Warren Buffett Ive Made Mistakes and Ill Continue to Make Mistakes

October 14, 2022 Post a Comment

Warren Buffett quotes capture the essence of his approach to investing and life. That's why we love them.

To say, "When he talks, people listen" is an understatement. Buffett's famous quotes on life, investing, success, leadership, emotion, and money are recognized across the world.

Why do people love his quotes so much?

Because he's built his wealth long-term to over $80.9 billion (2019), making him one of the richest men in America. As CEO of Berkshire Hathaway, Warren Buffett lives by a certain set of values that he uses to invest, gain capital, and make other life decisions.

His approach to investing in stocks can be identified throughout his famous investing quotes—which follow a similar methodology as Rule 1. We gathered our favorites in this post.

These 100 intelligent and inspiring quotes on investing and success from Warren Buffett will give you a look into the mind of one of the wealthiest and most successful people in the world.

Famous Warren Buffett Quotes

Buffett's Two Rules of Investing…

For us, Rulers, the first, and I might be biased here but also the best Warren Buffett quote is no surprise to us.

"Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1"

But, it is possible for the stock market to price things wrong! You can find wonderful businesses on sale often.

As Buffett says,

"Remember that the stock market is a manic depressive."

For any consumer of daily financial news, this will ring true. Equity markets swing wildly from day to day on the smallest of news, rally, and crash on sentiment, and celebrate or vilify the most inane data points. It's important not to get caught up in the madness. Instead, stick to your homework.

Always stay rational.

So what is the Warren Buffett Rule?

Never lose money. Stay rational and stick to your homework when researching businesses in which to invest.

…But If You Do Happen to Lose

Every investor goes through losses at some point, but you have to know how to handle them.

"Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks."

In other words:

"The most important thing to do if you find yourself in a hole is to stop digging."

Investments can go bad, and when they do, it's best to bow out and stop throwing money at it. It is a difficult decision to make, but accepting the loss will prove to be more beneficial financially.

The Market Can Price Things Wrong

"Price is what you pay. Value is what you get."

Don't focus on short-term swings in price. Focus on the underlying value of your investment.

"Beware the investment activity that produces applause; the great moves are usually greeted by yawns."

From a man who has made a fortune on companies like Apple, American Express, General Motors, UPS, Johnson & Johnson, Mastercard, and Walmart, this is sage advice.

Related: What is a Bull and Bear Market?

And, always remember that:

"For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments."

If you pay too much for a company, your investments might take a hit later on.

High Returns with Low Risk is the Key

"Risk comes from not knowing what you are doing."

The advice here is obvious but often forgotten, particularly after investors have had some success. The temptation to believe that success in one area you know well allows you to easily analyze another is much greater once you've had some good returns, but should be resisted.

Warren Buffett himself has kept out of the technology sector for the most part, given his lack of knowledge of the sector. Buffett said it best:

"Never invest in a business you cannot understand."

Warren Buffett has always held strong to the belief that index funds are one of the best ways to grow wealth. They are inexpensive and are not closely linked to how well one entity is predicted to fare.

Plus, individual stocks cost more so advisors will keep a larger percentage of earnings. Buffett says:

"If returns are going to be 7 or 8 percent and you're paying 1 percent for fees, that makes an enormous difference in how much money you're going to have in retirement."

Since cost matters, a passive form of investing could be the best path to take to build wealth.

It's Easier to Look Back Than to Look Into the Future

"In the business world, the rearview mirror is always clearer than the windshield."

The past is simple and straightforward. Whereas, the future can be murky because it is clouded with the perceptions of many.

Consider the Four M's Before Investing

When I talk about the four M's of investing, I'm referring to meaning, moat, management, and margin of safety.

Finding the right investment for you always begins with meaning, and sometimes, this can take time. Becoming an expert on a potential investment option is always more powerful to do before jumping in. Allowing ample time to learn the in's and out's of any company before investing never fails.

"Time is the friend of the wonderful company, the enemy of the mediocre."

