About Mr. Warren Buffett:
Mr. Warren Buffett, also known as the “Oracle of Omaha,” is one of the most successful investors of all time. Buffett is the chairman and CEO of Berkshire Hathaway, which controls over 60 businesses, including insurer Geico, battery manufacturer Duracell, and the food chain Dairy Queen.
As the son of a United States congressman, he purchased his first stock at the age of 11 and filed his first tax return at the age of 13. He has pledged to contribute more than 99 percent of his fortune. He has given around $41 billion to date, primarily to the Gates Foundation and his children’s foundations.
He co-founded the Giving Pledge with Bill Gates in 2010, inviting billionaires to commit to giving at least half of their fortune to philanthropic causes.
Warren Buffett is widely regarded as the world’s greatest value investor, and as a result, he has made numerous famous remarks regarding maximizing returns on stock investments.
And, these are his famous quotes.
Importance of Reading and Learning:
Buffett feels that, as an investor, your thinking is possibly your most valuable asset. As a result, it’s critical to spend time training your intellect.
Buffett is an ardent reader. It typically amazes people to hear that the majority of Buffett’s workday is spent alone in his office reading, but Buffett attributes much of his success to his relentless quest for information.
Mr.Warren Buffett quotes on Importance of Reading and Learning:
“I just sit in my office and read all day”
“I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business.”
“The most important investment you can make is in yourself.”
“One can best prepare themselves for the economic future by investing in your own education. If you study hard and learn at a young age, you will be in the best circumstances to secure your future.”
“Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”
Buffett is a follower of Benjamin Graham’s value investing philosophy. Value investors seek out stocks with unjustifiably low prices relative to their intrinsic value.
While there is no universally acknowledged method for determining intrinsic value, it is frequently determined through an examination of a company’s fundamentals.
As with bargain hunters, the value investor seeks out stocks that the market believes are undervalued, or stocks that are valuable but are unknown to the majority of other buyers.
Buffett takes this approach to value investing to a new level. Numerous value investors reject the efficient market hypothesis (EMH).
According to this hypothesis, stocks always trade at their fair value, making it more difficult for investors to either buy undervalued equities or sell them at inflated prices.
They do believe that the market will eventually begin to reward those high-quality stocks that were undervalued for a period.
Mr.Warren Buffett quotes on Value Investing:
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
“Price is what you pay. Value is what you get.”
“Widespread fear is your friend as an investor because it serves up bargain purchases.”
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
“The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.”
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
“For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.”
“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.”
“On the margin of safety, which means, don’t try and drive a 9,800-pound truck over a bridge that says it’s, you know, capacity: 10,000 pounds. But go down the road a little bit and find one that says, capacity: 15,000 pounds.”
Warren Buffett is widely regarded as the world’s greatest value investor, and as a result, he has made numerous famous remarks regarding maximizing returns on stock investments.
Not only is Warren Buffett an excellent value investor, but he is also a strong believer in buy-and-hold investments. To that end, here are some of Buffett’s top quotations on why investing in strong businesses for the long term is the prudent course of action and how investors should approach investment decisions.
Mr.Warren Buffett quotes on Long-Term Investing:
“Our favorite holding period is to hold forever!”
“You can’t produce a baby in one month by getting nine women pregnant.”
“Someone’s sitting in the shade today because someone planted a tree a long time ago”
“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
“An investor should act as though he had a lifetime decision card with just twenty punches on it.”
“Since I know of no way to reliably predict market movements, I recommend that you purchase Berkshire shares only if you expect to hold them for at least five years. Those who seek short-term profits should look elsewhere.”
“Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.”
“All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.”
“Do not take yearly results too seriously. Instead, focus on four or five-year averages.”
