Mark Twain had many observations about human behavior, society, and various aspects of life, including investing and the stock market.
What did Mark Twain say about the stock market? Here are a few of his most famous ones:
“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”
The takeaway is that market timing is risky and trying to time your entry and exit points can be hazardous because the market is unpredictable. Seasonal patterns like “Sell in May and go away” or historic trends related to specific months might not always hold true so don’t underestimate the stock market’s potential to surprise.
“There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can.”
Risk management is a crucial component to investing success. Even when you have surplus funds, speculation is not the same as investing. Make sure you understand the difference between the two.
“The lack of money is the root of all evil.”
If we apply this quote to the stock market, the lesson is that capital preservation is of utmost importance. The quickest way to make money is to not lose it in the first place. This is especially true for traders who prefer to actively manage their portfolios, a segment that can be prone to over-trading and incurring hefty transaction fees.
“Buy land, they’re not making it anymore.”
Another way to think about this is to invest in assets with intrinsic value. Whether it’s stocks, real estate, or other investment vehicles, the asset should have fundamental value that is likely to appreciate over time.
“The secret of getting ahead is getting started.”
When it comes to investing success, procrastination can be very costly. Compounding requires time, so the earlier you start, the better. Whether it’s opening a trading account or buying your first stock, taking the first step is crucial.
“To succeed in life, you need two things: ignorance and confidence.”
Overconfidence can be a trader’s downfall, but a certain level of self-assurance is necessary to make the tough calls that others shy away from. However, balancing confidence with due diligence and a willingness to admit when you’re wrong is critical in investing.
Whenever you find yourself on the side of the majority, it is time to pause and reflect.”
When everyone is buying, it might be time to sell, and vice versa so look to be a contrarian investor where possible. Following the herd can lead to bubbles and subsequently, crashes.
“It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt.”
In the world of investing, it pays to be cautious about who you listen to. Just because someone is vocal about their investment strategies doesn’t mean they’re successful or that their approach is right for you.
“All you need in this life is ignorance and confidence, and then success is sure.”
Sometimes, it’s important to take calculated risks based on available information, rather than waiting for the ‘perfect’ data set that will never come. Analysis paralysis can be real in stock market investing, so at times it’s best to take the plunge with the information you have at hand.
“Kindness is the language which the deaf can hear and the blind can see.”
Companies that prioritize corporate social responsibility often attract a loyal customer base, which can translate to better long-term returns.
Twain’s insights are not all related to the market but they do focus on the human elements that affect how people approach money, risk, and reward.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.