Wise Investment Sayings by Warren Buffett 3
Well, although I did say this is a money-making blog and will be full of different ideas on how to become rich and different ways to make money, I am biased in favour of Warren Buffett's investment style and paradigm. That's why he's more prominent on my blog and I mention him quite often as a role model. To be fair, I've included long and varied research and ideas on technical analysis, and individual investors should just make up their own minds as to which school of thought they believe in or prefer. What is your investment style? What are your goals? How do you like to make your money, and what risk can you take? etc, etc. Nonetheless, even if individual investors do not follow his style nor like him, there can be some things to learn from his homespun wisdom, and also - quite funny and humorous quotes sometimes. Enjoy!
More quotes from Warren Buffett to follow:
If you don't know jewellery, know the jeweller.
If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes.
There seems to be some perverse human characteristic that likes to make easy things difficult.
One’s objective should be to get it right, get it quick, get it out, and get it over... your problem won’t improve with age.
In the insurance business, there is no statute of limitation on stupidity.
If a business does well, the stock eventually follows.
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 future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.
We will only do with your money what we would do with our own.
(One of the reasons why I respect this great man - real and proven financial integrity and probity.)
Of one thing be certain: if a CEO is enthused about a particularly foolish acquisition, both his internal staff and his outside advisors will come up with whatever projections are needed to justify his stance. Only in fairy tales are emperors told that they are naked.
When asked how he became so successful in investing, Buffett answered: "we read hundreds and hundreds of annual reports every year."
I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. “I’m paying $32 billion today for the Coca Cola Company because...” If you can’t answer that question, you shouldn’t buy it. If you can answer that question, and you do it a few times, you’ll make a lot of money.
You ought to be able to explain why you’re taking the job you’re taking, why you’re making the investment you’re making, or whatever it may be. And if it can’t stand applying pencil to paper, you’d better think it through some more. And if you can’t write an intelligent answer to those questions, don’t do it.
I really like my life. I've arranged my life so that I can do what I want.
Someone's sitting in the shade today because someone planted a tree a long time ago.
If options aren't a form of compensation, what are they?
If compensation isn't an expense, what is it?
And if expenses shouldn't go into the calculation of earnings, where in the world should they go?
First, many in Wall Street - a community in which quality control is not prized - will sell investors anything they will buy.
An irresistable footnote: in 1971, pension fund managers invested a record 122% of net funds available in equities - at full prices they couldn't buy enough of them. In 1974, after the bottom had fallen out, they committed a then record low of 21% to stocks.
When returns on capital are ordinary, an earn-more-by-putting-up-more record is no great managerial achievement. You can get the same result personally while operating from your rocking chair. Just quadruple the capital you commit to a savings account and you will quadruple your earnings. You would hardly expect hosannas for that particular accomplishment. Yet, retirement announcements regularly sing the praises of CEOs who have, say, quadrupled earnings of their widget company during their reign - with no one examining whether this gain was attributable simply to many years of retained earnings and the workings of compound interest.
Wall Street is the only place that people ride to work in a Rolls Royce to get advice from those who take the subway.
The Stock Market is designed to transfer money from the Active to the Patient.
Managers thinking about accounting issues should never forget one of Abraham Lincoln's favorite riddles:
'How many legs does a dog have if you call his tail a leg?' The answer: 'Four, because calling a tail a leg does not make it a leg'.
Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds... any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops.
Working with people who cause your stomach to churn seems much like marrying for money - probably a bad idea under any circumstances, but absolute madness if you are already rich.
One of the ironies of the stock market is the emphasis on activity. Brokers, using terms such as 'marketability' and 'liquidity," sing the praises of companies with high share turnover... but investors should understand that what is good for the croupier is not good for the customer. A hyperactive stock market is the pick pocket of enterprise.
The speed at which a business success is recognized, furthermore, is not that important as long as the company's intrinsic value is increasing at a satisfactory rate. In fact, delayed recognition can be an advantage: It may give us the chance to buy more of a good thing at a bargain price.
I am out of step with present conditions. When the game is no longer played your way, it is only human to say the new approach is all wrong, bound to lead to trouble, and so on. On one point, however, I am clear. I will not abandon a previous approach whose logic I understand ( although I find it difficult to apply ) even though it may mean foregoing large, and apparently easy, profits to embrace an approach which I don't fully understand, have not practiced successfully, and which possibly could lead to substantial permanent loss of capital.
I don't usually play bridge, but Buffett apparently does:
(On Bridge) It’s got to be the best intellectual exercise out there. You’re seeing through new situations every ten minutes…In the stock market you don’t base your decisions on what the market is doing, but on what you think is rational….Bridge is about weighing gain/loss ratios. You’re doing calculations all the time.
(On Bridge) The approach and strategies are very similar in that you gather all the information you can and then keep adding to that base of information as things develop. You do whatever the probabilities indicated based on the knowledge that you have at that time, but you are always willing to modify your behaviour or your approach as you get new information. In bridge, you behave in a way that gets the best from your partner. And in business, you behave in the way that gets the best from your managers and your employees.
(Sources: free and public online sources, Wikipedia, libraries)
Ideas on how to become rich!
