Introduction to the Quotes and Wisdom of Warren Buffett on Investing and Success
These 50 Warren Buffett quotes on investing are incredibly useful. Following the advice of one of the world’s most successful and wealthiest men will help you be a better investor and business person. We took his advice and applied it to investing and our own business – The Great Investments Programme.
Warren Buffett might be among the world’s wealthiest men, but you couldn’t tell if you met that man ever! He wants to be loved far more than he wants to be prominent, and his wit is way more symbolic of his character than his self-worth.
Buffett’s net worth as of 2020 is $89 billion. Warren’s success was hard-earned, and he had clambered to the top via his company Berkshire Hathaway from the time when he was a youngster. His business is more than 60 years old!
And they don’t call him the “Oracle of Omaha” for nothing. He made his earliest venture at merely eleven years old. By thirteen, Buffett was overseeing his business as a paperboy while vending his horse racing tip sheet.
Likewise, at thirteen, he recorded his initial tax return, with a thirty-five dollar tax subtraction for his bike. By the age of 14, Buffett acquired a tiny farmhouse in Omaha, Nebraska, exhausting the incomes from his paper route. After he graduated from college, he had $90,000 in reserves. In 1962, Buffett turned out to be a millionaire with his Omaha-based venture company, Buffett Partnership, Ltd.
He started purchasing stocks of a textile manufacturing business, Berkshire Hathaway, and finally took power over the company. He was a billionaire by 1990!
At the moment, he’s one of the wealthiest men in America. But he doesn’t dine at lavish places. In its place, he eats at Gorat’s. That’s a native steakhouse in Omaha. And it’s continuously the same order: a rare T-bone with a twin order of hash browns and a Cherry Coke.
Buffett drives to work every day in a gold Cadillac. He’s unassuming, polite, and friendly, and it’s not unusual for him to take a guest to McDonald’s before dropping him at the airport.
It’s indisputable that Warren Buffett is nifty. He engrosses packs of info and has an in-depth memory that astonishes attendees at Berkshire’s yearly stockholder meeting.
At these pilgrimages of the followers of guru, he takes queries without a break for hours annually. But extraordinarily, his participating tactic is straightforward, and he’s able to purchase great companies at a decent value.
In June 2006, Buffett donated “his complete wealth” to charitable foundations. Eighty-five percent of that wealth passed on to the Bill and Melinda Gates Foundation. This act turned out to be the most significant deed of philanthropic contributions in US history.
Regardless of being detected with prostate cancer in 2012, Buffett undertook treatment efficaciously and endures to rank near the topmost of the Forbes world billionaires record.
Here are 50 characteristic quotes from one of the most paramount thinkers of our time.
We have offered some insight into each quote’s thought process, so a basic understanding of what can be achieved if you have a simple plan and stick to it!
Warren Buffet Quotes to live by
“Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.”
When you are forced to worry about losses, which Buffett wants you to focus on, you cannot speculate, and you cannot take wild gambling risks. Notice how he does not say the first rule is to make money or get rich. Investing is not a get rich quick scheme. Quick would mean higher risk of loss.
“A very rich person should leave his kids enough to do anything, but not enough to do nothing.”
True to his word, he gave away 85% of his wealth to The Gates Foundation.
“It’s class warfare; my class is winning, but they shouldn’t be.”
Buffett is well aware that he is privileged and lucky and that society is unfair. He often says he pays more in tax than his cleaner. He is politically active for a fairer society, pushing the US Congress to improve the tax laws and tax him more.
“If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.”
This is not just about his sense of fairness and philanthropy. He sees the macro view of investing.
Having this sense that a company has inherent value Buffett, picks a company that delivers on its service first.
He understands that the customer experience and his ability to tell his fellow human being of this beautiful new product will, by its nature, increase market exposure.
The company owes it to the community to deliver.
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Reputational risk is one thing. However, equally is the sense that it takes a long time to build real wealth, and there are no get rich quick schemes; however, it can all be lost if you lose sight of the plan and the method that will stand the test of time.
“Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.”
Money brings out the worst, not the best in people. Be careful what you wish for and that it does not change you for the worse.
“The business schools reward difficult, complex behaviour more than simple behavior, but simple behavior is more effective.”
When I created The Great Investment Program, I instilled this simple approach; pick 15 stocks or so for 12 months and review. Ensure they go through a harsh but straightforward filtering process before the privilege of being in your portfolio.
“You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.”
Only buying quality and not being distracted from the purpose to build on only quality is key. Patience is key. There is sometimes just the right time, and you have to wait, not chase the company.
“Can you really explain to a fish what it’s like to walk on land? One day on land is worth a thousand years of talking about it, and one day running a business has exactly the same kind of value.”
