A Quote by Warren Buffett
Stocks are the only thing that people are happy to buy when the price goes up.
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I buy stocks when they are battered. I am strict with my discipline. I always buy stocks with low price-earnings ratios, low price-to-book value ratios and higher-than-average yield. Academic studies have shown that a strategy of buying out-of-favor stocks with low P/E, price-to-book and price-to-cash flow ratios outperforms the market pretty consistently over long periods of time.
So the first thing I learned about how to get superior performance is not to buy stocks that are near their lows, but to buy stocks that are coming out of broad bases and beginning to make new highs.
A price drop in a good stock is only a tragedy if you sell at that price and never buy more. To me, a price drop is an opportunity to load up on bargains from among your worst performers and your laggards that show promise. If you can't convince yourself "When I'm down 25 percent, I'm a buyer" and banish forever the fatal thought "When I'm down 25 percent, I'm a seller," then you'll never make a decent profit in stocks.
There are no happy endings, just happy days, happy moments. The only real ending is death, and trust me, no one dies happy. And the price of not dying is that things change all the time, and the only thing you can count on is that there's not a thing you can do about it.
Investors... can't pick stocks that are better than average. Stocks are a good thing to own over time. There's only two things you can do wrong: You can buy the wrong ones, and you can buy or sell them at the wrong time. And the truth is you never need to sell them.
Do not buy the hype from Wall St. and the press that stocks always go up. There are long periods when stocks do nothing and other investments are better.
As a bull market continues, almost anything you buy goes up. It makes you feel that investing in stocks is a very easy and safe and that you're a financial genius.
Each year we buy stocks and they go up, we sell them and then we try to buy something cheaper.
Experience teaches that the time to buy stocks is when their price is unduly depressed by temporary adversity. In other words, they should be bought on a bargain basis or not at all.
The thing you have to remember is, oil and gas are commodities, and the more we use them the more the price goes up, like any commodity. Solar, wind - they are technologies, so the more you use them, the more the price goes down.
In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy.
The only way one should buy stocks is if you understand the underlying business. You stay within the circle of competence. You buy businesses you understand.
My philosophy is that all stocks are bad. There are no good stocks unless they go up in price. If they go down instead, you have to cut your losses fast Letting losses run is the most serious mistake made by most investors.
The good thing about the dividend-paying stocks is, first of all you have stocks, which are real assets if we have some inflation. I think we're going to have 2%, 3% maybe 4%. That's a sweet spot for stocks. Corporations do well with that. It gives them pricing power. Their assets move up with prices. I'm not fearful of that inflation.
Buy a stock, if it goes up, sell it, if it goes down, don't buy it.
When stocks are attractive, you buy them. Sure, they can go lower. I've bought stocks at $12 that went to $2, but then they later went to $30. You just don't know when you can find the bottom.
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