Words of wisdom from Warren Buffett

"Rule No.1: Never lose money. Rule No.2: Never forget rule No.1."

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

"You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else."

"Our favourite holding period is forever." Letter to Berkshire Hathaway shareholders, 1988

"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact."

"Risk comes from not knowing what you're doing."

"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."

"A public-opinion poll is no substitute for thought."

"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."

"Occasionally, a man must rise above principles."

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."

"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."

"Price is what you pay. Value is what you get."

"For some reason, people take their cues from price action rather than from values. What doesn’t work is when you start doing things that you don't understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it's going up. "

"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."

"We have tried occasionally to buy toads at bargain prices with results that have been chronicled in past reports. Clearly our kisses fell flat. We have done well with a couple of princes - but they were princes when purchased. At least our kisses didn't turn them into toads. And, finally, we have occasionally been quite successful in purchasing fractional interests in easily-identifiable princes at toad-like prices."- 1981 Chairman's Letters to Shareholders

"Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results."- 1974 Letter to Shareholders

"Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid." - Berkshire Hathaway 1998 Annual Meeting

"If you're an investor, you're looking on what the asset is going to do, if you're a speculator, you're commonly focusing on what the price of the object is going to do, and that's not our game."- 1997 Berkshire Hathaway Annual Meeting

"Despite three years of falling prices, which have significantly improved the attractiveness of common stocks, we still find very few that even mildly interest us. That dismal fact is testimony to the insanity of valuations reached during The Great Bubble. Unfortunately, the hangover may prove to be proportional to the binge."- March 2003
On acquiring bad companies for cheap prices: "In my early days as a manager I, too, dated a few toads. They were cheap dates - I've never been much of a sport - but my results matched those of acquirers who courted higher-price toads. I kissed and they croaked."

"I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out."- Oct. 2003 talking with Wharton MBA students

"The important thing is to keep playing, to play against weak opponents and to play for big stakes."- Nov. 2002 talking with students at Gaston Hall


source : deadpresidents.blogspot.com