Why do so many of us look for investment inspiration through Warren Buffett quotes? A business prodigy, Buffett bought his first stock when he was just 11 years old. He then used savings to buy and install pinball machines in local shops when he was still a teenager.
Although he got rejected from Harvard (a decision that admissions officers now surely regret) he would go on to become one of the world’s most famous and wealthy value investor. Today, he is the CEO of a former textile company called Berkshire Hathaway that has been transformed into the world’s highest-priced stock, valued at $316,700 a share in August, 2020.
Investors turn to his advice with such admirationulation that Buffett has earned the nickname the “Oracle of Omaha,” a reference to his home state of Nebraska. Indeed, his sage perspectives on the market are so sought-after that “Warren Buffet quotes” is among the most Googled phrases in the online wealth management industry today.
Warren Buffett quotes are perhaps so desired because they are entertaining, succinct and easy to digest.
Funny and sharp, pithy and wise, Warren Buffett has become every bit the philosopher and high priest of the modern investment world.
However, so dense has the internet become with vast lists of Warren Buffett quotes, that, upon research, we discovered that it was necessary to craft a ‘top 10’ list that takes a more nuanced approach to long-term investing goals — the main pillar of the Buffett (and Sarwa) philosophy.
Here, we provide a list of our favorite Warren Buffett quotes to inspire your long-term investment goals.
[Want to build wealth with investment strategies used by Warren Buffett? Sarwa offers professional financial advisory that makes investing easy and affordable. Schedule a free call with a wealth advisor that can help put your investment goals on track.]
1. The most important of
the Warren Buffett quotes: “Rule No. 1 is never lose money. Rule No. 2 is never forget Rule No. 1.”
Otherwise known as Warren Buffett’s golden rule, this quote sets the foundation for his philosophy for investing. Essentially, what Buffett is saying is that capital preservation should be the main priority for any investor when deciding to place your money into the market.
In other words, stay rational.
However, the statement is actually inaccurate to Buffett’s actual track record of investing. Buffett has made plenty of losing investments over his lifetime. Ironically, he even counts his investment into Berkshire Hathaway (once a New England textile company) as one of his biggest regrets. (This is because he, quite irrationally, started buying up shares in the company due to a feud with its then leadership.)
Perhaps the most important takeaway — even the “Oracle of Omaha” is human.
2. “Someone’s sitting in the shade today because someone planted a tree a long time ago.”
This quote forms a foundational pillar of Buffett’s long-term investment ethos. What he is saying here is that — in life as with investing — you have to think about the grand trajectory of things.
Overall, there is no better time to start thinking about that path than today. A tree takes time to grow, and so will most smart investments. Start early, be patient, and let your money grow.
3. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
We love this quote because it offers perhaps the best insight into how Warren Buffett approaches active and passive investment debate. Siding with passive investor legends like Jack Bogle, the founder of Vanguard Group, Buffett urges that we pick our investments wisely — and be ready to hold on to them for the long haul if we wish to see real rewards.
In this quote, he sets a clear divide with the emotional life of day traders, who prefer to scour markets looking for short-term aberrations instead of fundamental long-term growth.
Buffett preaches that the smart investor should also assess a stock by the company’s strengths and weaknesses, looking for long-term advantages it can win within its industry. This quote also reinforces the previous two quotes, underscoring a philosophy of patience and rationale action.
4. “Price is what you pay, value is what you get.”
This famous Buffett quote strikes at the heart of the “value investor” approach and reveals the secret of how Buffett made his fortune.
After Buffett was rejected by Harvard, he enrolled in an undergraduate degree at Columbia Business School. Which is where he studied under Benjamin Graham, today known as the “Dean of Wall Street.” Buffett was largely influenced by Graham’s magnum opus, The Intelligent Investor, which lays out the philosophy for value investing.
In essence, value investors are looking for deeply discounted share prices on the market. There is no better deal than a great company that is on sale for a low price, so the value investor mantra goes. To succeed at value investing, you should aspire to learn more about companies in the hope of discovering which are undervalued and, thus, great investment opportunities.
This other famous Buffett quote also nicely sums up value investing: “Whether we’re talking about stocks or socks, I like buying quality merchandise when it is marked down.”
5. “The most important quality for an investor is temperament, not intellect.”
A disciplined investor is a wealthy investor because they have learned that market fluctuations are normal and that patience pays off.
In this quote, Buffett touches on the psychological nerve of most investment failures. Humans are by nature irrational beings and are often tempted to make trades when they think the market is working against them. In contrast, it is the well-tempered investor that learns to not watch the market. This is the person that ultimately ends up reaping the most rewards over the long term.
Buffett extols that to build more wealth does not require you to be necessarily smarter than another investor, but rather that you become more disciplined with your reaction towards the irrationality of the market.
“You don’t need to be a rocket scientist,” goes a similar Buffett quote. “Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”
6. “Risk comes from not knowing what you are doing.”
A little bit of research can reduce a lot of risk. Buffett is ever the pedantic investment professor, and in this quote he reminds us that we should study, study, study.
However, this advice can be often forgotten, especially after an investor has seen some success. A positive feedback loop can be misleading and indeed dangerous for investors.
Instead, as any good teacher prescribes, Buffett instructs that we do our homework.
Research the rules of investing, study holdings before deciding why to invest in ETFs, and learn the lessons of historical data. All of these are important factors that will improve your understanding of the market and reduce your risk when participating in it.
7. “Never depend on a single income. Make an investment to create a second source.”
Here you have the pillar for why investment is so important. In life, we should never rely on a single source of income. Investing opens up a proven avenue to generating that all-important second income stream.
In this quote, Buffett also alludes to the importance of basic diversification. By establishing more than one income source, we essentially begin to diversify our own revenue streams.
Diversified, long-term investing is a recipe for success, as well as Sarwa’s approach to investing.
8. “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”
Few quotes provide as much insight into the mind of Warren Buffet as this one.
In this famous quote, Buffett reflects on an important fact: humans are naturally irrational. We can expect a large quantity of them in a group to do irrational things. This is why large market swings are often based on the whims of traders.
By rationally learning to work against this status quo, we learn that fighting the urge to follow the herd mentality into a stock will pay off. Meanwhile, running into a trend will often lead to disaster.
The best way to fight this greed and “become rich” is to think long term and begin investing in automated savings, retirement planning, or other investment schemes as soon as possible.
9. “No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
One of Buffett’s most oft-quoted and colorful phrases, here the Oracle of Omaha is instructing us to understand that things cannot be rushed. There is no such thing as a successful ‘get rich quick’ scheme; investments — like babies — always take a certain amount of time to grow.
Indeed, by hastily jumping into an investment in the stock market you do more harm than good to your own hard-earned wealth. The best bet: Always take a breath, learn to be patient, research and seek out expert financial guidance when needed.
10. “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.”
The stock market can be intimidating. This is especially true if you have already had an unfortunate acquaintance with the fear-greed cycle. It’s no surprise then that some still prefer to hold on to cash.
But as Buffett points out here, cash is the worst asset you can have. By not investing, you are keeping a depreciating asset that becomes devalued from inflation.
To fight inflation, we must discover ways to keep our wealth growing over time. The best way to do this today is to automate our investments. For those curious to learn more, this can start by building an investment portfolio from scratch after speaking with a financial advisor.
If we listen to Buffett, the smartest way to invest always starts with action taken today.