Warren Buffet Investment Advice & Quotes

Warren Buffet Investment Advice & Quotes

Buffett on Investing

Warren Buffett generally has come up with a lot of great sayings when it comes to the field of investing; his advice in terms of buying and selling actual stocks is not always sage. He has made two notable mistakes;  IBM he got in at the top and out at the bottom and he jumped into Apple at the wrong time and continued to pile in as the stock dropped. However, overall, when he does not venture into tech stocks his record seems to be pretty good, provided one is willing to hold those investments for a long period

“What we learn from history is that people don’t learn from history.” When investors get either too fearful or too greedy, they sometimes hide behind the notion that “This time it’s different.”

It’s always different in the mind of the masses, but in reality, its the same old story. That is why the masses never win and are always on the wrong side of the market. Mass psychology clearly states that one should buy when the masses panic and sell with they are euphoric.

Use Fear and Greed To Your Advantage 

“Two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. … We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

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

Risk comes from not knowing what you are doing.”

On patience, in three examples

“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”

“Our favourite holding period is forever.” 

“I don’t look to jump over seven-foot bars: I look around for one-foot bars that I can step over.” 

“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.

On being smart and being successful

“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.”

Along the same lines: “It is not necessary to do extraordinary things to get extraordinary results. … By periodically investing in an index fund, the know-nothing investor can actually outperform most investment professionals.”

My take on that topic: If you want above-average results with below-average risks, make regular investments in index funds and leave the money there until you need it.

Now let’s look at some other Warren Buffett gems that include his thoughts on the value of value investing, the non-value of predictions, following the herd, the tarnish of gold as an investment, and more.

 

Buffett’s view on Value investing 

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” That’s what value investing is all about.

Don’t let fear and greed change your investing criteria and values. Avoid being overwhelmed by outside forces that affect your emotions. Never sell into panic.

Buffet only invests in companies he understands and believes have stable or predictable products for the next 10 – 15 years. This is why he has typically avoided technology companies.

Treat investing in stock as though you are buying the entire company. I always take a hard look at enterprise value because this is the total price of a company. In other words, it is the price you would be paying for the company if you could buy the whole company at current prices.

He would rather pay a fair price for a great company than a low price for a mediocre company. 

Investment opportunities become available through broad market corrections or individual stocks that become bargains. These are not predictable events; so cash on hand is an important concept in value investing. Full Story

Predictions and on losing money 

“We have long felt that the only value of stock forecasters is to make fortune-tellers look good.”

“Rule No.1 is never lose money. Rule No.2 is never forget Rule No. 1.”

“The most important thing to do if you find yourself in a hole is to stop digging.”

“I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”

“Price is what you pay. Value is what you get.”

Stick with what you know

“Risk comes from not knowing what you’re doing.”

“Diversification is a protection against ignorance.”

“Only when the tide goes out do you discover who’s been swimming naked.”

“Never invest in a business you cannot understand.”

“What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.”

Common Sense

“Chains of habits are too light to be felt until they are too heavy to be broken.”

“Do not save what is left after spending, but spend what is left after saving.”

“You shouldn’t own common stocks if a 50% decrease in their value in a short period of time would cause you acute distress.”

“With enough insider information and a million dollars, you can go broke in a year.”

Never follow the Crowd 

“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.”

 

Buffett on Gold and Gold Bugs

“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side … Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion — that’s probably about a third of the value of all the stocks in the United States. For $7 trillion, you could have all the farmland in the United States, you could have about seven Exxon Mobil Corporations plus a trillion dollars of walking-around money. … If you offered me the choice of looking at some 67-foot cube of gold all day, … call me crazy, but I’ll take the farmland and the Exxon Mobil Corporations.”

“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”

 

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Lost Money In The Stock Market? Here’s the Solution  (Nov 19)

A clear illustration of why we often refer to experts as jackasses  (Nov 15)

Stock Market Bull 2018 Doldrums; is the Bear Ready to Growl (Oct 28)

The Ideal time to Buy Stocks is when the Masses are Panicking (Oct 27)

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