A huge picture of Berkshire Hathaway Chairman Warren Buffett looks overshareholders swarming the exhibit floor where companies owned by Berkshiredisplay and sell their products, at the company's annual meeting in Omaha May 4,2013.
Warren Buffett's 23 Best QuotesAbout Investing
SAM RO MAR. 3, 2014, 4:45 PM
Warren Buffett published his 2013 annual letter to Berkshire Hathaway shareholders onSaturday.
In it, he bulleted six "fundamentals of investing."
Not only is Buffett the most successful investor in history. He also shares his wisdom in anapproachable and entertaining manner.
Vintage Coca Cola ad
We compiled a few of Buffett's best quotes from his TV appearances, newspaper op-eds,magazine interviews, and of course his annual letters.
Investing novices and experts alike can learn from the advice that the he has articulatedthrough the years.
If we've missed any of your favorites, let us know in the comments.
Buying a stock is about more than just the price."It's far better to buy a wonderfulcompany at a fair price than a faircompany at a wonderful price."
Source: Letter to shareholders, 1989
You don't have to be a genius to invest well."You don't need to be a rocketscientist. Investing is not a gamewhere the guy with the 160 IQ beatsthe guy with 130 IQ."
Source: Warren Buffet Speaks, viamsnbc.msn
University of Chicago professor Eugene F. Fama,father of the efficient markets hypothesis.
But, master the basics."To invest successfully, you neednot understand beta, efficientmarkets, modern portfolio theory,option pricing or emerging markets.You may, in fact, be better offknowing nothing of these. That, ofcourse, is not the prevailing view atmost business schools, whosefinance curriculum tends to bedominated by such subjects. In ourview, though, investment studentsneed only two well-taught courses -How to Value a Business, and Howto Think About Market Prices."
Source: Chairman's Letter, 1996
Flickr / Mark Rain
tavopp / Flickr
Don't buy a stock just because everyone hates it."None of this means, however, thata business or stock is an intelligentpurchase simply because it isunpopular; a contrarian approachis just as foolish as a follow-the-crowd strategy. What's required isthinking rather than polling.Unfortunately, Bertrand Russell'sobservation about life in generalapplies with unusual force in thefinancial world: "Most men wouldrather die than think. Many do."
Source: Chairman's Letter, 1990
Bad things aren't obvious when times are good."After all, you only find out who isswimming naked when the tide goesout."
Source: Letter to shareholders, 2001
flickr / Doug Wertman
Always be liquid."I have pledged to you, the ratingagencies and myself to always runBerkshire with more than amplecash. We never want to count onthe kindness of strangers in orderto meet tomorrows obligations.When forced to choose, I will nottrade even a nights sleep for thechance of extra profits."
Source: Letter to shareholders,2008
The best time to buy a company is when it's in trouble."The best thing that happens to us iswhen a great company gets intotemporary trouble...We want to buythem when they're on theoperating table."
Source: Businessweek, 1999
Stocks have always come out of crises."Over the long term, the stockmarket news will be good. In the20th century, the United Statesendured two world wars and othertraumatic and expensive militaryconflicts; the Depression; a dozen orso recessions and financial panics;oil shocks; a flu epidemic; and theresignation of a disgraced president.Yet the Dow rose from 66 to11,497."
Source: The New York Times,October 16, 2008
Don't be fooled by that Cinderella feeling you get fromgreat returns."The line separating investment andspeculation, which is never brightand clear, becomes blurred stillfurther when most marketparticipants have recently enjoyedtriumphs. Nothing sedatesrationality like large doses ofeffortless money. After a headyexperience of that kind, normallysensible people drift into behaviorakin to that of Cinderella at theball. They know that overstayingthe festivities that is, continuingto speculate in companies that havegigantic valuations relative to thecash they are likely to generate inthe future will eventually bring onpumpkins and mice. But theynevertheless hate to miss a singleminute of what is one helluva party. Therefore, the giddy participants all plan to leave just secondsbefore midnight. Theres a problem, though: They are dancing in a room in which the clocks have nohands."
Source: Letter to shareholders, 2000
Think long-term."Your goal as an investor shouldsimply be to purchase, at a rationalprice, a part interest in an easily-understandable business whoseearnings are virtually certain to bematerially higher five, ten andtwenty years from now. Over time,you will find only a few companiesthat meet these standards - so whenyou see one that qualifies, youshould buy a meaningful amount ofstock. You must also resist thetemptation to stray from yourguidelines: If you aren't willing toown a stock for ten years, don'teven think about owning it for tenminutes. Put together a portfolio ofcompanies whose aggregateearnings march upward over theyears, and so also will the portfolio'smarket value."
Source: Chairman's Letter, 1996
Forever is a good holding period."When we own portions ofoutstanding businesses withoutstanding managements, ourfavorite holding period is forever."
Source: Letter to shareholders, 1988
MovieClips / YouTube
Dumb & Dumber
Buy businesses that can be run by idiots."I try to buy stock in businessesthat are so wonderful that an idiotcan run them. Because sooner orlater, one will."
Source: Business Insider
IMDB, Twentieth Century Fox
Gordon Gekko, "Wall Street"
Be greedy when others are fearful."Investors should remember thatexcitement and expenses are theirenemies. And if they insist on tryingto time their participation inequities, they should try to befearful when others are greedyand greedy only when others arefearful."
Source: Letter to shareholders, 2004
You don't have to move at every opportunity."The stock market is a no-called-strike game. You don't have toswing at everything--you can waitfor your pitch. The problem whenyou're a money manager is that yourfans keep yelling, 'Swing, youbum!'"
Source: The Tao of Warren Buffettvia Engineeringnews.com
AP Photo/Horst Faas
Ignore politics and macroeconomics when picking stocks."We will continue to ignore politicaland economic forecasts, which arean expensive distraction for manyinvestors and businessmen. Thirtyyears ago, no one could haveforeseen the huge expansion of theVietnam War, wage and pricecontrols, two oil shocks, theresignation of a president, thedissolution of the Soviet Union, aone-day drop in the Dow of 508points, or treasury bill yieldsfluctuating between 2.8% and17.4%.
"But, surprise - none of theseblockbuster events made theslightest dent in Ben Graham'sinvestment principles. Nor did theyrender unsound the negotiatedpurchases of fine businesses at sensible prices. Imagine