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”
“It is a terrible mistake for investors with long-term horizons, among them pension funds, college endowments, and savings-minded individuals — to measure their investment ‘risk’ by their portfolio’s ratio of bonds to stocks,”
How to Pick stocks:
Buffett is candid about the fact that not everyone should invest in equities directly. There is nothing wrong with carefully researching stocks if you have the desire and time, but the majority of individuals do not.
Buffett tells investors not to think of their assets as “stocks,” but rather as “entities.”
There is a reason why Buffett’s portfolio is devoid of biotech and high-growth technology companies. He does not comprehend them, and as a result, he does not invest in them. Not only should you understand the firms in which you invest, but you should also look for organizations with a proven track record of profitability, popular products, and a position among the industry’s leaders.
It is more prudent to invest in a huge but excellent company than it is to acquire a mediocre business on the cheap.
Finally, these two nuggets of wisdom are helpful guidelines for evaluating assets. Because historical data is always more reliable than projections, it should account for a far bigger portion of your research. Additionally, always understand why you’re investing in a firm before you invest.
Mr.Warren Buffett quotes on How to Pick stocks:
“If you like spending six to eight hours per week working on investments, do it. If you don’t, then dollar-cost average into index funds.”
“Charlie and I view the marketable common stocks that Berkshire owns as interests in businesses, not as ticker symbols to be bought or sold based on their “chart” patterns, the “target” prices of analysts, or the opinions of media pundits.“
“Buy into a company because you want to own it, not because you want the stock to go up.“
“Never invest in a business you cannot understand.”
“Risk comes from not knowing what you’re doing.”
“If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on.”
“Buy companies with strong histories of profitability and with a dominant business franchise.”
“We want products where people feel like kissing you instead of slapping you.”
“It’s better to have a partial interest in the Hope diamond than to own all of a rhinestone.”
“In the business world, the rearview mirror is always clearer than the windshield.”
“One thing that could help would be to write down the reason you are buying a stock before your purchase. Write down “I am buying Microsoft at $300 billion because…” Force yourself to write this down. It clarifies your mind and discipline.”
Circle of Competence:
One of Buffett’s most important pieces of advice to investors is to define their “circle of competence.” If someone is exceptionally skilled at analyzing pharmaceutical stocks, they should stick to that. On the other hand, investors should avoid the temptation to purchase the cheapest bank shares.
In other words, if you are only familiar with one or two sectors, there is no reason to feel compelled to “spread out.” And if you are unfamiliar with any, there is no shame in sticking to index funds.
Do not purchase equities only for the purpose of diversification. Banks account for over half of Berkshire’s equity holdings. Why? Buffett is intimately familiar with that industry.
Mr.Warren Buffett quotes on Circle of Competence:
“There is nothing wrong with a ‘know nothing’ investor who realizes it. The problem is when you are a ‘know nothing’ investor but you think you know something.”
“You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”
“We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it.”
“Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.”
Not all of your investments will succeed. Buffett has frequently chosen stocks that turned out to be losers. What defines your success is how you handle your failing investments. And, the best way to deal with your loss-making investments is to cut them out at the earliest signs of weakness.
In other words, if one of the businesses in which you invest does not perform as well as you had planned, one of the worst things you can do is continue to invest in it. If you’re wrong about a company, the best course of action is to find a more productive use for that capital.
Mr.Warren Buffett quotes on Loss-making Investments:
“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.”
“The most important thing to do if you find yourself in a hole is to stop digging.”
How not to Invest:
Avoiding disastrous investments is often more critical than discovering excellent ones, and here are a few pearls of knowledge Buffett has accumulated over the course of his career.
In other words, Buffett is unlikely to invest in a business with ongoing challenges that lack clear remedies. He’d much rather invest in another business.
If you’ve been investing for a while, consider the late 1990s dot-com bubble. I can not recall a moment when it was easier to profit in the stock market. And we are all aware of how that ended up.
If an investment appears to be too good to be true, it probably is; yet, some speculators will strike it rich, at least initially. Few, if any, will prosper over time.
