Warren Buffet, often called the Oracle of Omaha, is one of the most famous and successful investors in the world. Renowned for his frugality and value investing style, Buffet has amassed a fortune of over 100 billion dollars over his 70-year-long career. As someone with such a long history of success, he has been credited with some of the most popular quotes in the industry. Today, we have put together a list of famous and insightful Warren Buffet quotes in the hopes of imparting some of his wisdom to you.
Table of contents
- Warren Buffet Quotes On Investing
- Quotes On The Margin Of Safety
- Warren Buffet Quotes On Long-Term Investing
- More Quotes On Long-Term Strategies
- Warren Buffet Quotes On Value Investing
- Warren Buffet Quotes On Diversification Of Assets
- Warren Buffet Quotes On What It Takes To Be A Successful Investor
- Warren Buffet On Contrarian Investing
- Always Know When To Tap Out
- Be Wary Of “Sure Things”
- Other Famous Quotes By Warren Buffet
- Life Advice From Warren Buffet
- Closing Thoughts
Warren Buffet Quotes On Investing
“Never invest in a business you cannot understand.”
Warren Buffet is known for his approach to investing that only targets organizations he believes have the potential for future growth. As such, he does not invest in anything that he does not understand or has not thoroughly researched.
“In the business world, the rearview mirror is always clearer than the windshield.”
Hindsight is always 20/20. It is much easier to look back at past decisions and evaluate them. In the investing world, it is important to look ahead and make the right moves that will affect the future. Even though this is more difficult, it is what counts.
“Time is the friend of the wonderful company, the enemy of the mediocre.”
As someone who only invests in organizations with potential, Buffet knows how they work. Companies with the necessary attributes for success will eventually thrive, even if it takes longer than expected. Meanwhile, those without a good foundation will only falter as more time passes.
Quotes On The Margin Of Safety
In investing, the margin of safety is the difference between a company’s market value and its intrinsic one. If an investor determines that the latter is greater than the former, the difference between the two is the margin of safety which allows them to make an investment with minimal risk.
“The three most important words in investing are margin of safety.”
The concept of margin of safety was popularized by Benjamin Graham, Buffet’s idol and mentor during his formative years. It is the central principle of value investing and one of the most important factors for Buffet’s style.
“On the margin of safety, which means, don’t try and drive a 9,800-pound truck over a bridge that says it’s, you know, capacity: 10,000 pounds. But go down the road a little bit and find one that says, capacity: 15,000 pounds.”
Since the margin of safety is so critical, it should not be overlooked. Buffet advises to always invest in companies with a significant margin of safety that will minimize any potential losses you might experience.
Warren Buffet Quotes On Long-Term Investing
As a value investor, Buffet will buy stocks and hold them for the long term. As such, over the years, he has learned to have patience and not be influenced by the market’s temporary fluctuations.
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”
“The stock market is designed to transfer money from the active to the patient.”
As a long-term investor, Warren Buffet rejects active day trading. He believes that the two practices are not similar in any way and should not be lumped together.
“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.”
If you want to realize gains in the investing world, you will need to learn patience. Investing in an undervalued company means that you will need to wait for it to realize its potential. You cannot achieve such success by going around and hedging your investments on multiple organizations.
“Do not take yearly results too seriously. Instead, focus on four or five-year averages.”
As a long-term investor, one should not preoccupy oneself with quarterly or even yearly results. While these might seem like significant milestones, there become less so when you look at the bigger picture.
More Quotes On Long-Term Strategies
“All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.”
Value investing is built on picking stocks with unrecognized potential and sticking with them. However, you should not be hardheaded and remain invested if you see that a company starts losing value and the things that made it profitable in the first place.
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
As a value investor, Buffet only buys stocks that he is convinced will do well in the long run. He strongly advises against buying assets that you might change your mind on later down the line.
“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.”
If you are too preoccupied with making a profit, you will not be able to think clearly when choosing investments. Instead, you should focus on their underlying organizations and future potential, even if that means not getting a return on your investment for years to come.
Warren Buffet Quotes On Value Investing
“Price is what you pay. Value is what you get.”