Next is a company's moat. Learning how to invest with this kind of durable advantage can increase your odds of investment success.

"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."

Then you'll look at the management to assess whether or not the company has a plan for continued growth and is run by good leaders.

And lastly, the margin of safety, which is part of Buffett's investment strategy that stresses the idea of buying investments at a high price while searching for opportunities to pay less for something with higher value.

Warren Buffett quotes on the margin of safety state:

"The three most important words in investing are margin of safety ."

"On the margin of safety, which means, don't try and drive a 9,800-pound truck over a bridge that says it's, you know, capacity: 10,000 pounds. But go down the road a little bit and find one that says, capacity: 15,000 pounds."

Warren Buffett's Motto

"It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price."

This famous Warren Buffett quote is very interesting, as frequently, "value investors" will pass on anything that they cannot get for a deeply discounted price. It was one of Buffett's early lessons as a value investor, famously defined by his turn away from "cigar-butt investing."

"If a business does well, the stock eventually follows."
"For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments."

Invest for the Long Term

"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."

When it comes to successful investing, timing is everything. According to Buffet, the mindset that the market may not open back up immediately should guide each and every single one of your investment decisions. Here's why:

"All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies."

"I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."

"It is a terrible mistake for investors with long-term horizons — among them pension funds, college endowments, and savings-minded individuals — to measure their investment 'risk' by their portfolio's ratio of bonds to stocks."

"Successful investing takes time, discipline, and patience. No matter how great the talent or effort, some things just take time: You can't produce a baby in one month by getting nine women pregnant."

Patience is Key

And impatience can kill your money. Buffett says:

"Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic."
"The stock market is designed to transfer money from the active to the patient."

If both of these quotes hold true, why not wait? You've got nothing to lose—and that's our goal, right?

Think Long-Term Over Short

"If you aren't thinking about owning a stock for 10 years, don't even think about owning it for 10 minutes."

Investing is not trading and has a vastly different goal. When done well, trading is about taking measured investment risks for discrete periods of time at sufficient volume to generate profits, and typically involves wild swings in profitability. Investing is about minimizing risk to generate wealth over the long term, not generating short-term profits.

If Warren Buffett had to choose how long to own a company for, this quote sums it up:

"Our favorite holding period is forever."

Another great Buffett quote in this vein is:

"An investor should act as though he had a lifetime decision card with just twenty punches on it."

This quote is basically saying you should never buy businesses with the intention of selling them. If you could only buy 10 or 20 stocks in your entire life you'd probably be a lot more careful with your investments. You'd spend more time researching a company to ensure you really love it before committing.

And, though we've touched on this before, keep in mind that time is on your side.

"Do not take yearly results too seriously. Instead, focus on four or five-year averages."

Yearly averages will not give you much insight into the success of an investment. Instead, comparing data from across a number of years will provide you with a much bigger picture that you can use to make necessary adjustments and continue moving forward.

Related: 30 Stock Market Quotes by Successful Investors

Only Invest In Wonderful Companies

Just as time is your friend. It is also the friend of any great company. Because with time, any wonderful company begins to age like fine wine:

"Time is the friend of the wonderful company, the enemy of the mediocre."

Invest In Companies That Match Your Values

"Why not invest your assets in the companies you really like? As Mae West said, 'Too much of a good thing can be wonderful.'"

Again, being choosy is not necessarily bad. Think back to your punch card. If you are only able to use 10 punches for the rest of your investing career, you'd think twice before making a decision. Do some research on companies that follow similar belief systems to your own, operate effectively, and have growth plans that closely match your own.

People Make Investing Seem More Difficult Than it Should

"The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective."

In my opinion, this is one of the best Warren Buffett quotes of all time. Many of his investing strategies focus on simplifying the process to make sound decisions.

For example, he is a fan of using the Rule of 72, which lets you determine how long it takes for an investment to double without using a calculator.

"There seems to be some perverse human characteristic that likes to make easy things difficult."

Buffett has made the point that you don't have to be a genius to be a good investor. Instead, being a good investor relies on hard work and due diligence.

