If you ask someone “who is the world’s greatest investor” there’s a good chance they may say Warren Buffett. There isn’t a formal award for the world’s greatest investor and there are, of course, many other deserving professional investors, but one thing is certain: the “Oracle of Omaha” is greatly admired by many in the investment world.
Warren Buffett is often a voice of reason in volatile times. Through the years, Buffett has shared many valuable tidbits of investment wisdom. Like Ben Franklin’s aphorisms in Poor Richard’s Almanac, they find grounding in common sense and are memorable. Here are some of our favorite Warren Buffett quotes of all time.
“Risk comes from not knowing what you’re doing.”
Making calculated decisions requires knowledge, forethought, and planning. It’s feasible that even with these precautions that mistakes will occur. However, the probability of success is more in an individual’s favor if they take these steps. Therefore, the chance for error is much higher if a person does not know what they’re doing and makes choices at random.
In terms of finance, this makes incorporating the services of a financial advisor one of the most risk-averse decisions. A financial advisor has the know-how of the industry that can assist in guiding your decision-making process toward successful investments and retirement savings choices.
“Someone is sitting in the shade today because someone planted a tree a long time ago”
Many things we have today are the product of the work of the past. For example, the normalcy of homes built with electricity may be credited to Thomas Edison’s lightbulb invention.
Similarly, a person who prioritizes retirement planning and long-term savings in their younger years will greatly benefit from these choices in their later years. Therefore, the work from the past bodes well for the future.
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”
This quote emphasizes the idea of making sound purchases. When you make a purchasing decision, your intent should be to buy an item that will provide a long lifespan of use. For example, you don’t buy a TV with the intent that it will break in the first 15 minutes of unwrapping it, right?
The investments you select must provide long-standing returns. While you may want to take greater risks with high turnover to attempt to achieve high returns, aiming for a stable, long-term investment is a safer choice and more probable to provide gains as opposed to unnecessary loss.
“Price is what you pay. Value is what you get.”
This is a similar statement to something you may have heard your parents say, “You get what you pay for”. The idea is that the quality of a product is often reflective of the price paid for the said product. However, don’t confuse a higher price tag with a guarantee that a product is fault-proof or better than alternatives.
Evaluating your choices and selecting the best option based on quality, and not the cost associated, is the most efficient method to assure you receive the best value.
“A business with terrific economics can be a bad investment if it is bought at too high a price.”
When making an investment decision, the staple advice from any trader is to buy low and sell high. In this scenario, the quote indicates that it’s irresponsible to purchase a perfect product at the highest price possible.
This indicates that the chances that you’ll be able to sell the product are unlikely because there is little room for improvement. Sometimes, an investment that is a work in progress and some potential is the best choice for an individual who wants to achieve a high return.
Some of the quotes above are from Warren Buffett’s annual letters to Berkshire Hathaway shareholders and show his genius for distilling investment lessons into plain English. A classic value investor, Buffett is also an optimist. He has never stopped being bullish on America. Buffett’s blend of optimism and pragmatism has helped make him one of the world’s wealthiest people. That said, the average investor might do very well to keep some of his maxims in mind, day after day.