As a value investor, Warren Buffet pays more attention to a company’s potential and intrinsic value rather than its current price.
“For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.”
Value investors will seek out undervalued assets and buy them for cheap. This is done so as not to overspend on any particular stock. Even though it might increase in value, if your initial investment is too large, it will take very long to see returns.
“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
This is closely connected with the margin of safety mentioned above. A company with a solid business, sold at a good price, is always a better bet than one that might succeed but is far riskier. Even if the latter is sold for next to nothing.
“If a business does well, the stock eventually follows.”
If a business is profitable and has a solid structure, it is always a good investment, regardless of its price. Even if they are selling for cheap or is experiencing a slump, companies with such attributes will tend to rise in value.
“Remember that the stock market is a manic depressive.”
Oftentimes, the movements exhibited by the stock market make little sense and do not’s match the reality of the industry. Value investors should be able to disregard such anomalies as they are only temporary and companies will realize their true value sooner or later.
Warren Buffet Quotes On Diversification Of Assets
Warren Buffet is known for his strong opposition to the excessive diversification of one’s portfolio. He has been quoted on numerous occasions as calling it a fool’s game. It is his opinion that if you diversify too much, you cannot possibly have sufficient knowledge of so many fields to make sound investments.
“Wide diversification is only required when investors do not understand what they are doing.”
If you do not do the proper research to understand the companies and markets you invest in, only then will you need to diversify your portfolio.
“It is a terrible mistake for investors with long-term horizons — among them pension funds, college endowments, and savings-minded individuals — to measure their investment ‘risk’ by their portfolio’s ratio of bonds to stocks.”
This is another example of Buffet’s attitude towards diversifying and hedging investments. He believes that decisions should be based on intrinsic value and potential, not mathematical equations and ratios.
“Diversification is protection against ignorance. It makes little sense if you know what you are doing.”
Carrying the same sentiment as the first quote, diversification is only needed if you do not understand the companies. Additionally, it leads to further ignorance, as holding diverse assets means that you will need to learn about more markets. This is much harder than learning about a handful and sticking with them.
Warren Buffet Quotes On What It Takes To Be A Successful Investor
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
You don’t need to be a genius in order to be a successful investor. If you do your proper research and stick with what you believe to be a promising investment, you will most likely do well.
“Success in investing doesn’t correlate with IQ … what you need is the temperament to control the urges that get other people into trouble in investing.”
Even if you are very smart or knowledgeable about the market, that does not instantly mean that you will be a successful investor. True investors need to have the patience and fortitude to withstand temporary fluctuations. Being temperamental and giving into such anomalies, and selling prematurely can cost you a lot of money.
“What counts for most people in investing is not how much they know, but rather how realistically they define what they don’t know.”
“There is nothing wrong with a ‘know nothing’ investor who realizes it. The problem is when you are a ‘know nothing’ investor but you think you know something.”
While it is important to be knowledgeable, it is also crucial that you realize that you don’t know everything. Those who are too sure of themselves often overestimate their abilities and end up overreaching. Remaining humble and doing the work is what will keep you profitable.
“The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.”
Oftentimes, the simplest approach is the best when it comes to investing. In order to make the practice teachable, business schools have overcomplicated it.
Warren Buffet On Contrarian Investing
Warren Buffet is a renowned contrarian investor. As such, he will often go against the market and buy stocks that are being sold off or sell those that are being bought up. This strategy is a very large part of what has earned him his success, as is illustrated by these famous Warren Buffet quotes.
“The most common cause of low prices is pessimism—sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer.”
“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.”
By combining value investing with a contrarian approach, Buffet has been very successful in sussing out great investments that are experiencing moments of doubt. This is what causes their prices to drop temporarily.
“So smile when you read a headline that says ‘Investors lose as market falls.’ Edit it in your mind to ‘Disinvestors lose as market falls—but investors gain.’ Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other.”
Times of volatility and uncertainty are when contrarians tend to make their best investments. Because market prices plummet in such situations, smart and intuitive financiers will suss out promising assets and buy them for cheap.