There are some basic investing rules that you need to learn, but if you follow those rules, chances are you'll be successful. Remember to use any of my investing calculators when the math gets tough!

Investing is More Than an IQ

As I said, Buffett believes you don't need to be incredibly intelligent to be a good investor. In his eyes, temperament, not intellect, is the only trait we need to fine-tune in order to lock in big wins.

"The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd."

"Success in investing doesn't correlate with IQ … what you need is the temperament to control the urges that get other people into trouble in investing."
"The stock market is a no-called-strike game. You don't have to swing at everything — you can wait for your pitch."

"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ."

"What counts for most people in investing vs saving is not how much they know, but rather how realistically they define what they don't know."

"There is nothing wrong with a 'know nothing' investor who realizes it. The problem is when you are a 'know nothing' investor but you think you know something."

Make Your Own Forecasts

Sometimes using your own intuition to make predictions can tell you a lot about your investment strategy, in comparison to the strategies of those around you.

"Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future."

Invest Only in Companies You Understand

Do your research to recognize what makes certain companies tick before you put money toward advancing their interests. In other words:

"Buy a stock the way you would buy a house. Understand and like it such that you'd be content to own it in the absence of any market."

"It's better to have a partial interest in the Hope diamond than to own all of a rhinestone."

This means that to be a good investor, you need only possess a certain amount of knowledge in your own areas of expertise. This concept is widely known as your circle of competence and is explained by the Buffett quote below:

"You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital."

Great Investors Don't Diversify

When asked whether or not Warren Buffett chooses to diversify, Buffett always answered with the same response: 'no.'

His argument rests on the idea that successful investors do not need diversification because they are very well educated and knowledgeable regarding the state of their current investments.

Buffett even went so far as to claim:

"Diversification is protection against ignorance. It makes little sense if you know what you are doing."

And:

"Wide diversification is only required when investors do not understand what they are doing."

Seize Great Opportunities and Load Up the Truck

"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."

This one is pretty self-explanatory. If there are great opportunities abound, take advantage. Use your best judgment in order to cash in on a plethora of opportunities, even if they all emerge in or around the same time period.

Trust in the United States Of America

"We always live in an uncertain world. What is certain is that the United States will go forward over time."

Warren Buffett has been quoted time and time again saying that America will always prevail. America is the best stock market to invest in and you can be sure that your money will be safe here. Sometimes, it just takes longer than you might expect. A few examples include:

"For 240 years it's been a terrible mistake to bet against America, and now is no time to start."
"American business — and consequently a basket of stocks — is virtually certain to be worth far more in the years ahead."
"I won't say if my candidate doesn't win, and probably half the time they haven't, I'm going to take my ball and go home."

When Prices Fall, You Will Buy

These Warren Buffett quotes relate to being fearful when stocks drop. Yet, Buffett sees it as an opportunity. Here's a brief look into how to buy wonderful companies on sale.

"Widespread fear is your friend as an investor because it serves up bargain purchases."

"Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."

"The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they're on the operating table."

"Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."

"The most common cause of low prices is pessimism—sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer."

Know What Not to Invest In

Avoiding bad investments can sometimes be more important than finding good ones. As Buffett says:

"After 25 years of buying and supervising a great variety of businesses, Charlie [Munger] and I have not learned how to solve difficult business problems. What we have learned is to avoid them."

Here is some more advice from the Berkshire Hathaway CEO on determining what not to invest in:

"Speculation is most dangerous when it looks easiest."

In Buffett's own experience, he advises against investing in a business that might feel a little turbulent or have unresolved issues that need to be worked through. In a scenario such as this, it is best to find another company to invest in instead of taking what is perceived to be the "easy" route.

"Keep things simple and don't swing for the fences. When promised quick profits, respond with a quick "no."

And, if an investment sounds too good to be true, it probably is.

"Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game."

Warren Buffett Quotes on Money

Doing Nothing is Often the Right Thing to Do

In a world that often emphasizes the importance of always needing to be doing something productive, this advice may seem counterintuitive. Trust me, it's not. When investing, Buffett reiterates:

"You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.

