Top 968 Quotes & Sayings by Warren Buffett - Page 14

For some reason, people take their cues from price action rather than from values. What doesn't work is when you start doing things that you don't understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it's going up.

In economics, you always want to ask 'And then what?'

Take Wrigley's Chewing Gum. I don't think the Internet is going to change how people chew gum.

In earlier years, a lesser effort produced literally dozens of comparable opportunities. It is difficult to be objective about the causes for such diminution of one's own productivity. Three factors that seem apparent are: (1) a somewhat changed market environment; (2) our increased size; and (3) substantially more competition.

Is management candid with the shareholders?

As I have mentioned before, we cannot make the same sort of money out of permanent ownership of controlled businesses that can be made from buying and reselling such businesses, or from skilled investment in marketable securities. Nevertheless, they offer a pleasant long term form of activity (when conducted in conjunction with high grade, able people) at satisfactory rates of return.

Generally, we have translated greater output in the few hours of work per week over the last century. And that's a good trend of the future. But we do have to have a system that, as output of goods and services keeps increasing per capita, that it takes care of the people who are willing to work and really are not getting by very well with a family on a 40-hour week.

I make no effort to predict the course of general business or the stock market. Period. However, currently there are practices snowballing in the security markets and business world which, while devoid of short term predictive value, bother me as to possible long term consequences.

Too often, executive compensation in the U.S. is ridiculously out of line with performance. That won't change, moreover, because the deck is stacked against investors when it comes to the CEO's pay.

In a difficult business, no sooner is one problem solved than another surfaces - never is there just one cockroach in the kitchen.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As 'bandwagon' investors join any party, they create their own truth - for a while.

Never lie under any circumstances.

Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

Exercise humility and restraint.

My net worth is the market value of holdings less the tax payable upon sale. The liability is just as real as the asset unless the value of the asset declines (ouch), the asset is given away (no comment), or I die with it. The latter course of action would appear to at least border on a Pyrrhic victory.

If I were the treasury secretary or head of the Fed, you know, I would try to scare the hell the out of the private sector and say, you better save this because you're going down with the ship.

Is management rational?

Does management resist the institutional imperative?

I put heavy weight on certainty. It's not risky to buy securities at a fraction of what they're worth.

My father was the best person i've ever known.

Having a large amount of leverage is like driving a car with a dagger on the steering wheel pointed at your heart. If you do that, you will be a better driver. There will be fewer accidents but when they happen, they will be fatal.

First, many in Wall Street - a community in which quality control is not prized - will sell investors anything they will buy.

I think that trying to invest through 535 people is a tough job, you know, and so I would give more latitude.

SUPPOSE that an investor you admire and trust comes to you with an investment idea. This is a good one, he says enthusiastically. I'm in it, and I think you should be, too.

It's the deleveraging that's going on right now that has caused the credit crisis.

We will reject interesting opportunities rather than over-leverage our balance sheet.

I believe the chance of any event causing Berkshire to experience financial problems is essentially zero. We will always be prepared for the thousand-year flood; in fact, if it occurswe will be selling life jackets to the unprepared.

I think you'll have plenty of scrutiny as how the money's invested. I mean, just like the RFC. When the RFC operated, people knew which institutions they were buying preferred stock in. And it worked very well.

This country is going - be living better ten years from now than it is now. It will be living better in 20 years from now than ten years from now. The ingredients that made this country, you know, the miracle of the world - I mean we had a seven for one improvement in the average American standard of living in the 20th century.

For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.

I think I could make you fifty percent a year on one million dollars. No, I know I could. I guarantee that.

In that, we agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to society. In my case, the ability to allocate capital would have had little utility unless I lived in a rich, populous country in which enormous quantities of marketable securities were traded and were sometimes ridiculously mispriced. And fortunately for me, that describes the U.S. in the second half of the last century.

The strategy we've adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it.

I always invest in companies an idiot could run, because one day one will.

On his Giving Pledge philanthropy: The way I got the message out was to get a copy of FORBES, look down that 400 list and start making phone calls! Bill and Melinda [Gates] did the same thing. So keep publishing the list so I can milk it.

Yeah, we don't consider many stupid things. I mean, we get rid of 'em fast...Just getting rid of the nonsense -- just figuring out that if people call you and say, 'I've got this great, wonderful idea', you don't spend 10 minutes once you know in the first sentence that it isn't a great, wonderful idea...Don't be polite and go through the whole process.

I have three boxes on my desk: In, Out, and Too Hard.

I have a house that I bought 55 years ago. It's warm in the winter; it's cool in the summer. It has everything I wanted, plus it has all kinds of good memories. Like my kids, I have good thoughts about that. I can't imagine living any better.

I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions.

We have provided capital here with a couple of institutions recently. The Federal government did that in the '30s for the RFC and I think there could well be a proper role for government in that.

What's going to happen - things we're doing are going to have some inflationary consequences.

We need to throw the resources at this that are necessary. But like I say, we are not spending money. I mean, if we buy these assets intelligently, the United States Treasury will make money. I mean, it's borrowing money. It's just a few percent a year.

I mean there is no capital requirements to it or anything of the sort. And basically, I said there were possibly financial weapons of mass destruction, and they had them. They destroyed AIG. They certainly contributed to the destruction of Bear Sterns and Lehman. Although Lehman had other problems, too.

Investment philosophy is the clear understanding that by owning shares of stocks he owns businesses, not pieces of paper.

If you own the only newspaper in town, up until the last five years or so, you have pricing power and you didn't have to go to the office.

I'm the luckiest guy in the world in terms of what I do for a living. No one can tell me to do things I don't believe in or things I think are stupid.

We try to buy businesses with good-to-superb underlying economics run by honest and able people and buy them at sensible prices. That's all I'm trying to do.

The market system rewards me outlandishly for what I do, but that doesn't mean I'm any more deserving of a good life than a teacher or a doctor or someone who fights in Afghanistan.

If I eat 2,700 calories a day, a quarter of that is Coca-Cola.

As one of my older friends says, "Nostalgia just isn't what it used to be." Let's take a stab at it, anyway.

I certainly have no desire to sell a good controlled business run by people I like and admire, merely to obtain a fancy price. However, specific conditions may cause the sale of one operating unit at some point.

And people really behaved in a fraudulent way or something, we'll go back and find the culprits later on. But that really isn't the problem we have. I mean that's where it came from, though. We leveraged up and if you have a 20 percent fall in value of a $20 trillion asset, that's $4 trillion. And when $4 trillion lands - losses land in the wrong part of this economy, it can gum up the whole place.

If horses had controlled investment decisions, there would have been no auto industry.

When Berkshire buys common stock, we approach the transaction as if we were buying into a private business.

I think what people understand there probably - well, they were hoping the private sector would do it [rescuing AIG ].

There's always a mismatch. I mean, you know, as the economy evolves, it reallocates resources. Now, the real problem, in my view, is - this has been - the prosperity has been unbelievable for the extremely rich people. If you go to 1982, when Forbes put on their first 400 list, those people had $93 billion. They now they have $2.4 trillion, 25 for one. That is - this has been a prosperity that's been disproportionately rewarding to the people on top.

I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot - and it's a lot - it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.

The financial calculus that Charlie and I employ would never permit our trading a good night's sleep for a shot at a few extra percentage points of return. I've never believed in risking what my friends and family have and need in order to pursue what they don't have and don't need.

I wouldn’t mind going to jail if I had three cellmates who played bridge

I mean, you may be very mad at some guy that walked away with a huge golden parachute, but that really isn't the important thing.