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The Proper Perspective on The Best Advice

One of the great things about investing is that you can get wisdom from some of the greatest investors that have ever lived.

Recently, we have been working on a project that compiles thousands of quotes from these great investors. We will begin sharing these daily on our social media, but it is also great to go through them ourselves.

We started with perhaps the most significant investor of all time – Warren Buffett.

We are a big fan of Buffett. That probably will not surprise you.

It is hard to argue with this long-time track record. He is also good at distilling his investment wisdom in phrases that resonate with regular investors.

There is one aspect of his wisdom, though, that sometimes troubles us.

We can't recall a time we actively disagreed with something he said, but there are quite a few times when we read his advice and think to ourselves…”Yes, but only in some cases.”

For today's HX Daily, we thought it would be interesting to share a couple of those quotes and our perspective.

Here is the first one…

"If you aren't willing to own a stock for ten years, don't even think about owning it for 10 minutes."

Warren Buffet

Like a lot of Buffett's wisdom, this one is very much framed by his investing style. 

Remember, he runs an insurance company and takes a long-term perspective on investing. We think this approach makes a ton of sense for almost every investor.

It isn’t, however, the only way to make money.

At HX Research, we have a long-term investing strategy called HX Legacy, which we take a similar approach to Buffett. A decade is a long time, but if you wouldn't hold a stock for at least three to five years, you are unlikely to make the kind of returns we are looking to make in those ideas.

We want to generate consistent smaller returns for TRADING strategies like our HX Trader and HX Income. You may not make two or three times your money, but knock out twenty +8% returns, and it adds up!

Buffett's advice IS excellent, but there are many ways to bake a cake.

Here is another one…

“Activity is the enemy of investment returns.”

Warren Buffet

We love this quote, and not just for investing. 

We are fond of saying, "Action does not equal progress."

Broadly speaking, his advice for INVESTING strategies is true again.

Again, though, for TRADING strategies, it doesn't make any sense at all. 

Instead, the opposite is true. For those to be successful, you have to be very active.

This is why one of our sayings at HX Research is, "Trade A Lot or Don't Trade At All."

For our final Buffett quote…

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”

Warren Buffet

This one is where I come closest to disagreeing with Buffett straight-up.

We don't disagree with the first two parts of his idea. Most people only start paying attention once many other people are paying attention.

It would also be great if you could find those ideas before the rest of the folks become interested. Not always easy to do, though…

Our big problem is with the final statement. Here, we strongly disagree.

Think of the most significant stocks of all time…Microsoft Corporation (NASDAQ: MSFT), Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), etc.

With almost every one of these stocks, you could have bought it after it had already gone up several folds and made life-changing money.

Many of Buffett's returns across the last few decades have come from his ownership of AAPL.

Finally, remember another one of our sayings – "Every stock that goes up ten-fold went up two-fold, three-fold, and five-fold first."

For significant returns, the trend and popularity are your friends.

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