Books are one thing. The best way to learn is by doing. It’s why on the Great Investments Programme, we don’t just teach. We update daily and show you the answers to practice investing alongside us and then mark your homework.
“You only have to do very few things right in your life so long as you don’t do too many things wrong.”
Be careful of your errors. We discovered that if we could remove many private investors’ mistakes, then what was left was being right. It’s why we filter, filter, filter in our checklists to avoid bad decisions.
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Quality is vital, and for that, you have to filter, and that is what we teach. Do not settle for second best. It is better to wait and wait.
“Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.”
As we beat the drum about quality, we pay reverence to Buffet for finding those gems. If the price drops, we can buy more at a discount, than panic over our decision.
This attitude also sees you through life’s storms. Because you will know the assets you own can withstand the shower, and you sleep easily and rely less on good times, which never last.
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
The truly successful do the opposite of the masses. We deploy this in all our actions in business.
“Risk is a part of God’s game, alike for men and nations.”
We cannot escape risk. We have to manage and mitigate it. Buffet understands how to manage risk through forensic analysis of the business and the management. On the GIP – we do nothing more than using the skills of the Gurus to assist in our decision making. We do not expect to re-invent that which works perfectly well.
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
Not often you hear Buffet talk about a stop loss. Still, when it happens, he will be the first to admit and have no emotion to ditch a bad idea, often due to his immense need to safeguard investor wealth!
“We believe that according to the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a ‘romantic.'”
A company should be so good; you do not keep on watching it and trading it in and out with every foible. It should be so good, you do not need to worry about timing and the risk of holding it.
“Chains of habit are too light to be felt until they are too heavy to be broken.”
Bad investing habits creep up on you. People, without realising it become gamblers. They become speculators. They take a view on an election or the outcome of some news. Instead of focusing on the quality of the company in which they invested.
“It’s better to hang out with people better than you. Pick out associates whose behaviour is better than yours, and you’ll drift in that direction.”
This resonates with the best of the best – for instance, when Steve Jobs explained his need to hire people smarter than himself so they can tell him what to do! You will ensure the gravitational pull to greatness when you surround yourself with great people. It is the same in investing. Learn from the proven best. Make sure they have the credentials.
“Let blockheads read what blockheads wrote.”
Journalists write for clicks. Just because it’s online, does not mean it is worth reading or following. In the Great Investments Programme we know what is important and what is not. We are not detracted from that by knuckleheads.
“Our favourite holding period is forever.”
The point is your stocks have to be outstanding and worthy of holding forever. To do this on the Great Investments Programme we filter and filter to get quality. We call it PurePerformance(TM) You can learn more about it here: https://youtu.be/ezcTHlE8Z4s
“I don’t look to jump over seven-foot bars; I look around for one-foot bars that I can step over.”
Keep is simple – the old adage! Nothing Buffet does is complicated; he has steered clear of Crypto for this reason. He doesn’t try to find the perfect timing for a risky stock. He would rather have a safe good one and not worry about timing.
“If a business does well, the stock eventually follows.”
Consistently doing things well, the market has no choice but to re-evaluate its position. The market exposes the laggards and the rising stars. Wait.
“Why not invest your assets in the companies you really like? As Mae West said, ‘Too much of a good thing can be wonderful.'”
Most people diversify their ignorance not their risk. They buy a little bit of everything because they don’t know if it is good or not. Instead they should pick a few which are good and stick to investing their money in only those.
“Price is what you pay. Value is what you get.”
People often say something is ‘overvalued’ based on its price. That does not tell you if something is over-valued. Value is based on profits, dividends, and those depend on cash-flow. Price is only one half of the equation.
“Wide diversification is only required when investors do not understand what they are doing.”
The fear of being wrong leads to over-diversification. With the GIP, we teach you how to data-mine for Value, Growth, and Income. This way you can hold as many stocks as billionaires do – roughly 15-40.
“Time is the friend of the wonderful company, the enemy of the mediocre.”
A good company returns your trust in time. A poor company, in time, punishes you with poor performance. In the short term, noise and momentum may make a poor company look good. But in time, the better company outperforms.
“Only when the tide goes out to do you discover who’s been swimming naked.”
There are moments in history that separates the quality from those that may have been built on hot air! 2020 has seen such an event with Covid-19, which crippled development countries and as revenues dried up, those that survived were either cash-rich or a service provider that delivered a need.
Therefore we look at numbers that tell how much cash that is available and expected probability of a company not being able to meet its cashflow demands for operating day to day – CROCI, Sortino, and the F-Score few.
“In the business world, the rear-view mirror is always clearer than the windshield.”
Of course we can be smart looking backward, and everything seems obvious, which was not at the time. That should not make us overconfident in the future.