History Doesn't Dictate the Future

Some investors may initially benefit from looking to the past for clues. However, many will not fare as well over the long run.

"If past history was all that is needed to play the game of money, the richest people would be librarians."
"The investor of today does not profit from yesterday's growth."
"What we learn from history is that people don't learn from history."

Don't Be Greedy

Greed is never a good look. When investors invest solely for money instead of from a place of enjoyment, it is noticeable.

"…not doing what we love in the name of greed is very poor management of our lives."
"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
"Money is not everything. Make sure you earn a lot before speaking such nonsense."

If You're Not Investing, You're Doing it Wrong

Choosing not to invest because you are unsure is the wrong decision. It is not difficult to get started, and learning about smart investment practices now can set you up for financial success in the future.

"Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value."

Warren Buffett Quotes on the Stock Market

The stock market has earned a reputation of being very volatile. But, Buffett likes to think that anyone who is actively involved in investing is winning out over those who are not because there will always be people willing to buy what is being offered.

"So smile when you read a headline that says 'Investors lose as market falls.' Edit it in your mind to 'Disinvestors lose as market falls—but investors gain.' Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other."

When investing during an uncertain market, make sure to pay attention to moving parts and other players because:

"Only when the tide goes out do you discover who's been swimming naked."

Being aware of the fact that predictions can only tell us so much is also extremely important. The more critical course of action lies in being prepared for anything at any time.

"Predicting rain doesn't count, building the ark does."
"The years ahead will occasionally deliver major market declines — even panics — that will affect virtually all stocks. No one can tell you when these traumas will occur."

Market turbulence is inevitable. It will happen. So preparedness is key. During periods of decline, look for ways to capitalize on opportunities to locate discounted shares of your favorite companies.

"This does not bother Charlie [Munger] and me. Indeed, we enjoy such price declines if we have funds available to increase our positions."
"The best chance to deploy capital is when things are going down."

In fact, Buffett and I both view market crashes as buying opportunities. But don't take my word for it. Some of the most lucrative investments Buffett ever made were in the midst of market crashes. He says:

"It's been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance."

Warren Buffett Quotes on Success

Get Around the Right People

Surrounding yourself with people you can learn from is some of Buffett's most valuable advice. It drives home the point that you will ultimately end up being a reflection of the company that you keep.

"It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction."
"Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars."

Your Public Image and Reputation

You can craft a legacy over a lifetime, but Buffett advises us to be cautious and not to throw it all away due to mistakes that could have been easily avoided.

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
"Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless."

It's More Important to Do Good

The good you put out into the world will always trump the amount of money you make. Here's why:

"If you get to my age in life and nobody thinks well of you, I don't care how big your bank account is, your life is a disaster."
"Basically, when you get to my age, you'll really measure your success in life by how many of the people you want to have love you actually do love you."

It's OK to Dream Big

Dreaming expands our belief in what is possible, and Warren Buffett believes that our mind is the only limiting factor when it comes to reaching our full potential.

"I always knew I was going to be rich. I don't think I ever doubted it for a minute."
"You only have to do a very few things right in your life so long as you don't do too many things wrong."

On Finding Honesty in Others

"Honesty is a very expensive gift. Don't expect it from cheap people."

Buffett once said that:

"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway."

In other words, be careful who you trust. Most of the financial "advice" offered by equity analysts, advisers, and those in the media should be taken with a grain of salt. Buffett and his partner have long worked with the same people with whom they have long histories of trust and experience. Any good investor should do the same.

Buffett dislikes the excessive fees that make Wall Street richer at the expense of ordinary investors (like you). He claims that:

"When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients."

Appreciate Where You Came From

Your upbringing and personal experiences will always shape the way you show up as an investor.

"Someone's sitting in the shade today because someone planted a tree a long time ago."

Give Back to Society

"If you're in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%."

This quote says it all. If you have the funds to give back, do so. You will be better for it.

