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Ever heard of the Oracle of Omaha? If you have not, no problem â€" he is Warren Buffett, the most successful investor and capital allocator of our time and even maybe of all time. One thing Warren is famous for are his condensed quotes which usually appears in his annual letter to Berkshire Hathaway shareholders.
They say you are a sum total of your words. If this is true then, the Oracle of Omahaâ€™s Quotes definitely sum up his philosophy regarding investing and approach to the allocation of his capital.
Below are some of his best advice of all time regarding being a wise investor:
1. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
2. Never invest in a business you cannot understand.
3. I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
4. Investing is laying out money now to get more money back in the future.
5. If a business does well, the stock eventually follows.
6. I put heavy weight on certainty. It’s not risky to buy securities at a fraction of what they’re worth.
7. In the short run, the market is a voting machine. In the long run, it’s a weighing machine.
8. For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.
9. Time is the friend of the wonderful company, the enemy of the mediocre.
10. It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
11. Risk comes from not knowing what you’re doing.
12. Wide diversification is only required when investors do not understand what they are doing.
13. All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.
14. It is better to be approximately right than precisely wrong.
15. The most common cause of low prices is pessimism. 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. None of this means, however, that a business or stock is an intelligent purchase simply because it is unpopular; a contrarian approach is just as foolish as a follow-the-crowd strategy. What’s required is thinking rather than polling.
16. When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
17. Diversification may preserve wealth, but concentration builds wealth.
18. You should invest in a business that even a fool can run, because someday a fool will.
19. You do things when the opportunities come along. I have had periods in my life when I have 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.
21. [On the dot-com bubble:] What we learn from history is that people don’t learn from history.
22. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.
23. 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.
Olusegun Adedokun is an entrepreneur from Nigeria. You can check out his blog is at internet-earner.com. For some effective but easily used blogging and marketing tips for earning online, check out his blog.