Warren Buffett is considered one of the most successful investors of our time. Also known as the “Oracle of Omaha,” the successful capitalist is often quoted for his exceptional wisdom and truths that stir up smart and knowledgeable investing. Warren Buffett’s investing quotes are studied and implemented by investors across the globe.
Warren Buffett’s investing genius is revealed in the returns of his BRK-A stock. This stock doesn’t pay a dividend and has never split. On December 1, 1984, one share of BRKA was worth $1,490 and today, October 27, 2022, that same share is worth $437,900, for a 16.13% annualized return.
Bonus; What is Multifactor Investing, and is it Worth a Try?
I don’t know about you, but this information doesn’t particularly cheer me up. The ‘woulda, coulda and shoulda’ aren’t particularly helpful. Instead of looking backward, let’s move ahead with these Warren Buffett inspirational quotes.
Use these inspiring Warren Buffett Investing quotes to educate and motivate you to invest in greatness.
Top Inspiring Warren Buffett Investing Quotes
Below are some of Warren Buffett’s quotes on investment:
Warren Buffett’s Investment Strategy
Generally, Buffett’s investing strategy focuses on buying businesses that comply with specific standards. His philosophy on investing revolves around investing in quality investments for a long time. And the business must:
- Earn good returns on invested capital (The business itself)
- Be run by experienced and honest managers (The management)
- Be available at a reasonable price (The price)
The Business
Buffett carefully examines his potential business’s quality in this criterion. The business he intends to buy or invest in must have strong economics. That means it should earn good returns on capital and generate cash flows. Also, Buffett invests in a business if he can see in existence beyond 5-10 years and knows its competitive advantage. He must have sufficient knowledge of the business to invest in or buy it.
1. “Time is the friend of the wonderful company, the enemy of the mediocre.”
This Warren inspiring quote advises us not to purchase or invest in any business and wait to benefit in the long run! Thus, it would help if you looked out for those with quality management and substantial competitive advantages. Buffett could buy any business he thinks is operating under its intrinsic value. What you need is the ability to correctly evaluate selected businesses.
The Management
Buffett evaluates the management of any business before entering into any deal with the owners in this strategy. He believes in businesses that already have top-notch management expertise. In this case, he focuses on the CEO, who plays the central role in the company’s management. Here is another famous Warren Buffett quote to support the management factor.
2. “It’s difficult to overpay the truly extraordinary CEO of a giant enterprise. But this species is rare,”
The Price
The cost of a potential investment is the final consideration in Buffett’s investment strategy. Even with sound business and management, you may fail to earn reasonable returns if the investment’s price is too high: Value investing theory.. Initially, Buffet invested in low-performing businesses at low prices and then worked on them to yield good returns.
However, this has changed with the growth of Berkshire, where he has begun paying fair prices for excellent investments.
3. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
In this case, your return comes from the business profits and not necessarily the low cost. Buffett won’t buy an inexpensive business simply because it costs a small sum.
4. “A too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.”
Warren Buffett’s Advice on Market Downturns
While the stock market is a volatile environment, it bothers not Warren. He has a clear strategy for managing market downturns. While other investors are stuck and selling their shares, Buffett takes advantage of the situation to buy good companies at fair prices. This investment model has worked in his favor for decades.
5. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
Buffett buys businesses that are in temporary trouble but with stable competitive advantages: Branding, market share, and good market position, among others. With his long-term focus, the businesses pick up again and make good money. He’s simply teaching you how to get rich on Wall Street through this successful investing formula.
Warren Buffett’s Advice on Buying What You Know
Knowing the business you’re investing in, or buying is vital. You can predict its existence for up to 10 years by assessing its competitive advantage. Although such businesses are costly, they’re likely to make good returns in the long run.
6. “Never invest in a business you cannot understand.”
Putting your money into an investment you don’t know can result from FOMO or advice from those close to you. Buffett advises us to do enough homework to avoid throwing good money after bad. He’s known for his refusal to purchase technology stocks when other investors reaped heavily from the investment.
Warren Buffett’s Advice on Patience
The investment expert discourages the get-rich-quick kind of mentality. He helps you to understand that you must exercise patience if you want to be successful in your investments. In another quote, Warren asks you not to rush things. Instead, take time to research and seek financial guidance from experts before jumping into an investment. Hasty investing can tarnish your financial status within no time.