It has been remarked numerous times that the worst thing you can hear about an investment opportunity is that “this time is different.” Generally, when you hear that phrase, the investment demonstrates many of the same characteristics as prior bubbles and fads.
Mr.Warren Buffett quotes on How not to Invest:
“After 25 years of buying and supervising a great variety of businesses, Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them.”
“Speculation is most dangerous when it looks easiest.”
“Investors should remember that excitement and expenses are their enemies.”
“Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick no!”
“Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game.”
“What we learn from history is that people don’t learn from history.”
Warren Buffett has unquestionably developed one of the finest reputations in the financial world. Additionally, the majority of the firms Berkshire owns enjoy a great reputation in their own right. Buffett views reputation as a priceless asset that must be safeguarded at all costs.
Mr.Warren Buffett quotes on Managements reputation:
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
“Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”
Buffett believes that while it is not necessary to be very brilliant to be a great investor, it is necessary to have the correct mentality. According to these four Buffett nuggets, patience and sound temperament are significantly more important than intelligence.
Mr.Warren Buffett quotes on Investing mindset:
“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”
“The stock market is a no-called-strike game. You don’t have to swing at everything, you can wait for your pitch.”
“Success in investing doesn’t correlate with IQ! What you need is the temperament to control the urges that get other people into trouble in investing.”
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
Advance and advice:
To be clear, Buffett is not opposed to investment management fees that provide value. Buffett, on the other hand, is adamantly opposed to high fees that enrich Wall Street executives at the expense of ordinary investors.
Mr.Warren Buffett quotes on Advance and advice:
“When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.”
“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.”
“If returns are going to be 7 or 8 percent and you’re paying 1 percent for fees, that makes an enormous difference in how much money you’re going to have in retirement.”
Market crash and Recessions:
Many investors look to Buffett’s wisdom while investing in volatile markets. Thus, here are some wonderful pieces of advice from Buffett that may assist you in navigating difficult times: When the market continues to rise, everyone appears to be an investing genius. It is only when circumstances deteriorate that you can determine who truly has a sound long-term strategy.
Market volatility is unavoidable. It is not a matter of “if,” but of “when,” so prepare for them. Prepare yourself mentally to avoid panicking during downturn moves and to bargain-hunt for discounted shares of your favorite firms.
Market corrections and collapses should be viewed as purchasing opportunities, not as reasons to worry. Indeed, some of Buffett’s greatest investments have occurred during market crises.
In 2009, Buffett wrote this in response to the financial crisis. Berkshire made some astute bets in bank equities following the crisis, which Buffett would not have done had he been focused on what market analysts were saying.
Mr.Warren Buffett quotes on Market crash and Recessions:
“Only when the tide goes out do you discover who’s been swimming naked.”
“The years ahead will occasionally deliver major market declines, even panics, that will affect virtually all stocks. No one can tell you when these traumas will occur.”
“Predicting rain doesn’t count, building the ark does.”
“This does not bother Charlie [Munger] and me. Indeed, we enjoy such price declines if we have funds available to increase our positions.”
“The best chance to deploy capital is when things are going down.”
“It’s been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance.”
Buffett believes that one of the most common mistakes investors make is to pay too much attention to television commentators, political turmoil, or market rumors.
And, retail investors are better off if they reduce this market noise by turning blind eyes to them and concentrate on long-term investing.
Mr.Warren Buffett quotes on Market noise:
“In the 54 years (Charlie Munger and I) have worked together, we have never forgone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.”
“In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
“We’ve long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”
“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.”
“Don’t get caught up with what other people are doing. Being a contrarian isn’t the key but being a crowd follower isn’t either. You need to detach yourself emotionally.”
“You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”
Berkshire Hathaway had well over $100 billion in cash on its balance sheet at the end of 2018. And, while this is a sizable sum even by Buffett’s standards, Buffett insists on maintaining a cash position of at least $20 billion at all times.
