

1. There should be adequate thought not excessive diversification. This might mean a minimum of ten different issues and a maximum of about thirty.
2. Each company should have a long record of continuous dividend payments…
3. Each company selected should be large, prominent, and conservatively financed…
4. The investor should impose some limit on the price he will pay for an issue in relation to its average earnings over, say the past seven years.” – Benjamin Graham, considered the father of value investing; most well-known disciple of his teaching: Warren Buffett

“You may have heard that the basic idea of the stock market is to buy low and sell high.  Pardon me for saying so, but that sounds like a lot of work.  An investment represents money that is supposed to work for me, right?  Having earned my money once already, why should I have to work for it all over again?” – Josh Peters, equity strategist and editor of Morningstar DividendInvestor

“Looking at an index, it is clear that some industries are very mature and will never bring more than below-average returns, while others will do better.  Historically, raw material or commodity prices have not kept up with inflation; whereas other sectors, such as health care or finance, have exceeded it.  Apart from that, an index inevitably includes a few companies that are badly managed, as well as some smaller doubtful enterprises that have a perennially low rate of return – or are outright money losers.  In this manner you might eliminate a minimum of 60% of an index.” – Stephen A. Jarislowsky, billionaire business magnate, investor, author, philanthropist; CEO of Jarislowsky Fraser Limited

Any particular investing quotes you live by?