Warren Buffett is the world's largest and one of the most prominent investors. Legendary Oracle from Omaha share his experience in the world of finance.
Fortunately, this person has an amazing ability to speak on complex topics in simple language and dilute them with jokes. His annual letters should always be on the must-read list. However, his best statements can most often be heard on TV, read in the newspaper or in his interviews with magazines. Here are some of the best quotes from the Oracle of Omaha.
1. Master the basics
“To invest successfully, you don't need to understand efficient markets, current asset management theory, options pricing theory, or emerging markets. Perhaps it's best not even to know all this. Of course, this point of view is not at all common in most business schools, whose timetables are full of such subjects. In our opinion, students studying investment should be well trained in two courses - "How to evaluate a business" and "How to think about market prices."
2. The best time to buy a company is when it has problems
“The best thing that can happen for us is a large company with temporary difficulties. We want to buy them while they are on the operating table."
3. Don't buy an asset just because everyone hates it
“The previous statements do not mean at all that an asset or a business is a good object to buy simply because it is not popular. The reverse approach is just as foolish to apply as the crowd-following strategy. You need to think. Unfortunately, Bertrand Russell's remarks about life in general collide with an unusual force in the financial world: "Most people would rather die than think." This is true".
4. Assets always come out of the crisis
“In the long term, the news on the stock market will be good. In the 20th century, the United States experienced two world wars and other costly military conflicts, the Great Depression, about a dozen recessions and financial crises, oil market shocks, flu epidemics and the resignation of the president. And yet, the Dow Jones rose from 66 points to 11, 497 points."
5. Don't be fooled by the hope of huge profits
“The dividing line between investment and speculation, which is never clear cut, becomes even more blurred when all market participants are at their peak of triumph. Nothing soothes rational thought better than large doses of easy money. After this happens, many begin to behave like Cinderella at the ball. They understand that most of the ball is over, but they continue to speculate on high-value stocks of companies, forgetting about the likelihood that soon everything will turn into a pumpkin and mice. They do not want to miss a second of this holiday. Intoxicated with hope, the participants plan to leave the ball seconds before midnight. However, there is one problem: they dance in a hall where the clock has no hands."
6. You don't need to be a genius to invest well
“You don't have to be an amazing scientist. Investing is not a game where someone with an IQ of 160 beats someone with an IQ of 130."
7. You always need to be liquid
“I have promised you, the rating agencies and myself, to always manage Berkshire with more than enough cash. We do not want to rely on the kindness of strangers to fulfill tomorrow's obligations. When I have to choose, I won't even trade my sleep because of the chance of extra profit."
8. Think long term
“Your goal as an investor should simply be to buy, at a reasonable price, a partial share in an understandable business, whose returns will definitely be significantly higher in 5, 10 and 20 years. Over time, you will only find a few companies that meet these standards. Therefore, when you come across one such company, you need to buy a significant share of its shares. You also need to resist the temptation to deviate from the basic principle: if you do not want to own stocks for 10 years, then you should not think about buying them for 10 minutes. Put together the portfolios of companies whose total income has been growing over the years, then the total market value of the portfolio will also rise."
9. Always is a good holding period
"When we own an outstanding business share with outstanding management, our preferred tenure is Always."
10. Buy a business that an idiot can run
“I try to buy stocks in companies that are so wonderful that any idiot can run them. Because sooner or later it will happen."
11. Be greedy when others are afraid
“Investors must remember that hustle and bustle and expense are their enemies. And if they insist on their participation in assets, they need to try to feel fear when others are greedy and greedy when others are afraid."
12. There is more to buying stocks than just price
"It is much better to buy a great company at a good price than a good company at a great price."
13. Don't grab onto every opportunity
“The stock market is not a game where you have to tackle everything. Here you need to wait for a chance just for you. However, the problem for you as an investor is that your fans are constantly shouting to you, "Take this, and this, and this more."
14. Ignore politics and macroeconomics when choosing assets
“We will ignore political and economic forecasts, which are a costly distraction for many investors and businessmen. Thirty years ago, no one could have predicted the spread of the Vietnam war, control of prices and wages, two oil shocks, the resignation of the president, the collapse of the USSR, a one-day drop in the Dow Jones index of 508 points and fluctuations in Treasury bill yields between 2, 8% and 17, 4%. As a result, it turns out that the best purchases are made at the time of the active spread of fears of various kinds. Fear turns out to be a friend of the fundamentalist."
15. The more you trade, the worse
“A long time ago, Isaac Newton brilliantly discovered the three laws of dynamics. However, Newton's talents did not extend to his investments - he lost a lot in the collapse of the South Sea Company. Then he will say: "I can calculate the movement of celestial bodies, but not the degree of madness of the crowd." Perhaps if Newton had not been so traumatized by his loss, he would have discovered the fourth law of dynamics: "For investors in general, returns decline when dynamics rise."
16. Price and cost are not the same
“Long ago, Ben Graham taught me that price is what you pay and cost is what you get. We are talking about securities or things, I prefer to buy a quality product during a decline."
17. The bad is not obvious in the good times
"At low tide, it will still become clear who is swimming naked."
18. There are no bonus points for complex investments
“The idea behind our investments remains simple: a really big investment idea can usually be explained in a short paragraph. We like businesses with competitive advantages, run by the right people. When these conditions are in place and when we can buy at a reasonable price, it is difficult to be mistaken. If you are simply correct that the total value of a business is highly dependent on a single key factor, then your income will be the same as if you did the right complex analysis using complex variables."
19. A good businessman makes a good investor
"I am a better investor because I am a businessman and I am a better businessman because I am not an investor."
20. High taxes are not a stumbling block
“Imagine that an investor who you admire and trust has come to you with an idea. He says: "This is a good idea, I am for it, and you, too, should participate in its implementation, as it seems to me." What are you most likely to answer him? Maybe you say, “It depends on the tax on the estimated income. If taxes are too high, then I'd rather keep my money in savings and get a quarter of a percent”? Such an answer can only be found in a fairy tale."
21. Companies that don't change can be great investments
“Our approach is that you can get a much higher profit from not changing than from having one. For example, I like the lack of change in the Wrigley gum manufacturer. I don't think the internet can harm the company. I like this kind of business."
22. Most important
“Rule number one: never lose money. Rule number two: always remember rule number one."
23. Time will tell
"Time is the friend of great business and the enemy of mediocrity."
24. Bonus: About Wall Street
"Wall Street is the only place where people come in Rolls-Royce to get advice from those on the subway."
"Private Correspondent"
