Common Trading & Investing Adages

Trading and investing are not just about numbers and charts; they’re also about wisdom and experience. Over the years, seasoned investors and traders have coined a series of adages that capture the essence of the market’s behavior and the psychology of investing. These adages, though simple in form, contain profound insights that have withstood the test of time. They serve as guiding principles, warning signs, and nuggets of wisdom that can help investors navigate the complex and often unpredictable world of financial markets. Whether you’re a novice investor or an experienced trader, understanding and applying these timeless sayings can enrich your investing approach, sharpen your decision-making, and help you avoid common pitfalls.

Buy low, sell high.

This is the most fundamental trading adage, emphasizing the aim to buy securities at a low price and sell them at a higher price to make a profit.

 

The trend is your friend.

This suggests that traders can potentially profit by following the market’s direction (“the trend”).

 

Cut your losses short, let your profits run.

This advice tells traders to sell losing positions quickly, while giving winning positions more time to accrue further gains.

 

Don’t try to catch a falling knife.

A warning against buying a security during a rapid decline without waiting for signs of price recovery.

 

Past performance is not indicative of future results.

A reminder that just because an investment has performed well in the past does not guarantee it will perform well in the future.

 

Don’t put all your eggs in one basket.

This adage encourages portfolio diversification to mitigate risk.

 

Bulls make money, bears make money, pigs get slaughtered.

This saying advises against greed and the danger of holding a position for too long in the hopes of squeezing out maximum gains.

 

Be fearful when others are greedy and greedy when others are fearful. 

A Warren Buffett quote suggesting the best time to buy is when others are panic-selling out of fear, and the best time to sell is when others are buying out of greed.

 

Time in the market is more important than timing the market.

This phrase emphasizes the value of long-term investing over short-term trading.

 

There is no free lunch.

This adage suggests that higher returns always come with higher risk, i.e., nothing is truly free in investing.

 

Markets can remain irrational longer than you can remain solvent.

This cautions that markets can behave illogically for a long time and can outlast an investor’s ability to sustain losses.

 

It’s not a stock market, it’s a market of stocks.

This quote is a reminder that individual stocks may behave differently from the overall market, and there are always opportunities.

 

Cash is a position too.

Sometimes the best decision is to hold cash, especially when there’s a lot of uncertainty in the market.

 

Don’t fight the Fed.

When the U.S. Federal Reserve has set a course for monetary policy, it’s often unwise to make investments that conflict with that direction.

 

If you can’t sleep at night, you’re in over your head.

This reminds investors not to invest more than they can afford to lose or to invest in something they don’t understand.

 

Nobody rings a bell at the top (or bottom) of the market.

This emphasizes that it’s impossible to consistently time the exact top or bottom of the market.

 

Risk comes from not knowing what you’re doing.

Another quote from Warren Buffett, reminding investors that knowledge is key to managing risk.

 

Price is what you pay, value is what you get.

Yet another Buffett quote, this one underscores the difference between a company’s stock price and its intrinsic value.

 

The four most dangerous words in investing are: ‘this time it’s different.

This quote from Sir John Templeton warns against disregarding history or believing new trends can indefinitely defy the fundamentals of economy.

 

In the short run, the market is a voting machine, but in the long run, it is a weighing machine.

A quote from Benjamin Graham indicating that while sentiment may drive prices in the short term, fundamentals prevail in the long run.

 
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