Warren Buffett's secrets of success
• 'Remember that the stock market is manic-
Warren Buffett, Chairman of Berkshire
Hathaway, is arguably the world's greatest
investor and the third richest man with a net
worth exceeding $52 billion (Rs 213,200
crore). He is also a great philanthropist: last
year he declared plans to give away over
$37 billion (Rs 151,700 crore) in charity, to
the Bill & Melinda Gates Foundation.
But he is not just a man with a large heart
and a matching wallet. Also known as The
Sage of Omaha, he is also full of wisdom
and wit.
Here are some of his gems of advice for
investors who look at the stock market to
make a fortune, culled from various
publications, his speeches and writings:
• 'Never invest in a business you cannot
understand.'
• 'Always invest for the long term.'
1/4
depressive.'
• 'Buy a business, don't rent stocks.'
• 'Price is what you pay. Value is what you
get.'
• 'Stop trying to predict the direction of the
stock market, the economy, interest rates, or
elections.'
• '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.'
• 'Wall Street is the only place that people
ride to in a Rolls-Royce to get advice from
those who take the subway.'
• 'Buy companies with strong histories of
profitability and with a dominant business
franchise.'
• 'It is optimism that is the enemy of the
rational buyer.'
• 'As far as you are concerned, the stock
market does not exist. Ignore it.'
• 'The ability to say 'no' is a tremendous
advantage for an investor.'
• 'If you're doing something you love, you're
more likely to put your all into it, and that
generally equates to making money.'
• 'My idea of a group decision is to look in
the mirror.'
• '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 smarter the journalists are, the better
off society is.'
 Warren Buffett's secrets of success
• 'Success in investing doesn't correlate with
IQ once you're above the level of 25. Once
you have ordinary intelligence, what you
need is the temperament to control the urges
that get other people into trouble in
investing.'
• 'Diversification is a protection against
ignorance. It makes very little sense for
those who know what they're doing.'
• 'You're neither right nor wrong because
other people agree with you. You're right
because your facts are right and your
reasoning is right - that's the only thing that
makes you right. And if your facts and
reasoning are right, you don't have to worry
about anybody else.'
• 'There seems to be some perverse human
characteristic that likes to make easy things
difficult.'
• 'In the short run, the market is a voting
machine but in the long run it is a weighing
machine.'
• 'It's only when the tide goes out that you
learn who's been swimming naked.'
• 'Somebody once said that in looking for
people to hire, you look for three qualities:
integrity, intelligence, and energy. And if
they don't have the first, the other two will
kill you. You think about it; it's true. If you
hire somebody without the first, you really
want them to be dumb and lazy.'
• 'There are three kinds of people in the
world: those who can count, and those who
can't.'
• 'It takes 20 years to build a reputation and
five minutes to lose it.'
• 'The first rule is not to lose. The second
rule is not to forget the first rule.'
2/4
• 'Wide diversification is only required when
investors do not understand what they are
doing.'
• 'Only buy something that you'd be
perfectly happy to hold if the market shut
down for 10 years.'
• 'We simply attempt to be fearful when
others are greedy and to be greedy only
when others are fearful.'
• 'Our favourite holding period is forever.'
• 'If past history was all there was to the
game, the richest people would be
librarians.'
• 'Why not invest your assets in the
companies you really like? As Mae West
said, 'Too much of a good thing can be
wonderful.''
• 'Your premium brand had better be
delivering something special, or it's not
going to get the business.'
• 'You are neither right nor wrong because
the crowd disagrees with you. You are right
because your data and reasoning are right.'
• 'We do not view the company itself as the
ultimate owner of our business assets but
instead view the company as a conduit
through which our shareholders own assets.'
• 'Accounting consequences do not influence
our operating or capital-allocation decisions.
When acquisition costs are similar, we much
prefer to purchase $2 of earnings that is not
reportable by us under standard accounting
principles than to purchase $1 of earnings
that is reportable.'
• 'Unless you can watch your stock holding
decline by 50% without becoming panic-
stricken, you should not be in the stock
market.'
 Warren Buffett's secrets of success
• 'The critical investment factor is
determining the intrinsic value of a business
and paying a fair or bargain price.'
• 'Risk can be greatly reduced by
concentrating on only a few holdings.'
• 'Much success can be attributed to
inactivity. Most investors cannot resist the
temptation to constantly buy and sell.'
• 'Lethargy, bordering on sloth should
remain the cornerstone of an investment
style.'
• 'An investor should act as though he had a
lifetime decision card with just twenty
punches on it.'
• 'An investor needs to do very few things
right as long as he or she avoids big
mistakes.'
• 'Turnarounds' seldom turn.'
• 'The advice 'you never go broke taking a
profit' is foolish.'
• 'It is more important to say 'no' to an
opportunity, than to say 'yes.'
• 'It is not necessary to do extraordinary
things to get extraordinary results.'
• 'An investor should ordinarily hold a small
piece of an outstanding business with the
same tenacity that an owner would exhibit if
he owned all of that business.'
• 'It takes 20 years to build a reputation and
five minutes to ruin it. If you think about
that, you'll do things differently.'
• 'In the business world, the rearview mirror
is always clearer than the windshield.'
• 'A public-opinion poll is no substitute for
thought.'
3/4
• 'It's far better to buy a wonderful company
at a fair price than a fair company at a
wonderful price.'
• 'The business schools reward difficult
complex behavior more than simple
behavior, but simple behavior is more
effective.'
• 'Look at market fluctuations as your friend
rather than your enemy; profit from folly
rather than participate in it.'
• 'The investor of today does not profit from
yesterday's growth.'
• '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.'
• '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.'
• 'I don't look to jump over 7-foot bars: I
look around for 1-foot bars that I can step
over.'
• 'I always knew I was going to be rich. I
don't think I ever doubted it for a minute.'
• 'We enjoy the process far more than the
proceeds.'
• '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.'
• 'I buy expensive suits. They just look
cheap on me.'
• 'Let blockheads read what blockheads
wrote.'
 Warren Buffett's secrets of success

• 'I do not like debt and do not like to invest

in companies that have too much debt,
particularly long-term debt. With long-term
debt, increases in interest rates can
drastically affect company profits and make
future cash flows less predictable.'

• 'My grandfather would sell me Wrigley's

chewing gum and I would go door to door
around my neighbourhood selling it. He also
sold me a Coca-Cola for a quarter and I
would sell it for a nickel each in the
neighbourhood, so I made a small profit. I
was always trying to do something like this.'

• 'A public-opinion poll is no substitute for

thought.'

4/4