Brilliant Warren Buffett Quotes and What We Can Learn From Them
Warren Buffett is arguably the most respected and successful investor ever. And we are blessed that an investor with such a vast knowledge of the stock market enjoys taking the time to give valuable advice to his fellow investors.
Some of the best advice that Buffett has given to investors can be found in his little sound bites during interviews or his letters to the shareholders of his company. I have highlighted some of his quotes below that I find insightful:
1. “To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing, or emerging markets. You may, in fact, be better off knowing nothing of these. That of course, is not prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses- How to value a business, and How to think about Market Prices.”
This brilliantly summarises the art of investing and where our focus as investors should be. We should not be worried about complex financial jargon or theory. Obviously knowing what they mean may not hurt our investments. But if we focus too much on basing out decisions on “reducing beta” or moving in and out the stock markets based on which “emerging market” is hot right now, we will lose focus on what is really important, which is finding a great company at a reasonable price.
That is why learning to value a company and understanding the price you pay for it on the stock market is the most important aspect of investing.
As retail investors, we need to invest our time wisely and choosing what information to use to make our decisions is extremely important.
2. “Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” and “growth” . . . In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value.”
I must admit that when I first started picking up stocks, I would define a particular stock as a growth stock and another as a value stock, never thinking that the two could come hand-in-hand. However, after listening to Buffett’s advice and gaining more experience studying companies, I realised that both growth and value indeed go together.
3. “Losing some money is an inevitable part of investing and there is nothing we can do to prevent it.”
Even the best of us may make investment mistakes, and Warren Buffett is not afraid to highlight some of his biggest investment mistakes. What we should avoid is to brush aside our mistakes but learn from them instead.
Market fluctuations will also make losing money inevitable in the short run. However, we must not let this fear of losses prevent us from making good long-term investments.
The Foolish Bottom Line
We are lucky to have such a successful investor who is willing to share his secrets and experiences with us through his numerous writings and interviews. Hopefully, all of us can continue to learn to be better investors through his wise words.