The Motley Fool Investor by Morgan Housel

35 Quotes That Changed How I Think About Investing

It looks like the market will end the year up more than 30 percent. This will make 2013 the seventh-best year for stocks in the last half-century.

If you're an investor, congratulations. The pundits have spent the last five years predicting doom and gloom. In the meantime, they've missed one of the largest stock market rallies in history. Those who try to avoid market losses by sitting on the sidelines consistently end up missing even larger gains. That's why patient, long-term investors win out in the end.

I have no idea what 2014 will bring. But even after this year's rally, I don't think all the opportunity is behind us. I'm as confident as ever that buying good businesses held for the long haul is the surest way to build wealth.

I'm a fan of short, pithy wisdom. You can often gain more insight in a single sentence than you can in a whole book. So here are 35 quotes from famous investors and thinkers that changed how I think about investing. Not all of these were originally intended to describe investing, but they all apply to common mistakes and challenges investors face.

1. "Timing the market is a fool's game, whereas time in the market is your greatest natural advantage." -- Nick Murray

2. "In expert tennis, 80 percent of the points are won, while in amateur tennis, 80 percent are lost. The same is true for wrestling, chess and investing: Beginners should focus on avoiding mistakes, experts on making great moves." -- Erik Falkenstein

3. "Risk is what's left over when you think you've thought of everything." -- Carl Richards

4. "If you look carefully, almost all Old Money secrets can be traced to a single source: a longer-term outlook." -- Bill Bonner

5. "It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent." -- Charlie Munger

6. "What looks like tomorrow's problem is rarely the real problem when tomorrow rolls around." -- Dan Gardner

7. "The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don't. It's just that simple." -- Charlie Munger

8. "No one can foresee the consequences of trivia and accident, and for that reason alone, the future will forever be filled with surprises." -- Dan Gardner

9. "Pundits forecast not because they know, but because they are asked." -- John Kenneth Galbraith

10. "A dollar picked up in the road is more satisfaction to us than the 99 which we had to work for, and the money won in the stock market snuggles into our hearts in the same way." -- Mark Twain

11."Men resist randomness, markets resist prophecy." -- Maggie Mahar

12. "If you have competence, you know the edge. It wouldn't be a competence if you didn't know where the boundaries lie. Asking whether you've passed the boundary is a question that almost answers itself." -- Charlie Munger

13. "Cultivating a garden takes lots of hard work, but at some point you have to let the plants grow. If you have a plan, let it work." -- Carl Richards

14. "Read 500 pages (of books, magazines, reports, etc.) every day. That's how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it." -- Warren Buffett

15. "To better avoid errors, you should talk to people who disagree with you and you should talk to people who are not in the same emotional situation you are." -- Daniel Kahneman (Try this before making your next investment decision.)

16. "People do not get what they want or what they expect from the markets; they get what they deserve." -- Bill Bonner.

17. "Spend less than you make. Always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer!" -- Charlie Munger

18. "All men's miseries derive from not being able to sit in a quiet room alone." -- Blaise Pascal (99 percent of long-term investing is doing nothing.)

19. "Based on my own personal experience, rarely do more than three or four variables really count. Everything else is noise." -- Marty Whitman

20. "What information consumes is rather obvious: It consumes the attention of the recipients. Hence a wealth of information creates a poverty of attention." -- Herbert Simon

21. "I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful." -- Warren Buffett

22. "In investing, what is comfortable is rarely profitable." -- Rob Arnott

23. "A jug fills drop by drop." -- Buddha (The importance of saving when young.)

24. "The stock market is a giant distraction to the business of investing." -- Jack Bogle (We're investing in companies, not stocks!)

25. "People focus on role models; it is more effective to find antimodels -- people you don't want to resemble when you grow up." -- Nassim Taleb (In addition to having an investing hero, study an investor you don't have to emulate.)

26. "Being slow and steady means that you're willing to exchange the opportunity of making a killing for the assurance of never getting killed." -- Carl Richards

27. "A true bubble is when something is overvalued and intensely believed." -- Peter Thiel

28. "When a possibility is unfamiliar to us, we do not even think about it." -- Nate Silver

29. "Using volatility as a measure of risk is nuts. Risk to us is 1) the risk of permanent loss of capital, or 2) the risk of inadequate return." -- Charlie Munger

30. "To achieve long-term success over many financial market and economic cycles, observing a few rules is not enough. Too many things change too quickly in the investment world for that approach to succeed. It is necessary instead to understand the rationale behind the rules in order to appreciate why they work when they do and don't when they don't." -- Seth Klarman

31. "You never know what the American public is going to do, but you do know they will do it all at once." -- Bill Seidman

32. "A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguishable from the truth." -- Daniel Kahneman

33. "You have never lost money in stocks over any 20-year period, but you have wiped out half your portfolio in bonds (after inflation). So which is the riskier asset?" -- Jeremy Siegel

34. "Acknowledging what you don't know is the dawning of wisdom." -- Charlie Munger (This is vital in investing. Asking yourself what you don't know about the companies you invest in is really important.)

35. "Invest in yourself. Your career is the engine of your wealth." -- Paul Clitheroe

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