Warren Buffett’s net worth of $73.1 Billion (at the time of this writing) is nothing to scoff at.
With all that money under his belt, you may think he would be living in a 30,000 sq. ft. mansion, with a 12-car garage full of Lamborghinis.
That couldn’t be farther from the truth.
Though he may be one of the world’s richest men, he cares far more about being liked and his reputation than the kinds of cars he drives. He continues living in the same modest home that he purchased in the 1960’s, drives a run-of-the-mill Cadillac, and stops for breakfast at McDonald’s on his way into the office each morning.
We all could benefit by learning a thing or two from Warren. As such, here are 15 quotes from the King of Investing.
1. Never lose money
“Rule Number 1: Never lose money. Rule Number 2: Never forget Rule number 1.”
This sounds pretty straight-forward, right? Everyone should already know this, as it’s common sense.
If that were the case, then, why do we spend so much money on depreciating assets? Cars, restaurants, consumer debt. All of these things take money out of our pocket, not add to it.
2. Gain real-world experience
“Can you really explain to a fish what it’s like to walk on land? One day on land is worth a thousand years of talking about it, and one day running a business has exactly the same kind of value.”
Actions speak louder than words. Rather than sitting, waiting for life to happen to you, grab it by the horns and do something. Take risks, try new things, be okay with failure. In life or in business, you’ll never know until you try.
3. Market timing
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Timing the market is incredibly difficult. And those who feel that they have already “mastered” such a skill have, in my opinion, simply been lucky until this point.
Purchase stocks in companies that you believe in, rather than waiting for a big dip or the perfect time to buy in. If you select the right companies, they won’t let you down.
4. Buy companies you believe in
“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
Warren Buffett is the perfect example of someone who’s in it for the long haul. He doesn’t believe in “Get Rich Quick” schemes, and rarely talks about day trading. He purchases stocks and companies with the intent of holding for a long time. If you aren’t comfortable holding a company for 10+ years, you probably shouldn’t purchase it in the first place.
5. Jumping ship
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
If you made a mistake, don’t be afraid to pivot and jump ship. Things go south, or don’t go as planned.
6. Choose friends wisely
“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.”
You may think, “What does this have to do with investing?” It has everything to do with investing. Jim Rohn once said, “You are the average of the five people you spend the most time with.” This is an investment in your future.
If you spend the majority of your time with people that are pessimistic, lazy, or make excuses, chances are these types of traits will rub off on you as well. Surround yourself with people that uplift, challenge, or inspire you to be better.
7. Weather the storm
“Our favorite holding period is forever.”
Going right along with number 4, hold companies for the long-term. Since its inception, the stock market always goes up no matter what. There are momentary (of very extended) periods of time where it dips, bit it will eventually return.
The stock market crash of 2008, along with the housing market, are now higher than where they were previously. It took 10 years to recover, but they have recovered. It may take time, but if you’re willing to wait, your investments will almost always increase, barring you choose companies with longevity.
“Wide diversification is only required when investors do not understand what they are doing.”
If I were a betting man, I would place good money on the fact that most financial advisors would tell you to diversify your assets. I don’t believe Buffet is telling you not to do this. But I do believe that his advice holds more water than others.
By doing your research, and investing in good, quality companies, you need not worry.
“In the business world, the rearview mirror is always clearer than the windshield.”
Hindsight is always 20/20, right?
How often have you heard someone in the financial industry say, “If only I had bought back then…” or “I wish I would’ve bought…” I catch myself falling into these patterns as well. “If only I had bought Bitcoin at a few cents, I could be a billionaire right now.” You have to quit thinking that way.
Weigh your options, make the most informed decision that you can, and then own it. Don’t worry about what isn’t in your control. Quit complaining, and move on.
10. Don’t make it harder than it needs to be
“There seems to be some perverse human characteristic that likes to make easy things difficult.”
LOVE this one.
This, I feel, is mostly self-explanatory, but quit making things more harder than they need to be.
11. Consistency is key
“The rich invest in time, the poor invest in money.”
Success doesn’t come from what you do occasionally. It comes from what you do consistently. I firmly believe that it’s less about smarts and intelligence than it is consistency. The person who works harder is ultimately going to receive the payout than the person attempting to do the numbers and cheat the system. Work hard and in the end, you’ll profit.
12. Be prepared to lose everything
“I never attempt to make money on the stock market. I buy on assumption they could close the market the next day and not re-open it for five years.”
The number one rule of investing is to never use money that you can’t afford to lose. Don’t ever put stretch yourself farther than you can afford, and don’t ever spend money you absolutely can’t lose. When placing it into an investment, picture that money as essentially gone from day one. If it makes money, great. If not, you’ve already lost it anyway.
13. Love the game
“We enjoy the process far more than the proceeds.
The reason Warren has done so well, is because he genuinely loves what he does each day. He once mentioned that he “get[s] to do what [he] likes to do every single day of the year.”
To him, it’s not about the money. It’s about the joy of the game.
14. Know your market
“Never invest in a business you can’t understand.”
I went to school for computers. Having said that, why would I invest in a petroleum company, knowing nothing about it?
Speculation while, at times, can reap profits, it all-to-often leads to disaster. Don’t play on your ignorance, pretending to know more than you really do.
15. Control emotion
“If you’re emotional about investing, you’re not going to do well. You may have all these feelings about the stock, but the stock has no feelings about you.”
Buffet has also said, “Only when you combine sound intellect with emotional discipline do you get rational behavior.”
Do NOT play into your emotion. Investing is not about “feelings” and how you may think a particular investment will perform. Look at the data, the hard metrics, and base your decision off of that.
What are your favorite Warren Buffett quotes? Leave a comment to let us know.