In 2016 Warren Buffett made $12B. That’s $32,876,712 a day. Every minute of his day, awake or sleeping, he made $22,831.
In the eight seconds it took you to read the first line, he added $3,044 to his net worth. I’m talking about Warren Buffett, and today I want to hammer home some of his key insights.
Think deeply about them, and act on them as well.
His humble beginnings trace back to his employment under value investing expert Benjamin Graham.
There are many hundreds of Warren Buffett quotes to choose from when looking for guidance in the area of value investing. I’ve compiled key quotes that really get to the heart of the matter and deliver sound, long-lasting advice for anyone looking to generate solid, consistent returns over time.
1. “Nothing sedates rationality like large doses of effortless money.”
This is another way of saying not to confuse brains with a bull market. Howard Marks, one of my favorite investors and a billionaire in his own right, stresses this to his clients as well. His fund wants to make good returns in a good market (like everyone else), but it wants to also make big money in bear markets, when others lose massive amounts.
The lesson here is to make sure you don’t start buying into your own brilliance, as Donald Trump did in the 1980s, a state of mind that bankrupted him.
2. “What the wise do in the beginning, fools do in the end.”
It’s better to exercise caution in the beginning than to take preventive measures only after a massive capital loss. The message here is one of critical importance, and it relates to your life in all regards, not just investing.
Buffett advises you to be skeptical at all times, research deeply, and get to the bottom line, not jump head first. He wants you to take baby steps, which brings us to his next suggestion.
3. “I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”
Goals should be attainable and proportionate to one’s account size. Buffett is teaching you the power of saying “NO” to most offers. When you manage $300B, like he does, the world is your oyster, yet you will never reach the pinnacle of success by trying to do it all.
4. “If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.”
I love this one because people have the tendency to believe that things will work out when they attempt to accomplish what is too difficult for them – they can’t resist the temptation, and it comes at a great cost.
5. “I try to buy stock in businesses that are so wonderful that an idiot can run them because sooner or later, one will.”
Even the oldest and most well-regarded companies can run into trouble due to leadership issues. General Electric provides a lesson in questionable leadership with Jeff Immelt, who resigned as CEO in 2017:
Courtesy of Barchart.com
6. “Culture, more than rule books, determines how an organization behaves.”
This is one I believe in most since I’ve built businesses from the ground up.
A constructive culture inspires all employees to treat the business as if they own it and every customer as if they are king.
7. “The most important quality for an investor is temperament, not intellect.”
It’s interesting to consider that the smartest person isn’t necessarily the best investor.
It takes the right temperament, not intellect, to ride out the dips. Over the past 30 years, Buffett has made billions holding Coca-Cola shares, which have dropped by 30% or more multiple times. Discipline, not intellect, has allowed Buffett to hold through thick and thin.
8. “You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”
This is important: don’t enjoy others agreeing with you, but don’t be a contrarian for the sake of going against the trend.
9. “The time to get interested is when no one else is.”
Remember this because when Buffett began buying insurance stocks, he was just about the only one.
Buying low provides a margin of safety, which is the cornerstone of value investing.
There are many things Buffett has done that I completely disagree with, but when it comes to these nine quotes, I couldn’t be more aligned with him.
Research Partner, PortfolioWealthGlobal.com