Quotes on Investing

Large losses are forever - in investing, in teenage driving, and in fidelity. If you avoid large losses with a strong defense, the winnings will have every opportunity to take care of themselves. And large losses are almost always caused by trying to get too much by taking too much risk.

Tradition, sentiment, vague generalizations, unsubstantiated rumors, can never be made the basis of sound investment or intelligent speculation. Now and then large profits are realized on no better foundation -- merely proving that sometimes luck laughs at logic.

I think great investors to some extent are like great chess players. They’re almost born to be investors.

Good investing requires a weird combination of patience and aggression. And not many people have it.

I have made bad business decisions. You can’t live a successful life without doing some difficult things that go wrong. That’s just the nature of the game.

I think people have the theory that any intelligent, hard-working person can get to be a great investor. I think any intelligent person can get to be pretty good as an investor and avoid certain obvious traps. But I don't think everybody can be a great investor.

I'm constantly making mistakes where I can, in retrospect, realize that I should have decided differently. And I think that that is inevitable because it's difficult to be a good investor.

I don’t think the objective of investment should ever be to take a risk in order to get a return. I think the objective of shrewd investment should be to find opportunities which offer a larger return than the average, combined with adequate safety.

The only sound distinction in investment policies for one type of investor or another is based not on his financial position but on his financial competence and financial preparation.

To me, the primary task in investing is to test and then retest some more the parameters and paradigms that appear to govern daily events. Betting against them is dangerous when they look solid, but accepting them without question is the most dangerous step of all.

Liquidity is a concern of the short-term investor and a minor matter for the long-term investor.

Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.

Businessmen play a mixed game of skill and chance, the average results of which to the players are not known by those who take a hand.

The actual results of an investment over a long term of years very seldom agree with the initial expectation.

Just because something is cheap does not mean it is not going to go down.

There is nothing at all conservative, in my opinion, about speculating as to just how high a multiplier a greedy and capricious public will put on earnings.

Investment decisions should be made on the basis of the most probable compounding of after-tax net worth with minimum risk.

It is obvious that a variation of merely a few percentage points has an enormous effect on the success of a compounding (investment) program. It is also obvious that this effect mushrooms as the period lengthens.

Our business is making excellent purchases -- not making extraordinary sales.

More investment sins are probably committed by otherwise quite intelligent people because of "tax considerations" than from any other cause.

The addition of the one-hundredth stock simply can't reduce the potential variance in portfolio performance sufficiently to compensate for the negative effect its inclusion has on the overall portfolio expectation.

I believe the investor operates at a distinct advantage when he is aware of what path his thought process is following.

We don't buy and sell stocks based upon what other people think the stock market is going to do (I never have an opinion) but rather upon what we think the company is going to do.

The course of the stock market will determine, to a great degree, when we will be right, but the accuracy of our analysis of the company will largely determine whether we will be right. In other words, we tend to concentrate on what should happen, not when it should happen.

Our investments are simply not aware that it takes 365 ¼ days for the earth to make it around the sun.

We live in an investment world, populated not by those who must be logically persuaded to believe, but by the hopeful, credulous and greedy, grasping for an excuse to believe.

My approach to bonds is pretty much like my approach to stocks. If I can't understand something, I tend to forget it.

The road to successful investing is paved with independence of spirit, decisiveness, and the courage of one's convictions.

Suppose you bought a stock cheap when it was a relatively obscure situation, and then a half-dozen Wall Street firms started cheering for the stock at the same time. I'd get concerned and think about selling. I don't like bandwagons. I'd rather do my own thing.

The very top officers of a company ought to have the equivalent of one year's salary invested in the company. If they can't demonstrate such faith in their own ability, why should I?

We don't invest for income. If you invest soundly for growth, the income follows.

I'm an optimist, both as a person and an investor. It's a big mistake to be pessimistic as long as we have a viable civilization which is reasonably well managed.

