Investing Doesn’t Take Genius Intelligence, Just Common Sense

A quote that’s attributed to Albert Einstein goes something like this; “Insanity is doing the same thing over and over and expecting different results.” Going by what Mr. Einstein says, it would be easy to assume that most investors are insane because of the fact that they’re constantly trying to predict when to enter and exit specific markets, pick outperforming stocks and are always on the lookout for the next “hot” fund manager to come along.

These are the same investors that rely on top mutual fund recommendations, listen to the advice of a broker who says that they have the skills to ‘beat the market’ and over-weigh their portfolio with asset classes that don’t make sense, including gold. They also rely much too heavily on financial media for information and tips on things like market direction, interest rates and stocks.

Many of these same people are also overly obsessed with every single thing that anyone has to say about investing guru Warren Buffett. The fact is, Mr. Buffett really doesn’t have any special insight into the market but simply happens to be an astute investor who studies prolifically, makes investments for the long-term and places very little focus on current market events.

In fact, a quote from Buffett really underlines his opinion about listening to pundits and trying to follow current market trends; “Forming macro opinions or listening to the macro or market predictions of others is a waste of time.” In other words, Warren Buffett is telling investors to ignore pundits and market trends, something the financial media emphasizes with abandon. In fact, much of the information you’ll find coming out of the mouths of financial media analysts comes from the comments of pundits about everything from market correction to the “best stocks to buy right now”.

Another quote by Mr. Buffett is definitely much more valuable for the everyday investor, and goes like this; “The know nothing investor who both diversifies and keeps his cost minimal is virtually certain to get satisfactory results.”

If you’re looking for investing advice the simple truth is that trying to “play” the markets, sniffing around for “stock tips” and listening to the excess of media outlets and their talking heads is probably the worst way to do it.

If someone “in the know” deigns to give you advice about how to pick stocks and tells you to do it the “same way Warren Buffett does it”, all you need to do is tell them that you are as you buy your stocks and bond index funds with low management fees and hold onto them for the long term.

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