Warren Buffett Quotes

Quotes from the Chairman of Berkshire Hathaway

• You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.
• We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own assets.
• When Berkshire buys common stock, we approach the transaction as if we were buying into a private business.
• Wide diversification is only required when investors do not understand what they are doing.
• Accounting consequences do not influence our operating or capital-allocation decisions. When acquisition costs are similar, we much prefer to purchase $2 of earnings that is not reportable by us under standard accounting principles than to purchase $1 of earnings that is reportable.
• Never invest in a business you cannot understand.
• Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.
• Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".
• (When speaking of managers and executive compensation) The .350 hitter expects, and also deserves, a big payoff for his performance - even if he plays for a cellar-dwelling team. And a .150 hitter should get no reward - even if he plays for a pennant winner.
• The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.
• Risk can be greatly reduced by concentrating on only a few holdings.
• Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.
• Many stock options in the corporate world have worked in exactly that fashion: they have gained in value simply because management retained earnings, not because it did well with the capital in its hands.
• Buy companies with strong histories of profitability and with a dominant business franchise.
• Be fearful when others are greedy and greedy only when others are fearful.
• It is optimism that is the enemy of the rational buyer.
• As far as you are concerned, the stock market does not exist. Ignore it.
• The ability to say "no" is a tremendous advantage for an investor.
• Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.
• Lethargy, bordering on sloth should remain the cornerstone of an investment style.
• An investor should act as though he had a lifetime decision card with just twenty punches on it.
• Wild swings in share prices have more to do with the "lemming- like" behaviour of institutional investors than with the aggregate returns of the company they own.
• As a group, lemmings have a rotten image, but no individual lemming has ever received bad press.
• An investor needs to do very few things right as long as he or she avoids big mistakes.
• "Turn-arounds" seldom turn.
• Is management rational?
• Is management candid with the shareholders?
• Does management resist the institutional imperative?
• Do not take yearly results too seriously. Instead, focus on four or five-year averages.
• Focus on return on equity, not earnings per share.
• Calculate "owner earnings" to get a true reflection of value.
• Look for companies with high profit margins.
• Growth and value investing are joined at the hip.
• The advice "you never go broke taking a profit" is foolish.
• It is more important to say "no" to an opportunity, than to say "yes".
• Always invest for the long term.
• Does the business have favourable long term prospects?
• It is not necessary to do extraordinary things to get extraordinary results.
• Remember that the stock market is manic-depressive.
• Buy a business, don't rent stocks.
• Does the business have a consistent operating history?
• An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.

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