By Sure Dividend. Originally published at ValueWalk.
This article contains 107 Warren Buffett quotes to teach you to build wealth and become a better investor.
Warren Buffett is arguably the greatest investor of all time.
He has amassed a net worth of over $60 billion from his investing skill.
I have grown as an investor from reading and writing this article. Warren Buffett’s words of wisdom crystalize decades of investment knowledge from the best in the business.
Out of the 107 quotes in this article, 1 sums up Buffett’s investment philosophy succinctly. This quote is below:
“We select such investments on a long-term basis, weighing the same factors as would be involved in the purchase of 100% of an operating business:
(1) favorable long-term economic characteristics;
(2) competent and honest management;
(3) purchase price attractive when measured against the yardstick of value to a private owner; and
(4) an industry with which we are familiar and whose long-term business characteristics we feel competent to judge.”
That’s it. That’s the basic ‘secret formula’ to Warren Buffett’s $60 billion fortune.
There is much more detail to Warren Buffett’s investment philosophy than the quote above provides. The 106 remaining Warren Buffett quotes in this article paint a clearer picture of Buffett’s thinking.
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The article is organized by category. The Buffett quote categories are listed below. Click on a section to read it immediately, or read the whole article in order:
- Long-Term Investing
- Do Nothing Investing
- Circle of Competence
- Great Businesses & Competitive Advantages
- When to Buy
- When to Sell
- Risk & Leverage
- Personal Finance & Life Tips
- Charity & Legacy
- History & Forecasting
- Bull Markets & Crowd Thinking
- Investing Tips
- Management
- Final Thoughts
11 Long-Term Investing Quotes from Warren Buffett
Warren Buffett is a long-term investor. Three of his longest holdings are shown below:
- American Express (AXP): 1st purchase in 1964
- Coca-Cola (KO): 1st purchase in 1988
- Wells Fargon (WFC): 1st purchase in 1989
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”
This quote shows Warren Buffett thinks in investing time frames of at least 5 years. But his holding period is preferably much longer…
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
&
“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”
These quotes shows that a 10 year holing period is really what you should look for when examining stocks to buy.
Even 10 years is too short a time period for outstanding businesses.
“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
&
“Time is the friend of the wonderful company, the enemy of the mediocre.”
You should not buy any business and hold it for the long-run. Businesses with strong competitive advantages and quality managements are preferred long-term holdings.
Great businesses withstand the test of time. Time itself has been very favorable to the stock market.
“Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a fly epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
The quote above shows the powerful tailwind of economic progress that pushes stable businesses to ever greater heights.
One advantage of buy & hold investing is lower taxes. When you don’t sell your holdings, the money you would have paid in capital gains tax is left compounding in your investment.
“Charlie and I would follow a buy-and-hold policy even if we ran a tax-exempt institution.”
Tax advantages are not the primary reason why Warren Buffett (and Charlie Munger) prefer to hold great businesses for the long run. The compounding effects (the ‘snowball effect’) of business growth are reward enough, irrespective of tax advantages.
The 4 quotes below use analogies and metaphors to explain the power of long-term investing.
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
&
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”
&
“Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”
&
“Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.”
The quote about not producing a baby in a month by getting nine women pregnant is especially poignant. It drives home the point that several mediocre short-term investments are not the same as one well-timed long-term investment.
This brings up another aspect of Warren Buffett’s success:
Only investing when the best opportunities present themselves – and ignoring everything else.
Do Nothing Investing
Warren Buffett’s partner Charlie Munger has coined a new word for their ability to not act on every investment that comes by: Assiduity
“Assiduity is the ability to sit on your ass and do nothing until a great opportunities presents itself”
– Charlie Munger
Buffett and Munger practice ‘Do Nothing Investing’. They do nothing until a great opportunity presents itself. Once they buy, they do nothing and let the excellent business purchased at an attractive price compound their wealth through time.
Buffett compares investing to a modified game of baseball. The modification: There are no strikes for not swinging. You can wait for the perfect pitch to hit out of the park.
“I call investing the greatest business in the world … because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There’s no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.”
The fielders don’t fall asleep often. Opportunities are not always there.
“You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.”
Opportunities come in waves. These ‘waves’ coincide with recession (which are discussed later in this article). Dry spells are usually during protracted bull markets – when great businesses are not trading at a discount.
You should take full advantage when the opportunities come.
“Opportunities come infrequently. When it rains gold, put out the bucket, not the
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