It's Usually Best to Just Say "No"

Does anyone else have trouble setting boundaries and using the word 'no?' If so, now is the time to correct the mistake of impulsively saying 'yes' to everything.

Becoming a wise investor means having control over your time and you will never be able to achieve this if you are constantly prioritizing the needs of others over your own. Buffett captures this idea in the following quotes:

"The difference between successful people and really successful people is that really successful people say no to almost everything."
"You've gotta keep control of your time, and you can't unless you say no. You can't let people set your agenda in life."

Do What You Love

It is a well-known fact that Warren Buffett's favorite things made him rich. In this case, the old adage that "if you love what you do, you never work a day in your life" proves to be extremely true.

"In the world of business, the people who are most successful are those who are doing what they love."

Investing in what you love allows you to feel good about the companies you're supporting and giving your money to. If you don't approve of a company's business, you have no right to invest in its future.

Related: 25 Retirement Quotes for a Happy Life

Actions Vs. Results

On the idea of actions versus results, Buffett emphasizes:

"It is not necessary to do extraordinary things to get extraordinary results."

In fact, if your results are working, he backs the idea that "if it's not broken, don't fix it." Because reinventing the wheel will not necessarily help you achieve better results:

"You know… you keep doing the same things and you keep getting the same result over and over again."

Choose Your Heroes Wisely

"Tell me who your heroes are and I'll tell you who you'll turn out to be."
"The best thing I did was to choose the right heroes."

When you choose your heroes wisely, you not only surround yourself with the best investors in the world. But more than that, you surround yourself with their upper-tier thinking and can use it to continue learning and growing.

Watch Out for Bad Habits

Bad habits can lead to unforgivable mistakes over time. Once you identify them, it is best to correct them immediately before too much damage is done. Buffett reiterates this ideology, saying:

"Chains of habit are too light to be felt until they are too heavy to be broken."

Two bad habits, in particular, are outlined in this next Warren Buffett quote:

"Investors should remember that excitement and expenses are their enemies."

Warren Buffett Quotes on Life

Warren Buffett is also a huge proponent of continuous learning and self-education. He's said in the past that he reads over 500 pages a day. He is always learning and he's always spending time on personal development.

"The most important investment you can make is in yourself."

And remember to think:

"I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business."

Engage in a daily reading practice:

"Read 500 pages like this every day. That's how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it."

And further your education:

"One can best prepare themselves for the economic future by investing in your own education. If you study hard and learn at a young age, you will be in the best circumstances to secure your future."

Here are some more Buffett quotes on life to round out this blog post and get you thinking about your future, not only as an investor but as a member of society:

"Imagine that you had a car and that was the only car you'd have for your entire lifetime. Of course, you'd care for it well, changing the oil more frequently than necessary, driving carefully, etc. Now, consider that you only have one mind and one body. Prepare them for life, care for them. You can enhance your mind over time. A person's main asset is themselves, so preserve and enhance yourself."
"I had a great teacher in life, my father. But I had another great teacher in terms of profession in terms of Ben Graham. I was lucky enough to get the right foundation very early on. And then basically I didn't listen to anybody else. I just look in the mirror every morning and the mirror always agrees with me. And I go out and do what I believe I should be doing. And I'm not influenced by what other people think."

Invest Like the Best

Did I miss any of your favorite famous Warren Buffett quotes? Leave a comment below.

Remember this, Warren Buffett started with $100 and turned it into $30 billion by learning how to invest in stocks. That means that it isn't about the money you have, it's about the knowledge you have. There are no real barriers to building the life you want if you're willing to work hard and learn.

Were you searching for information on Warren Buffett because you want to learn how to invest like him? Obviously, I'm a big fan of Warren as well. In fact, all of the Rule #1 Investing principles are based on Warren's investing styles.

So if you want to learn all of these principles and start making smart investing decisions to achieve financial freedom, start investing like the world's greatest investing gurus.

Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil's goal is to help you learn how to invest and achieve financial independence.

Summary

102 Warren Buffett Quotes on Investing, Life & More | Rule #1 Investing

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