Warren Buffett

Warren Buffett Quotes

“Risk comes from not knowing what you are doing”

POINT MADE: When you don’t understand the business or industry in which it operates in it becomes risky to the investor to invest. It is not wise to invest in a situation which you do not understand what is going on. Ensure that you understand the business and the industry it operates in before you decide to invest,

“It more important to say no to an opportunity than saying yes”

POINT MADE: Saying no to most opportunities are wise for the investor, when real bargins present themselves which may seem

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it”

POINT MADE: Market fluctuations are perceived to be the enemy in investment, however the wise investor views fluctuations as a friend because profitable buying opportunities present themselves in market downturns while others are fearful and filled with panic.

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market for the next day and not reopen it for five years.”

POINT MADE: Warren buffett does not try to profit from short term movements in the market. He purchases business which he is happy to hold if the market was to shut down for 5 years.

“Buy companies with strong histories of profitability and with a dominant business franchise:”

POINT MADE: Warren buffet enjoys purchasing companies with historical evidence that they can maintain strong profits coupled with a business which competitive advantages and favourable market share.

“When i buy a stock, i think of it in terms of buying a whole company, just as if i were buying a store down the street, if i were buying the store, i would want to know all about it.”

POINT MADE: Investing in a stocks is not a complex process. Anyone has the ability to identify a spectacular business. Warren buffets views buying stocks like paying for a business, just like if you were to purchase a local business which is performing well. You would want to know every detail of this business before you decide to invest. This is the simplest explanation of how investment in companies work.

“The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”

POINT MADE: Warren Buffet has emphasises the importance of buying companies with clear and sustainable moats; which are businesses with clear competitive advantages, whether they have a monopolistic position in their industry, low cost benefits with expenses or production, majority market share in the industry and low barriers to entry for competition. These businesses are the ones which generally prevail.

“A great investment opportunity occurs when a marvelous business encounters a one time huge, but solvable problem”

POINT MADE: Investment opportunity exists when solid businesses encounter a setback issue, however in these cases generally the price of the company will fall to price in this problem. The role of the investor is to investigate the issues and determine whether a wonderful businesses can recover from this issue, this is how opportunity can occur in the market.

“Before looking at new investments, we consider adding to old ones. If a business is attractive enough to buy once, it may well pay to repeat the process.”

POINT MADE: Warren buffett likes to repurchase companies he has already invested in, especially if they fall in price. This is called averaging down in investment. The reason for repurchasing already owned companies is because the company must have attractive perks in the first place if it was worth to invest in, so when the price drops it makes sense to repurchase more.

“Only buy something you’d be perfectly happy to hold if the market shut down for 10 years”

POINT MADE: In investment it is important to avoid having a short term view of how the business will perform. It is wiser to have a long term horizon outlook on the business

“The stock market is a non-called strike game. You don’t have to swing at everything – you can wait for your pitch.”

POINT MADE:

“I dont invest a dime based on macro forecasts.”

POINT MADE: Macroeconomic forecasts are when analysts or professionals in the industry spend time trying to predict macroeconomic factors such as interest rate movements, inflation levels, GDP and many other indicators. No one has the ability to accurately forecast these factors because it is impossible. It is a waste of time paying attention to forecasts as no one can predict the future on impossible things to forecast. Many experts place to much emphasis on trying to predict things which cannot be predicted.

“When investing pessimism is your friend and euphoria is your enemy”

POINT MADE: In investment pessimism will cause lower prices which makes it favourable for the invest

“If the business does well, The stock eventually follows.”

POINT MADE: The stock market isn’t as complicated as everyone thinks, the only thing an investor needs to do is pay an attractive price which proves the company is un

“Much success can be attributed to inactivity. Most investors cannot resist the temptation to
constantly buy and sell”

POINT MADE:

“The definition of a great company is one that will be great for 25 or 30 years “

POINT MADE: A great company is a business which will prevail and be great for a long duration. These companies overtime, if the investment is held will create substantial returns for the investor through share price growth, dividend payment growth on their initial principal growth.

“There seems to be some perverse human characteristics that likes to make easy things difficult.”

POINT MADE: It is in our human nature to make decisions based on our emotion at that period of time. Decisions which are made on emotional premise will most likely lead to irrational decision making.

“Periodically, financial markets will become divorced from reality.”

POINT MADE: Investors in the market must realise that the market can easily be

“Do not take yearly results too serious. Instead focus on four or five year averages”

POINT MADE: When a company announces their reports, sometimes they can underperform or have average performance. Don’t take this too seriously, instead focus on how the company reports on a 4-5 year basis. This is a better indication of how the company will perform in the future, instead of focusing just on one year results.

“We continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen.

POINT MADE: Political and economic forecasts are

“”The best thing that happens to us is when a great company gets into temporary trouble, we
want to buy them when they’re on the operating table.”

POINT MADE:

“When proper temperament joins with proper intellectual framework, then you get rational
behaviour.”

POINT MADE: