by Martin de Bruyn, CFA, CFP®

To call yourself a Warren Buffet fan is almost a cliché, but I am really one. I read most of the popular books on his life and investment philosophy about ten years ago and recently came across one of those books which contain some pearls of wisdom in the form of quotations and interpretations on wealth and business management. In this memo I have highlighted some quotations from this book.

Berkshire Hathaway will be part of the news cycle over the next week as their legendary AGM conference will be hosted this coming weekend on the 4th of May. Should be a great day because it is also my daughter’s second birthday, I digress. Can you believe that Warren Buffet and Charlie Munger are 88 and 95 years old respectively? I’m certainly looking forward to seeing them in action this weekend. The event will be streamed live and can be viewed by using the address below:

https://finance.yahoo.com/brklivestream/

Quotes according to theme:

Long-Term Economic Value Is the Secret to Exploiting Short-Term Stock Market Folly

“We do not have, never have had, and never will have an opinion about where the stock market, interest rates, or business activity will be a year from now.”

“We believe that according the name investors to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic.”

“As far as I am concerned, the stock market doesn’t exist. It is only there as a reference to see if anybody is offering to do anything foolish.”

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

“No matter how great the talent or effort, some things just take time: You can’t produce a baby in a month by getting nine women pregnant.”

“Uncertainty actually is the friend of the buyer of long-term values.”

“What we learn from history is that people do not learn from history.”

The Price You Pay

“A pin lies and wait for every bubble, and when the two eventually meet, a new wave of investors learn some very old lessons.”

“The smartest side to take in a bidding war is the losing side.”

“That which goes up does not necessarily have to come down.”

“For some reason, people take their cues from price action rather than from values. Price is what you pay. Value is what you get.”

Your Circle of Competence

“Our method is very simple. We just try to buy businesses with good-to-superb underlying economics run by honest and able people and buy them at sensible prices. That’s all I’m trying to do.”

“If we can’t find things in our circle of competence, we don’t expand the circle. We’ll wait.”

“It won’t be the economy that will do in investors; it will be investors themselves.”

Mistakes to Beware Of

“If you don’t make mistakes, you can’t make decisions.”

“I want to be able to explain my mistakes. This means I do only the things that I completely understand.”

“We never look back. We just figure there is so much to look forward to that there is no sense thinking of what we might have done. It just doesn’t make any difference. You can only live life forward.”

When to Sell, When to Leave

“Most people get interested in stocks when everyone else is. You can’t buy what is popular and then do well.”

“We also believe candor benefits us as managers: The CEO who misleads others in public may eventually mislead himself in private.”

Beware the Folly of Greed

“The fact that people are full of greed, fear, or folly is predictable. The sequence is not predictable.”

“We simply attempt to be fearful when others are greedy and to be greedy when others are fearful.”

Discipline, Prudence and Patience

“In the search for companies to acquire, we adopt the same attitude one might find appropriate in looking for a spouse: It pays to be active, interested, and open-minded, but it does not pay to be in a hurry.”

“Imagine 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.”

“If you let yourself be undisciplined on the small things, you will probably be undisciplined on the large things as well.”

The Workplace

“If you hit a hole in one on every hole, you wouldn’t play golf for very long.”

“We enjoy the process far more than the proceeds, though I have learnt to live with those also.”

“Wouldn’t it be great if we could buy love for $1 million. But the only way to be loved is to be lovable. You always get back more than you give away. If you don’t give any, you won’t get any. There’s nobody I know who commands the love of others who doesn’t feel like a success. And I can’t imagine people who aren’t loved feel very successful.”

“The really good business manager doesn’t wake up in the morning and say, ‘This is the day that I am going to cut costs,’ any more than he wakes up and decides to practice breathing.”

“It’s only when the tide goes out that you learn who’s been swimming naked.”

“In looking for someone to hire, you look for three qualities: integrity, intelligence, and energy. But the most important is integrity, because if they don’t have that, the other two qualities, intelligence and energy, are going to kill you.”

Education

“You want to learn from experience, but you want to learn from other people’s experience when you can.”

“The smarter the journalists are, the better off society is.”

“You have to think for yourself. It always amazes me how high-IQ people mindlessly imitate. I never get good ideas talking to other people.”

I have learnt many lessons from Warren Buffett, most notably that we ought to get sceptical when the market seems too good to be true and vice versa, patience is required to be rewarded in the markets, that it is very difficult to beat the market and money will not give you ultimate happiness but love will.

Please contact us should you have any financial planning/wealth management needs or questions.

Sources:

The Tao of Warren Buffett by Mary Buffett and David Clark