If a company has a sound balance sheet with minimal long-term debt, good growth prospects and responsible management, then the stock should be interesting.

It makes no sense for individual investors to jump in and out of the market. People who trade in that way rarely die rich, whereas the patient investor often does.

I have a very simple strategy. I buy good companies at attractive prices. Then I sit on them.

It's extremely difficult to figure out when to sell anything. So I'd rather have the stock taken away from me in a merger or a buyout. It's much easier.

It's my job to find unusual companies and then judge whether the price they're selling at is too high.

If you are in the right companies, the potential rise can be so enormous that everything else is secondary.

I have stressed management, but even so, I haven't stressed it enough. It is the most important ingredient.

My stocks sometimes get overpriced, but in the long run this kind of company, if you can find it, will outperform the market and the economy. The worst thing you can do is try to catch the swings, sell out too soon and be afraid to buy back in.

The big profits I have made were through very long planning, waiting and watching.

Buy slowly stocks of companies that will capitalize on the problems of scarcity and social need. Companies with excellent management.

I think it is more conservative in the long run to be in a company that is really progressing and really has an edge.

I am vitally interested in companies that are going to survive, but I don't think a big cap company is necessarily one that will.

I want companies that welcome dissent, rather than stifle it, that don't penalize people who criticize what management is doing.

My business is to find unusual companies and judge whether the price is too high.

The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.

You want to be greedy when others are fearful. You want to be fearful when others are greedy. It's that simple.

To some degree, I'm betting on the continuation of what is now. I'm not betting it will continue exactly, but I'm betting against dramatic discontinuities.

We don't go into companies with the thought of effecting a lot of change. That doesn't work any better in investments than it does in marriages.

I want to be in businesses so good that even a dummy can make money.

I feel the same way about managing that I do about investing: It's just not necessary to do extraordinary things to get extraordinary results.

You need a temperament that neither derives great pleasure from being with the crowd or against the crowd because this is not a business where you take polls, it's a business where you think.

The first rule of an investment is: Don’t lose. And the second rule of investment is: Don't forget the first rule. And that's all the rules there are.

The tour we've taken through the last century proves that market irrationality of an extreme kind periodically erupts -- and compellingly suggests that investors wanting to do well had better learn how to deal with the next outbreak.

Don't think for a moment that small investors are the only ones guilty of too much attention to the rear-view mirror.

Investing is laying out money today to receive more money tomorrow.

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.

I am a better investor because I am a businessman, and a better businessman because I am an investor.

Diversification is protection against ignorance, but if you don’t feel ignorant, the need for it goes down drastically.

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

Almost all of the big, great ideas in business are very simple.

It is extraordinary to me that the idea of buying dollar bills for 40 cents takes immediately with people or doesn't take at all.

Size is the anchor of performance.

You’re not buying a stock, you’re buying part ownership in a business. You will do well if the business does well. And if you didn't pay a totally silly price.

In the stock market, you don’t base your decisions on what the markets are doing, but on what you think is rational.

Beating the market averages, after paying substantial costs and fees, is an against-the-odds game; yet a few people can do it, particularly those who view it as a game full of craziness with an occasional mispriced something or other.

When people are desperately trying to sell, I buy. When people are desperately trying to buy, I sell. It has worked out very well over the years.

If you just buy businesses that your idiot nephew can run, you're going to do all right.

Absence of change is how you get rich in investing.

The best kind of business to be in is something where you sell something that costs a penny and sells for a dollar and is habit forming.

If you really know businesses, you probably shouldn’t own more than six of them. If you can identify six wonderful businesses, that is all the diversification you need and you’re going to make a lot of money.

What you really want to do in investments is figure out what’s important and knowable. If it's unimportant or unknowable, you forget about it.

Wall Street makes its money on activity. You make your money on inactivity.

If you are not a professional investor, if your goal is not to manage money in such a way so you get a significantly better return than the world, then I believe in extreme diversification.

Financial markets are a kind of time machine that allows selling investors to compress the future into the present and buying investors to stretch the present into the future.

Rational investors will part with their cash only when they believe they are properly compensated for the loss of liquidity and the pain of disquietude.

I think there’s a tendency in the modern world of people wanting their money to be working hard, and I joke that our money is like a couch potato by comparison.

Investors who find an overly narrow niche to inhabit, prosper for a time but then usually stagnate. Those who move on when the world changes at least have the chance to adapt successfully.

Your wealth is in many ways dependent on what other people will pay for your assets.

The first thing I heard when I got in the business, not from my mentor, was bulls make money, bears make money, and pigs get slaughtered. I'm here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig.

I am convinced that an individual investor with sound principles, and soundly advised, can do distinctly better over the long pull than a large institution.

If it's a choice between investing in a good company in a great industry, or a great company in a lousy industry, I'll take the great company in the lousy industry any day. Good management, a strong balance sheet, and a sensible plan of action will overcome many obstacles, but when you've got weak management, a weak balance sheet, and a misguided plan of action, the greatest industry in the world won't bail you out.

Buy only what you understand, believe in, and intend to stick with -- even when others are chasing the next miracle.

It is true that you don't go broke taking a profit, but that assumes you will make a profit on everything you do. It doesn't allow for the mistakes you're bound to make in the investment business.

You want to design a portfolio that will make the members of a household as happy as possible, but the problem is that people aren't very good at anticipating how they're going to react to various market outcomes.

Investors need to pick their poison: Either make more money when times are good and have a really ugly year every so often, or protect on the downside and don’t be at the party so long when things are good.

Avoiding round trips and short-term devastation enables you to be around for the long term.

The line I draw in the sand is that if an asset has cash flow or the likelihood of cash flow in the near term and is not purely dependent on what a future buyer might pay, then it’s an investment. If an asset’s value is totally dependent on the amount a future buyer might pay, then its purchase is speculation.

All investors need to learn how to be at peace with their decisions.

When the markets are fairly ebullient, investors tend to hold the least objectionable securities rather than the truly significant bargains.

Investing is buying a fractional interest in a business and buying debt claims on a business.

You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct.

One of the nice things about investing is there are many different disciplines that work. You should find one that you’re comfortable with.

Your own psychology can be your worst enemy as an investor.

I always thought if you looked at ten companies, you'd find one that's interesting, if you'd look at 20, you'd find two, or if you look at hundred you'll find ten. The person that turns over the most rocks wins the game.

Managers do not create large alphas by being conventional. They do so by taking the risk of being wrong and alone.

The way to maximize outcome is to concentrate on process.

Investors should always keep in mind that the most important metric is not the returns achieved but the returns weighed against the risks incurred.

It is crucial to have a strategy in place before problems hit, precisely because no one can accurately predict the future direction of the stock market or economy.

The best investors do not target return; they focus first on risk, and only then decide whether the projected return justifies taking each particular risk.

New financial products are typically created for sunny days and are almost never stress-tested for stormy weather.

Risk is not inherent in an investment; it is always relative to the price paid.

Nowhere does it say that investors should strive to make every last dollar of potential profit; consideration of risk must never take a backseat to return.

You must always be prepared for the unexpected, including sudden, sharp downward swings in markets and the economy. Whatever adverse scenario you can contemplate, reality can be far worse.

Money flows, in effect, can render fundamental analysis futile in the short run, even while creating a compelling longer-term opportunity.

The point of investing, after all, is not to have a great story to tell; the point of investing is to make money with limited risk.

The tendency of investors to follow the market's momentum and bet on whatever has worked recently is accompanied by antipathy to whatever hasn't.

Being extremely early is tantamount to being wrong, so contrarians are well advised to develop an understanding of the psychology of the sellers.

Investors must never mistake an investment that is down in price for one that is bargain-priced; undervaluation is determined only by a security's price compared to its underlying value.

We consider for each of our investments not only whether a security is undervalued but why it is undervalued. If the reason is that there are uninformed or emotional sellers, we become more comfortable.

It is always easiest to run with the herd; at times, it can take a deep reservoir of courage and conviction to stand apart from it. Yet distancing yourself from the crowd is an essential component of long-term investment success.

As an investor you never have perfect information, and the biggest profits are always available when competition and information are scarce.

In investing, nothing is certain. The best investments we have ever made, that in retrospect seem like free money, seemed not at all that way when we made them.

Rather than own a little bit of everything, we have always tended to place our eggs in a few dozen baskets and watch them closely.

The true investment challenge is to perform well in difficult times.

People do not consciously choose to invest according to their emotions -- they simply cannot help it.

There is no salve for the hungry investor like the immediate positive reinforcement that comes from making money instantaneously.

Higher risk investments often erode one's capital and produce lower returns -- the worst of all investment worlds. Higher-returns-for-higher-risks only applies on average and over time.

I think investors always learn the lessons of the recent past. And that is the lesson.

Everybody can talk about the problems, but very few investors act on them.

If the market's going wild and you want to be in it, you either have to lower your standards to stay in the game or you buy stuff which may not participate because it's not part of the game at that time.

I like the idea of having a little action. That may not be good from a logical point of view, but it's good from an emotional point of view.

Be careful of leverage. It can go against you.

If you don't like to lose money and it affects your judgment, don't buy things that can go down a great deal.

One of the things you learn in this business is humility because you see your mistakes the next day.

The problem in investing, I think, is timing. You may be right. But in the long run, we're all dead. Even if you're right, if it takes 20 years to work out, it can be a disaster.

If you don't understand a company, if you can't explain it to a 10-year-old in 2 minutes or less, don't own it.

A lot of my stocks don't work. The beauty of the stock market is that if you are wrong, if you put $1,000 up, all you lose is $1,000. I have proven that many times.

A lot of mutual fund managers don't know what they own. The odds are the best they have ever been for the individual.

All you have to do, really, is find the best hundred stocks in the S&P 500 and find another few hundred outside the S&P 500, to beat the market.

People spend all this time trying to figure out "What time of the year should I make an investment? When should I invest?" And it's such a waste of time. It's so futile.

If you're in the market, you have to know there's going to be declines.

In this business, if you're good, you're right six times out of ten. You're never going to be right nine times out of ten.

Diversification of risk matters not just defensively, but because it maximizes returns as well, because we expose ourselves to all of the opportunities that there may be out there.

No matter how calm you are, no matter how long term an investor you are, no matter what your horizons, when the market is jumping around, you feel uncertainty in your gut and it's hard to resist that.

The most important lesson an investor can learn is to be dispassionate when confronted by unexpected and unfavorable outcomes.

Survival as an investor over that famous long course depends from the very first on recognition that we do not know what is going to happen. We can speculate or calculate or estimate, but we can never be certain.

Unless you are that rarest of birds, someone who is cool under the rapid-fire, high-pressure decision making required to maximize your returns, let others take such risks, and allow your portfolio to plug along at a slower speed. In investing, tortoises tend to win far more often than hares over the turns of the market cycle.

Volatility provokes the constant dread that some investors know more than we do, making us fearful of ignoring such powerful price movements.

Many people pride themselves on being "long-term investors," but acting deliberately when prices are bouncing around is not so easy.

Faith in the long run is the most powerful force that drives investment decisions.

In the end, the value of your portfolio is not what somebody tells you is likely to happen over the long run but how much other investors out there are going to be willing to pay you for your assets.

The fact is that strategies that perform sub-optimally under certain market conditions can work surprisingly well in others.

What other people are doing in the market is not relevant to what you’re doing.

When there's a war going on, don't buy the companies that are doing the fighting; buy the companies that sell the bullets.

