Words of Wisdom from Warren Buffett
A well-designed financial plan is necessary for successful investing, but you must also have the discipline to stay on course, rebalance, and tax-manage.
Unfortunately, most investors do not have a written plan. Emotions such as greed or envy in bull markets, and fear or panic in bear markets, can cause investors to discard even the most well-designed plans.
Here are some of our favorite quotes by Warren Buffett, arguably the best investor of this generation. Consider utilizing his tips to start developing your long-term investment strategy.
- On hiring: “Somebody once said that in looking for people to hire, you look for the three qualities: integrity, intelligence, and energy. And, if they don’t have the first, the other two will kill you.”
- On market predictions: “I have never met a man who could forecast the market.”
- On giving your kids a big inheritance: “The idea that you get a lifetime supply of food stamps based on coming out of the right womb strikes at my idea of fairness.”
- On stocks with good histories: “The investor of today does not profit from yesterday’s growth.”
- On how to view stocks: “Look at stocks as businesses. Look for businesses you understand, run by people you trust and are comfortable with, and leave them alone for a long time.”
- On ethical investment management: “The investment manager must put his client first in everything he does.”
- On thinking long term: “I wouldn’t buy any stocks I would not be happy owning if they stopped trading it for three years.”
- On predicting markets: “The fact that people will be full of greed, fear, or folly is predictable. The sequence is not predictable.”
- On the limitations of wealth: “Money, to some extent, sometimes lets you be in more interesting environments. But, it can’t change how many people love you or how healthy you are.”
- On the ideal investor personality: “The most important quality for an investor is temperament, not intellect. You don’t need tons of IQ in this business. You don’t have to be able to play three-dimensional chess or duplicate bridge. You need a temperament that derives great pleasure neither from being with the crowd nor against the crowd.”
- On risk: “Risk is not knowing what you’re doing.”
- On long-term thinking: “Our favorite holding period is forever.”