7. “No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
Warren Buffett’s Advice on Bargain Hunting
In this strategy, Warren carefully examines the value of the business in quantitative terms. However, if the stock had qualitative attributes (competitive advantage, excellent management, and growing earnings), that would be an added advantage. His focus was more on quantity than quality.
8. “Beware the investment activity that produces applause; the great moves are usually greeted by yawns.”
In his value-investing approach, initially, the famous investor went for cheap stocks at a low cost. He then upgraded to purchasing good stocks at fair prices when Berkshire Hathaway expanded.The cheap-assets-low-price strategy will only work when your business is young. However, in both cases, it takes time to produce good returns. So, be patient!
Warren Buffett On His Own Success
There’s no doubt that Buffett is one of the most successful legendaries worldwide. He attributes his success mainly to three key things: Patience, persistence, and tenacity.
9. “I don’t look to jump over 7-foot bars; I look around for 1-foot bars that I can step over.”
The other source of his triumph came from his confidence that one day he’ll be rich. It’s one of the wheels that drove to finding his success key. Though not bragging, this is what he said:
10. “I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”
Additional Famous Warren Buffett Investing Quotes:
11. “Rule No. 1: Never lose money. Rule No. 2: Never Forget rule No. 1”
This is a great rule, but as any seasoned investor knows, you occasionally lose money if you invest in the financial markets. In fact, even Warren Buffett has lost money a time or two. The best way to avoid losing money on an investment is to do your homework, research the stock or fund and buy at the right price.
Bonus content: What Does PE Ratio Mean?>>>
12. “Price is what you pay. Value is what you get.”
Investing in individual stocks is time-consuming and requires a tremendous amount of research. That’s why I don’t invest in individual stocks anymore. But even if you stick to mutual funds, you may overpay.
Stocks and stock funds have price tag(s) calculated with valuation ratios. Even the best stock bought at the wrong price will take your money if you pay too much.
13. “In the business world, the rear-view mirror is always cleaner than the windshield.”
Phrased another way, ‘hindsight is 20-20′. If anyone says they know what’s going to happen in the future, run in the other direction. The best way to invest is by being lazy and average. In any given year, no more than approximately 25-35% of active managers beat the market indexes. And the catch is that even if someone beats the markets one year, it’s unlikely they’ll outperform the next.
14. “Only buy something you’d be happy to hold if the market shut down for 10 years.”
This means active trading is a loser’s game. Investors who buy and sell are more likely to lag the market than to beat it. Look at the research!
In a John Bogle video that I watched a while ago, the founder of the modern-day index fund and Vanguard Investments suggested (tongue-in-cheek) that you should invest throughout your life and only check the stocks, bonds, and funds prices when it’s time to retire. Although checking mutual fund prices once, at retirement, is not enough, checking prices every week is too often. Once per year or quarter will help you sleep better.
15. “What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. . . . My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors . .”
Read: Why Warren Buffett’s Advice To His Heirs Is Wrong
Last year on a CNBC Squak Box interview, he hit it out of the park with the prior inspiring Warren Buffett investing quote. In that quote, Buffett disclosed plans for how to invest his estate. Guess what? It’s in index funds. If the greatest investor of this generation recommends a passive investing approach, maybe you should listen!
Source; Quotes 1-4 – Ruleoneinvesting.com, “29 Warren Buffett Quotes on Investing and Success”.
Bottomline
There’s an endless list of inspiring Warren Buffett investing quotes that you can emulate and learn from to sharpen your investment skills. They carry Buffett’s homespun wisdom and truths that every investor needs to be successful. And, of course, no one wants to put their money where there are no good returns.
The experienced investor advises you to know your potential investment, evaluate its management, and consider its price before jumping into it.
Thankfully, this article has outlined some top inspiring quotes from the expert and their interpretation you can incorporate into your investing strategies. If you apply them, you can boost your index fund investing practice and success and consequently enrich your bank account.
Source; Quotes 1-4 – Ruleoneinvesting.com, “29 Warren Buffett Quotes on Investing and Success”.
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