warren buffet

Warren Buffett

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful . . . Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So, if you wait for the robins, spring will be over

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• [Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.
  • Harvard, 1998
• The chains of habit are too light to be felt until they are too hard to be broken.
  • Talk to Columbia Business School
• I always knew I was going to be rich. I don't think I ever doubted it for a minute.
• 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.
• A story that was passed down from Ben Graham illustrates the lemming like behavior of the crowd: "Let me tell you the story of the oil prospector who met St. Peter at the Pearly Gates. When told his occupation, St. Peter said, "Oh, I'm really sorry. You seem to meet all the tests to get into heaven. But we've got a terrible problem. See that pen over there? That's where we keep the oil prospectors waiting to get into heaven. And it's filled—we haven't got room for even one more." The oil prospector thought for a minute and said, "Would you mind if I just said four words to those folks?" "I can't see any harm in that," said St. Pete. So the old-timer cupped his hands and yelled out, "Oil discovered in hell!" Immediately, the oil prospectors wrenched the lock off the door of the pen and out they flew, flapping their wings as hard as they could for the lower regions. "You know, that's a pretty good trick," St. Pete said. "Move in. The place is yours. You've got plenty of room." The old fellow scratched his head and said, "No. If you don't mind, I think I'll go along with the rest of 'em. There may be some truth to that rumor after all."
  • On Benjamin Graham
• 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.
• 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.
  • October 2003 talking with Wharton MBA students
• The important thing is to keep playing, to play against weak opponents and to play for big stakes.
  • November 2002 talking with students at Gaston Hall
• Sometimes you're outside your core competency. Level 3 is one of those times but I've made a bet on the people and I feel I understand the people. There was a time when people made a bet on me.
  • Oct. 2002 when questioned about his investment in Level 3
  • See also wikipedia on Level 3 Communications.
• There are all kinds of businesses that Charlie and I don't understand, but that doesn't cause us to stay up at night. It just means we go on to the next one, and that's what the individual investor should do.
  • Morningstar Interview
• Berkshire's arbitrage activities differ from those of many arbitrageurs. First, we participate in only a few, and usually very large, transactions each year. Most practitioners buy into a great many deals perhaps 50 or more per year. With that many irons in the fire, they must spend most of their time monitoring both the progress of deals and the market movements of the related stocks. This is not how Charlie nor I wish to spend our lives. (What's the sense in getting rich just to stare at a ticker tape all day?)
• At the bottom of the bear market in October 1974 a Forbes article interviewed Buffett. Buffett, for the first time in his life, made public prediction about the stock market.
  
  • "How do you feel? Forbes asked.
  • "Like an oversexed guy in a whorehouse. Now is the time to invest and get rich."
• Charlie and I decided long ago that in an investment lifetime it's too hard to make hundreds of smart decisions. That judgement became ever more compelling as Berkshire's capital mushroomed and the universe of investments that could significantly affect our results shrank dramatically. Therefore, we adopted a strategy that required our being smart - and not too smart at that - only a very few times. Indeed, we'll now settle for one good idea a year. (Charlie says it's my turn.)
• The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable.
  • Financial Review, 1985
• I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.
  • Lecturing to a group of students at Columbia U. He was 21 years old.
• 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.
  • July 1999 at Herb Allen's Sun Valley, Idaho Retreat
• "It's crazy to take little in between jobs just because they look good on your resume. That's like saving sex for your old age. Do what you love and work for whom you admire the most, and you've given yourself the best chance in life you can."
  • 2001? speech at Terry College of Business at the University of Georgia
• "I asked him what he wanted to do for his career, and he replied that he wanted to go into a particular field, but thought he should work for McKinsey for a few years first to add to his resume. To me that's like saving sex for your old age. It makes no sense."
• I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.
• Diversification is a protection against ignorance. It makes very little sense for those who know what they're doing.
• If you understand the business, you don't need to own very many of them. If you have a harem of 40 women, you never get to know any of them very well.
• I'd be a bum on the street with a tin cup if the markets were always efficient.
• 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.
• 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 jewelry, know the jeweler.
• 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.
• If you gave me the choice of being CEO of General Electric or IBM or General Motors, you name it, or delivering papers, I would deliver papers. I would. I enjoyed doing that. I can think about what I want to think. I don't have to do anything I don't want to do.
• This time Congress should listen to the slim accountants. The logic behind their thinking is simple:

1. If options aren't a form of compensation, what are they?
2. If compensation isn't an expense, what is it?
3. And if expenses shouldn't go into the calculation of earnings, where in the world should they go?

• Wall Street is the only place that people ride to work in a Rolls Royce to get advice from those who take the subway.
• 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'.
• 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.
• The managers at fault periodically report on the lesson they have learned from the latest disappointment. They then usually seek out future lessons.
• 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.
  • in a letter to his partners in the stock market frenzy of 1969.
• I just don't see anything available that gives any reasonable hope of delivering such a good year and I have no desire to grope around, hoping to 'get lucky' with other people's money. I am not attuned to this market environment, and I don't want to spoil a decent record by trying to play a game I don't understand just so I can go out a hero.
• In a chronically leaking boat, energy devoted to changing vessels is more productive than energy devoted to patching leaks.
• Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.