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”
As a contrarian, Buffet believes that by the time everyone is talking about an asset, it is already too late to invest. Instead, he will do the opposite of what everyone is doing. This way, he gets ahead of the next cycle when interest is renewed.
Also read: 20 Warren Buffet’s Book Recommendations You Need To Read Now
Always Know When To Tap Out
“The most important thing to do if you find yourself in a hole is to stop digging.”
If you end up on a loss, it is important to accept that and count your losses. Doubling down on investments that do not show promise is a bad idea and will only end up costing you more money. However, it is important to note here that this is different from temporary dips, and you need to learn to distinguish the two.
“After 25 years of buying and supervising a great variety of businesses, Charlie [Munger] and I have not learned how to solve difficult business problems. What we have learned is to avoid them.”
It’s best to avoid investing in markets and companies you don’t understand. If you are in over your head, it is best to sell and focus on something that you are familiar with.
Be Wary Of “Sure Things”
“Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game.”
As a seasoned investor, Buffet knows full well that in order to be successful over the long run, you have to do the work and not take shortcuts. Those who bet on risky ventures with a high payout tend to lose money, even if it seems like they are winning at the start.
“Speculation is most dangerous when it looks easiest.”
Warren Buffet is known for his approach to investing, which is built on solid research and facts. As such, he is opposed to speculation and rejects its categorization as an investment strategy. In speculation, the deals that seem like a “sure thing” are often the most treacherous.
“Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”
Again, Buffet advises against jumping on propositions that promise surefire ways for quick returns. Such deals are often too good to be true and will end up costing you money instead. Sticking to fundamentals will get you much farther.
Other Famous Quotes By Warren Buffet
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1”
This one is pretty self-explanatory. Always do everything you can so as not to lose money. Warren Buffet’s tenets are learning about a topic before investing, sticking with your beliefs, and keeping your cool.
“Our favorite holding period is forever.”
As a value investor in the truest sense, Warren Buffet makes investments that he would be happy to hold for an indefinite period of time.
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”
Investments that you wouldn’t hold for an extended period aren’t worth buying at all. As a believer in long-term investment, Buffet advises against buying and selling stocks over a short time.
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
As a long-term investor, Buffet understands that good things often take a long time. If you want to have something in the future, you need to start thinking about it from early on.
“There seems to be some perverse human characteristic that likes to make easy things difficult.”
Again, keeping things simple is often the best thing you can do. Don’t overthink your decisions or look for shortcuts. If you simply do your research and stick with your gut feeling, you should do fine.
Life Advice From Warren Buffet
“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”
If you are successful in the things you do and don’t make too many mistakes, you won’t need to
“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”
The people that you surround yourself with will determine what kind of person you are and will become. If you surround yourself with smart and successful people, then chances are, you will become one as well.
“Honesty is a very expensive gift. Don’t expect it from cheap people.”
This is another of those Warren Buffet’s quotes where the legendary investor is talking about the people you surround yourself with and meet throughout your life. If you want honesty from others, do not expect it from those with weak character.
“Tell me who your heroes are and I’ll tell you who you’ll turn out to be.”
Who your role models are is very telling of your own character. People will tend to imitate their heroes and often end up being like them in one way or another.
“Chains of habit are too light to be felt until they are too heavy to be broken.”
Bad habits can be the downfall of even the best investor. One should always be vigilant that they do not develop such habits as they can be quite costly. More often than not, habits will form unnoticed and by the time they are recognized, it will be too late to correct them.
“One can best prepare themselves for the economic future by investing in your own education. If you study hard and learn at a young age, you will be in the best circumstances to secure your future.”
The best thing to invest in is your education. If you start learning at a young age, then you will always be in a better position than if you learn the same things later in life.
As one of the greatest investors in the world, Warren Buffet definitely knows what he is talking about when it comes to finance and money management. If you are looking to get into this business and need a role model whom to emulate, then Buffet is definitely the gold standard.
Over the years, he has imparted much of his knowledge to the public in an attempt to educate and enlighten both newcomers and experienced professionals. As a result, if you take these Warren Buffet quotes to heart and really apply their sentiment in your actions, then it is very likely that success will follow suit.