Warren Buffet’s Investing And Inspirational Quotes

• You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.

• We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own assets.

• When Berkshire buys common stock, we approach the transaction as if we were buying into a private business.

• Wide diversification is only required when investors do not understand what they are doing.

• Never invest in a business you cannot understand.

• Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.

• The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.

• Risk can be greatly reduced by concentrating on only a few holdings.

• Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.

• Buy companies with strong histories of profitability and with a dominant business franchise.

• Be fearful when others are greedy and greedy only when others are fearful.

• It is optimism that is the enemy of the rational buyer.

• As far as you are concerned, the stock market does not exist. Ignore it.

• The ability to say “no” is a tremendous advantage for an investor.

• Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.

• Lethargy, bordering on sloth should remain the cornerstone of an investment style.

• An investor needs to do very few things right as long as he or she avoids big mistakes.

• “Turn-arounds” seldom turn.

• Is management rational?

• Is management candid with the shareholders?

• Does management resist the institutional imperative?

• Do not take yearly results too seriously. Instead, focus on four or five-year averages.

• Calculate “owner earnings” to get a true reflection of value.

• Look for companies with high profit margins.

• Growth and value investing are joined at the hip.

• The advice “you never go broke taking a profit” is foolish.

• It is more important to say “no” to an opportunity, than to say “yes”.

• Always invest for the long term.

• Does the business have favorable long term prospects?

• It is not necessary to do extraordinary things to get extraordinary results.

• Remember that the stock market is manic-depressive.

• Buy a business, don’t rent stocks.

• Does the business have a consistent operating history?

• An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.

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4 Responses

  1. Sherise Kuhne says:

    Absolutely fantastically written. Real props. Usually, I do not comment on blog posts unless I feel a great desire to do so! I’ve worked in various hedge funds in my life and just wanted to supplement some information on asset management. The biggest new craze now is Forex trading which I see a lot of my customers do. Playing Forex can appear alluring, but the majority of people who try it lose money. All you have to do is do a web search on the words “Forex” and “lose” to see this is the consensus. Forex is similar to what we call a “zero sum” game. You are making a bet with someone else about whether a currency will rise or fall. For every winner there has to be a loser. The net winnings of everyone combined equals zero. If you are smarter than the average player, you may make money. If you are dumber than the average player, you are likely to lose money. Most of the people making the “bets” in Forex are highly trained professionals at banks and other institutions. You are unlikely to beat them at this game. Actually Forex is not quite a zero sum game. It’s a slightly negative sum game as the Forex broker takes a small percentage each time in the spread. It’s a small amount but over a hundred trades, it ends up being a considerable amount of money. So the average player is likely to lose money, and remember the average player is a highly trained professional and probably smarter than you. There is a lot of luck in Forex, and if you play it, you will have some periods of time where you make money. This is usually because you are having a lucky streak, not because you have suddenly become an expert Forex player. However, most people are unwilling to admit their success is due to luck. They become convinced they have a system that works, and lose a lot of money trying to refine it. I would recommend not trying to do Forex at all, unless you are a trained professional. It’s like playing poker with people better than you, with the house constantly taking a small percentage from the pot. I, myself, prefer index funds, particularly the S&P 500 – just read the NOVA article by Delos Chang – there is a great deal of ideas there that you can wrap your head around.

  2. Ivalene says:

    In the comlpicaetd world we live in, it’s good to find simple solutions.

  1. August 21, 2008

    […] Warren Buffet's Investing And Inspirational Quotes | Fortune Watch • Wide diversification is only required when investors do not understand what they are doing. […]

  2. September 5, 2008

    […] wrong because the crowd disagrees with you. You are right because your data and reasoning are right.http://www.fortunewatch.com/warren-buffets-investing-and-inspirational-quotes/BusinessWeek: The Warren Buffett You Don’t KnowIn-depth profile of the ace stockpicker and […]

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