Warren Buffett is old. He can’t keep up with the times. He’s famously cheap, and wears dorky grandpa glasses and bad suits. Even his seemingly cool nickname, “The Oracle of Omaha,” sort of sounds like a hokey phrase coined in the Roaring ’20s, or perhaps in ancient Greece. But as he’s proved time and again—like last year, when net earnings of his company, Berkshire Hathaway, jumped 61%—trendiness has nothing to do with making money in the long run. And while most of Buffett’s advice is aimed at investors, his business wisdom has obvious implications if you’re simply hoping to save money, or if you’re looking to buy or sell just about anything.
The WSJ notes that if you’d invested $10,000 with Berkshire Hathaway in 1965, you’d have $80 million right now. Little help that does anyone without a time machine. Still, it’s never too late to follow Buffett’s lead. His advice may be boring and old-fashioned. There is no get-rich-quick formula. What there is is a solid, well-thought-out approach. Here, the WSJ excerpts some of what Buffett wrote in a recent letter to stockholders:
Buy when everyone else is selling. “We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend … Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.”
Don’t buy when everyone else is buying. “Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance,” Mr. Buffett wrote. The obvious corollary is to be patient. You can only buy when everyone else is selling if you have held your fire when everyone was buying.
Value, value, value. “In the end, what counts in investing is what you pay for a business-through the purchase of a small piece of it in the stock market-and what that business earns in the succeeding decade or two.”
Buffett is addressing stockholders. But the thrust of what he’s saying is applicable to everyone. That’s the way a lot of Buffett’s advice works. Sure, there are obvious takeaways for MBAs and other white-collar types. But every little consumer can take heed too. Once you understand that, you’ll realize that Buffett is the modern-day version of famously money-wise Benjamin Franklin—only a whole lot richer.
“When it’s raining gold, reach for a bucket, not a thimble.” Now that sounds incredibly Franklin-esque to me.
Take this Buffett quote:
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
He’s discussing the purchase of a company. You’re not going to buy a company. So why should you care? Because the message applies equally well if you’re considering the purchase of a house, or a car, or anything you hope to use for a long time.
Another famous Buffett quote:
“Value is what you get.”
In other words, value is not what someone else (or society at large) tells you it’s worth. It’s not a value strictly because it’s cheap. It’s a value because the benefit you get is well worth the asking price.
Here’s some more Buffett wisdom to take to heart, no matter what you do for a living, no matter what your ability or interest in investing, no matter how much money you make:
“Risk comes from not knowing what you’re doing.”
“Only when the tide goes out do you discover who’s been swimming naked.”
“If a business does well, the stock eventually goes up.”
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
“A public-opinion poll is no substitute for thought.”
“Beware of geeks bearing formulas.”
“Chains of habit are too light to be felt until they are too heavy to be broken.”
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Read more:
It’s a Bird! It’s a Plane! It’s … a Cartoon Warren Buffett Teaching Kids About Personal Finance?
FAQs
Be fearful when others are greedy. Be greedy when others are fearful.” Few quotes provide as much insight into the mind of Warren Buffet as this one. In this famous quote, Buffett reflects on an important fact: humans are naturally irrational.
What are the Warren Buffett's first 3 rules of investing money? ›
What are Warren Buffett's biggest investing rules?
- Rule 1: Never lose money. This is considered by many to be Buffett's most important rule and is the foundation of his investment philosophy. ...
- Rule 2: Focus on the long term. ...
- Rule 3: Know what you're investing in.
Buffett uses the average rate of return on equity and average retention ratio (1 - average payout ratio) to calculate the sustainable growth rate [ ROE * ( 1 - payout ratio)].
What was Charlie Munger's famous quote? ›
“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well.
What is Warren Buffett's golden rule? ›
"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1."- Warren Buffet.
What is the famous quote by Warren Buffett when others are greedy? ›
In 2008, amid one of the most severe financial crises in recent history, legendary investor Warren Buffett, chairman of Berkshire Hathaway, shared a piece of timeless wisdom that would resonate with investors for generations to come: “Be fearful when others are greedy, and be greedy when others are fearful.”
What is the 70 30 rule Warren Buffett? ›
A 70/30 portfolio is an investment portfolio where 70% of investment capital is allocated to stocks and 30% to fixed-income securities, primarily bonds.
What is Buffett's rule #1? ›
Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”
What is the Buffett's two list rule? ›
Buffett presented a three-step exercise to help streamline his focus. The first step was to write down his top 25 career goals. In the second step, Buffett told Flint to identify his top five goals from the list. In the final step, Flint had two lists: the top five goals (List A) and the remaining 20 (List B).
What is the 10x rule Buffett? ›
The rule really is an observation that Buffett has paid ~10x pretax earnings for many of his largest and best deals, ranging from Coca-Cola, American Express, Wells Fargo, Walmart, Burlington Northern, and the more recent Apple investment.
Simplicity has been at the center of Buffett's strategy for decades. With Berkshire holding a record $168 billion of cash and short-term investments on its balance sheet, investors must surely be wondering what Buffett is thinking. I'd say he just told us, and I think it makes a lot of sense.
Does Warren Buffett read 500 pages a day? ›
Buffett spends 80% of his day reading
Supposedly, in the early days of Buffett's investment career, he would read 600-1000 pages in a single day. Nowadays, he still dedicates 80% of his day to reading. “Read 500 pages… every day.
What is Warren Buffett's most famous quote? ›
"Price is what you pay. Value is what you get." Buffett is widely celebrated as the greatest value investor of all time – and with good reason. That's exactly why this 2008 quote resonates.
What are the words of wisdom from Charlie Munger? ›
"You don't have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long, time." "Remember that reputation and integrity are your most valuable assets, and can be lost in a heartbeat." "There's no way that you can live an adequate life without making many mistakes."
How did Munger make his money? ›
In 1961, an old acquaintance of Munger's, Otis Booth, invited him to partner with him in a real estate development deal, which was completed in 1967 and Munger made a 400% profit on the sale of the development. Munger stayed in the business for a few more years until he made his first million dollars.
What is the most famous quote ever said? ›
Best Quotes of All Time
- 1. “ To be, or not to be, that is the question.” – William Shakespeare.
- 2. “ I think, therefore I am.” – René Descartes.
- 3. “ The only thing we have to fear is fear itself.” – Franklin D. ...
- 4. “ That which does not kill us makes us stronger.” – Friedrich Nietzsche.
- 5. “ ...
- 6. “ ...
- 7. “ ...
- 8. “
His penchant for long-term investments is reflected in another of his aphorisms: “You should invest in a business that even a fool can run, because someday a fool will.” He doesn't believe in businesses that rely for their success on every employee being excellent.
What is the best investment quote? ›
“Invest for the long haul. Don't get too greedy and don't get too scared.” “Waiting helps you as an investor and a lot of people just can't stand to wait. If you didn't get the deferred-gratification gene, you've got to work very hard to overcome that.”