Buffett never wants Berkshire to be in need of a bailout. Buffett wants enough cash on hand to satisfy all of the company’s continuing requirements regardless of economic conditions.
On the other hand, Buffett dislikes having an excessive amount of cash on hand, as Berkshire does at the moment. He’d much rather invest Berkshire’s capital in high-yielding assets than in cash and advises others against doing the same.
Mr.Warren Buffett quotes on Cash holdings:
“Too-big-to-fail is not a fallback position at Berkshire. Instead, we will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity.”
“We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits.”
“Cash is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent”
“The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth less over time. But good businesses are going to become worth more over time.”
Buffett is adamantly anti-debt, except for home mortgages. Buffett has often counseled investors to avoid debt, particularly when purchasing equities.
As previously stated, mortgages are a notable exception to Buffett’s debt-averse disposition. He believes that homeownership makes sense for people who intend to remain in one location for an extended period of time and that the 30-year mortgage is an effective financial tool. In particular, because you can always refinance if interest rates fall.
Buffett famously planned to give away 99 percent of his money to charity. Thus, while his wife and children will inherit a sizable sum (1 percent of billions of dollars is still a considerable sum of money), it will be less than you might expect for Warren Buffett’s family.
As I previously stated, Buffett intends to give away 99 percent of his fortune, so it’s safe to conclude that philanthropy is a priority for him. Here is what he has said regarding the concept of caring for others less fortunate than himself. Choose your investments and your time wisely. Time is the only resource that can not be replenished. Therefore, be exceedingly judicious when allocating it.
Associating with the best and brightest elevates you as well. You will lean toward lethargy and pessimism if you surround yourself with them. It is all up to you.
Mr.Warren Buffett quotes on Personal Finance:
“If you’re smart, you’re going to make a lot of money without borrowing.”
“If you buy things you do not need, soon you will have to sell things you need.”
“You can’t borrow money at 18 or 20 percent and come out ahead.”
“Because if you’re wrong and rates go to 2 percent, which I don’t think they will, you pay it off. It’s a one-way renegotiation. It is an incredibly attractive instrument for the homeowner and you’ve got a one-way bet.”
“If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.”
“We have learned to turn out lots of goods and services, but we haven’t learned as well how to have everybody share in the bounty. The obligation of a society as prosperous as ours is to figure out how nobody gets left too far behind.”
“The difference between successful people and really successful people is that really successful people say no to almost everything.”
“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”
As I have stated, Buffett is not a fan of inefficient assets, and gold is no exception. Here’s why Buffett will never invest a major portion of Berkshire’s cash in precious metals:
Mr.Warren Buffett quotes on Gold Investing:
“I have no views as to where it (gold) will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money, and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.”
“You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what it’s worth at current gold prices, you could buy — not some — all of the farmland in the United States. Plus, you could buy 10 ExxonMobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?”
Buffett normally advises against investing in non-productive assets, and he believed bitcoin was even worse than the majority of other non-productive assets.
Mr.Warren Buffett quotes on Bitcoin Investing:
“Bitcoin has no unique value at all.”
“You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more. You aren’t investing when you do that, you’re speculating.”
“Stay away from it. It’s a mirage, basically…The idea that it has some huge intrinsic value is a joke in my view.”
As previously said, Buffett believes stock picking is a terrific concept if one has the time and willingness to do it properly. However, the majority of people do not.
That is why Buffett believes index funds are the best option for the majority of investors: they are guaranteed to reflect the market’s performance over time, which has historically been quite robust.
Mr.Warren Buffett quotes on Index Investing:
“Among the various propositions offered to you, if you invested in a very low cost index fund where you don’t put the money in at one time, but average in over 10 years, you’ll do better than 90% of people who start investing at the same time.”
“Just pick a broad index like the S&P 500. Don’t put your money in all at once; do it over a period of time.”
“It is not necessary to do extraordinary things to get extraordinary results.”
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