Overconfidence in the future and ones own ability to predict makes people take on more risk than they realise and make bigger gambles than are wise. All investment errors.
“Risk comes from not knowing what you’re doing.”
As humans we often are overconfident in our own abilities, or just believe we will get lucky, or lazy in our research. All these things result in more risk and gambling. On the Great Investments Programme, we don’t gamble.
“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”
Know quality companies, which, when dragged down due to market forces, gives you the opportunity to participate at a much-reduced price and higher yield. Don’t participate in the volatility by trying to time in and out. Instead, wait and be patient.
“There seems to be some perverse human characteristic that likes to make easy things difficult.”
So often we will tell people a simple investing rule, and they will complicate it. We will tell them to hold a stock for 12 months and review, and they will overcomplicate it by trying to make lots of rules. Bad rules. Complicated rules.
“If you are in a poker game and after 20 minutes you don’t know who the patsy is, then you’re the patsy.”
Buffet will never gamble with other people’s money, let alone his own. To know how to pick stocks like Warren Buffet, you can pretty much be assured you will never be the patsy! More importantly, if you don’t understand what you’re investing in, then someone in the market will sell you something at a price you should not be paying.
“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”
Investors place too much reliance on ‘experts’ and ‘fund managers.’ They need to learn from themselves.
“The rich invest in time, the poor invest in money.”
Rich value time and pay for it. They make their investing simple and save time. They do not spend time to watch risky companies. Time is too valuable.
“Beware of geeks bearing formulas.”
First, you must always understand what you are investing in. Formulas can be very enticing. Don’t be fooled. Complexity does not mean truth or quality.
“Without passion, you don’t have energy. Without energy, you have nothing.”
If you don’t love investing, you will get it wrong. You will not have the energy to learn or desire. Without that, you would have failed.
“I get to do what I like to do every single day of the year.”
Find your passion and do that, and you will find that you do not work a single day in your life!
“I never attempt to make money on the stock market. I buy on the assumption they could close the market the next day and not re-open it for five years.”
If you have a quality investment using our approach, then it will stand the test of time and will not be a short term gamble.
“If past history were all that is needed to play the game of money, the richest people would be librarians.”
It takes action and the ability to learn from history and apply it to make money.
“The investor of today does not profit from yesterday’s growth.”
Looking at past performance will not guarantee future performance, so the need to do your homework and tick all the boxes of value, growth and income is paramount to ensure that the future can be as bright as the past performance. Does the company still have in place for future growth, what it had from past growth.
“The smarter the journalists are, the better of the society is to a degree. People read the press to inform themselves; and the better the teacher, the better the student body.”
We need good quality financial journalism so that we can make good quality decisions and uncover all relevent informatgion.
“We enjoy the process far more than the proceeds.”
Love what you do, not for the fruits, but because you are passionate and enthralled, and the fruits will take care of themselves.
“Focus on your customers and lead your people as though their lives depend on your success.”
At GIP, we understand that success comes when you stop following the madness of crowds and become a leader of your own. The GIP course empowers you to secure your financial security through intelligent investing. We know your financial future depends on it.
“I have no idea on timing. It’s easier to tell what will happen than when it will happen.”
It’s simple probabilities. The more predictions you ask someone to make, eg direction and time, the less likely they will be right. Buffett reduces risk and buys time, by finding companies that will rise. He does not try to work out when, so does not risk being wrong.
“Cash never makes us happy. It’s better to have the money burning a hole in Berkshire’s pocket than resting comfortably in someone else’s.”
As a fund investor, not investing in a company and so holding cash, does not make Buffett happy, because he is not getting a return. But he would rather that, than having the money in a poor comfortable company.
“Never invest in a business you can’t understand.”
“Derivatives are financial weapons of mass destruction.”
Derivatives are all leveraged products and hence the chance to lose more than you invest! In the wrong hands, it has been proven to bring down some major banks historically.
“We’ve used derivatives for many, many years. I don’t think derivatives are evil, per se, I think they are dangerous. …So we use lots of things daily that are dangerous, but we generally pay some attention to how they’re used. We tell the cars how fast they can go.”
The misuse of derivatives is dangerous in the hands of someone who does not fully understand the market or the price a stock purchase should be bought at! The price you pay plays a big part in the yield you receive, and this is where Buffet has mastered a complex strategy and simplified it for the shareholders of Berkshire Hathaway.
“Only when you combine sound intellect with emotional discipline; do you get rational behaviour.”
“I buy expensive suits. They just look cheap on me.” Just one for fun.
We hope you’ve enjoyed these quotes. They are good lessons for investors and business people because they come from an experienced source and are pithy.
Alpesh Patel and Paresh Kiri www.investing-champions.com