8 Investment Lessons From Top Wall Street Experts

"Psst!" You’ll hear someone say in a Wall Street bar. "Do I have a great stock tip for you!" It sure sounds like a dream come true for you; getting a stock tip from someone who is in the know. However, it is better to learn how to trade or invest yourself, rather than rely on getting stock picks from someone else. You also do not have to be lounging around a bar along the financial district to get investment lessons either.

Here are nine quickie lessons from some of the nation’s top Wall Street experts which you can easily apply:

Wall Street Lesson 1: Recessions happen

Peter Lynch: "You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets."

This is a very important lesson for us, folks. The stock market does go up, up and up! But it also can also comes down, down, down. The smart investor knows what calls to make; either to stick out the ride during the temporary sell down or to cut losses and re-enter the market just before a turnaround.

Wall Street Lesson 2: Investors forget too easily

Roman Abromovich: "Investors have very short memories."

Doesn't it seem like a horrible shock every time we hear the whisper of a recession coming through our country? We’ve been through this before, and we are going to go through it again (and again). Investors do have short memories and they seem to forget the past and even the very recent past.

Wall Street Lesson 3: Go BIG on Bets That You Are Sure On

Warren Buffett: "Wide diversification is only required when investors do not understand what they are doing."

Buffett raises an interesting point. If you have an investment that you feel confident about, why not place almost all your bets on it instead of diversifying your portfolio? Not to forget, the highest rewards go to those who dare to take the most risks. However, it is absolutely critical to know what you are doing with your investments before making that decision!

Wall Street Lesson 4: Pick stocks you like and want to follow

Warren Buffett: "Why not invest your assets in the companies you really like? "
Mae West: "Too much of a good thing can be wonderful."

This is a great point, to invest in businesses that you like and feel confident about. If you have an interest in the specific companies, following their every move is a natural thing for you. Often investors do well with investments they at they have knowledge about and that they like the most. There is nothing wrong with having few stock picks and doing very well with them.

Wall Street Lesson 5: Go Against The Herd

Warren Buffett: "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

Buffett speaks of knowing how to invest in a Bear or a Bull market. When we are in a recession, this is actually a great time to buy stocks if you have the extra funds on hand. When the market is doing well, this is less of a time to buy stocks because everyone is buying stocks and the prices are high.

Wall Street Lesson 6: It is the perceived value rather than the actual worth that counts

Mark Cuban: "I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it."

Cuban has an excellent point. Much of what happens in the stock market is not about actual worth of something or a company: but about what someone thinks it is worth. Knowing that what is going on has to do with people’s inflated (or deflated) belief of what something is worth can help you keep things in perspective.

Wall Street Lesson 7: Follow The Trend Of The Market

Jesse Livermore: "When I’m bearish and sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don’t buy long stocks on a scale down, I buy on a scale up."

Livermore teaches us that no one really knows where the bottom is. Hence, it will be foolish to buy as prices come down because it is hard to determine if the market is about to turn or not. He teaches us that it is important to follow the general trend of the market. So only purchase stocks in a rising market.

Wall Street Lesson 8: Overall Trends Can Help Predict The Direction Of A Specific Stock Price

Jesse Livermore: "I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up."

The smart investor knows not to tell other investors which stocks to invest in. No one really knows any better specifically; but what is obvious is that stocks move almost together. It is therefore easy to assume that in a bear market, the prices of all stocks come down and in a bull market, the prices of stocks in general rise. If you want to appear intelligent, follow this same advice!