If you're lucky enough to have one golden egg in your portfolio, it may not matter if you have a couple of rotten ones in there with it.

I can't say enough about the fact that earnings are the key to success in investing in stocks. No matter what happens to the market, the earnings will determine the results.

Anomalies are always to be found in the business situation.

Finance has its anatomy and its physiology. The former is studied through the medium of balance sheets, the latter through income statements.

In finance, as in other fields, theory and practice sometimes differ.

Investing for the long run works only as long as people don't believe it.

If you don't believe corporate profits will continue to rise, and you can't stomach a decline in the market, don't buy stocks or equity mutual funds.

A correction is a wonderful opportunity to buy your favorite companies at a bargain price.

If timing the market is such a great strategy, why haven't we seen the names of any market timers at the top of the Forbes list of richest Americans?

As long as people are willing to pay foolish prices for things, no plan is foolproof.

Ultimately, to be an investor in stocks, you have to believe that American business has a decent future, as well as business worldwide, and that corporations will continue to increase their profits.

As soon as you realize you can afford to wait out any correction, the calamity also becomes an opportunity to pick up bargains.

I've never understood the apocalyptic theory of investing. If the world really does collapse, is it really going to do you any good to have a few Krugerrands in your pocket?

There's no such thing as a worry-free investment. The trick is to separate the valid worries from the idle worries, and then check the worries against the facts.

Here's my investment motto of the month: It's the company, stupid.

In my investing career, the best gains usually have come in the third or fourth year, not in the third or fourth week or the third or fourth month.

Just because the good news is already out doesn't mean it's too late to invest.

If you cut enough losses, sooner or later there's nothing left to cut.

The real problem is not finding a good fund manager, it's finding the right time horizon for your investing and what your temperament is for volatility.

Even in the highest grade securities, there is a certain inescapable speculative risk.

The average trader is naturally a chronic bull. It is human nature to prefer optimism to pessimism.

I've thought a lot of things when I'm managing money with great, great conviction, and a lot of times I'm wrong. And when you're betting the ranch and the circumstances change, you have to change, and that's how I've always managed money.

There is no clear evidence from experience that the investment policy which is socially advantageous coincides with that which is most profitable.

See the investment world as an ocean and buy where you get the most value for your money.

I think a weakness of many people's approach to investment is that they try to be jacks of all trades and masters of none.

We all know that the best rule for investors -- the clients of the investment business -- is, "Don't just do something -- stand there."

Inefficiency doesn't make it easier for all investors to beat the market.

When it comes to long-term investing, doing "less" is often "more."

It's important to recognize that the riskiness of investing comes only partly from the things you invest in. A lot of the risk comes from the behavior of the participants.

Extrapolation is usually right, but not valuable, and predictions of deviation from trends are potentially profitable but rarely right. So far, macro-economic forecasting doesn't represent the path to superior investments.

There's no asset so good that it can't be overpriced and become a bad investment, and very few assets are so bad they can't be underpriced and be a good investment.

Almost any asset can be risky or safe, depending on how other investors treat it.

There's no such thing as superior investing without superior judgment.

Investing is a hard area for most people to figure out what to do.

I spend a great deal of my personal time trying to figure out one thing, which is, at a given point in time, how should you balance aggressiveness and defensiveness in your portfolio.

The reason for dwelling on the virtue of simple investment approaches is that complicated ones, which can't be explained simply, may be disguising a more basic defect. They may not make any sense.

Most financial principles and theories have a degree of good sense to them. It may be a large degree, but it never comes close to being absolute.

If you can invest your money under fair conditions, in fact under attractive specific conditions, I think one certainly should do so even if the market should go down further and even if the securities you buy may also go down after you buy them.

If we assume that a very considerable amount of Wall Street activity must inevitably have elements of chance in it, then the sound idea would be to measure these chances as accurately as you can, and play the game in the direction of having the odds on your side.

No method guarantees you're not going to lose your shirt. I've done that many times. I've had stocks go from $11 to seven cents.

Let us define the speculator as one who seeks to profit from market movements, without primary regard to intrinsic values; the "prudent stock investor" as one who (a) buys only at prices amply supported by underlying value, and (b) who determinedly reduces his stock holdings when the market enters the speculative phase of a sustained advance.

Participation in the stock market is not limited to the experienced, the conservative, nor even the intelligent. It is a game at which any number of people may play. And as the market level rises, the quantity of players grows rapidly and their quality diminishes somewhat in proportion.

A common stock investor is one who regards his common stock holdings as a proprietary interest in various businesses, not as a series of quotations in a newspaper.

The chief hazard of a careful common stock program is not that it may bring unexpected losses, but that its profits will turn the investor into a speculator greedy for quicker and bigger gains -- and therefore headed for ultimate disaster.

It is an axiom of investment that securities should be purchased because the buyer believes in their soundness, and not because he needs a certain income.

Investors venerate their old gods long after their divinity is departed.

I am an exponent of the philosophy that the main objective of common stock investment should be pricing, not timing; and by pricing I mean the endeavor to buy securities at prices which are attractive, letting timing take care of itself.

The investor must recognize that there are uncertain, and hence, speculative elements inherent in any policy he follows.

Let us define the speculator as one who seeks to profit from market movements, without primary regard to intrinsic value; the prudent stock investor as one who (a) buys only at prices amply supported by underlying value, and (b) who determinedly reduces his stock holdings when the market enters the speculative phase of a sustained advance.

These chaps start out reading Graham and Dodd and I'm sure most of them are quite impressed by it in business school. I take some malicious pleasure in saying it's the book on finance that's been read by more people and disregarded by more people than any other that I know of.

Risk-taking is an inevitable ingredient in investing, and in life, but never take a risk you do not have to take.

I view diversification not only as a survival strategy but as an aggressive strategy, because the next windfall might come from a surprising place.

Survival is the only road to riches.

I think you have to invest in a way that's comfortable for you.

I don't think investing is a science. I rather look at it as part art and part science with some boundaries.

Stocks are not lottery tickets. There's a company behind every stock. If the company does well, the stock does well. It's not that complicated.

If you can't explain to a 10-year-old in two minutes or less why you own a stock, you shouldn't own it.

My system for over 30 years has been this: When stocks are attractive, you buy them.

People who have made money in the stock market usually bought companies that have done well over time.

The game of professional investment is intolerably boring and overexacting to anyone who is entirely exempt from the gambling instinct; whilst he who has it must pay to this propensity the appropriate toll.

It appears that capital gains are one of the few remaining ways in which an enterprising American can build or augment a fortune.

The secret to successful investing is relatively simple: Figure out the value of something and then pay a lot less.

Whenever we consider an investment, we think just as much or more about what can go wrong as about what can go right, and we put the avoidance of losses on a high pedestal.

If a common stock is a good investment it is also a good speculation.

There are inefficiencies in the market, but they're not easy to demonstrate, and I think that needs to be done before one shifts money in that direction.

Shortsighted things that people sometimes do for their individual self-interest don't tend to work out well in the long run.

Casino gambling with a system where you have the edge is a wonderful teacher for elementary money management.

The whole trick of the game is to have a few times when you know that something is better than average and invest only where you have that extra knowledge.

There are huge advantages for an individual to get into a position where you make a few great investments and just sit back. You're paying less to brokers. You're listening to less nonsense.

Most of the destruction of investment value occurs in small, private anguishing experiences that are never discussed and never recorded, because people were doing things they never should have done.

Benign neglect is the secret to long-term investing success.

The problem of investment in common stocks is either to insulate yourselves from the speculative influences, or else to adjust your investment policy so that you can take advantage of the speculative fluctuations that are imposed upon the basic investment quality of common stocks.

The single most important thing to me in the stock market for anyone is to know what you own.