As we approach the much-awaited annual shareholders meeting of Berkshire Hathaway, dubbed as the “Investment Olympics,” investors around the world are eagerly anticipating the investment wisdom that will be shared by the legendary duo, Warren Buffett and Charlie Munger. From May 6th to 7th, the two investing masters will once again team up to impart their valuable insights to shareholders.
Munger, widely considered as the world’s smartest investor, and Buffett, famously known as the “Oracle of Omaha,” have been a dynamic duo since they met in 1959. Together, they have created an investment powerhouse that has become the stuff of legends.
Their investment philosophy and viewpoints have been much sought after, and they have left behind many memorable quotes that continue to resonate with investors today. Let’s take a trip down memory lane and revisit some of their classic quotes that have become part of investment lore.
Munger’s 20 classic quotes:
Investment Wisdom
- “People calculate too much and think too little.”
- The importance of critical thinking and deep analysis over impulsive decisions based on calculations.
- “The most reliable way to build long-term wealth is to work hard at being not stupid, instead of trying to be very intelligent.”
- The importance of avoiding common mistakes and sticking to a rational investment approach.
- “Jealousy, resentment, and self-pity are disastrous modes of thought. Self-pity gets fairly close to paranoia, and paranoia is one of the very hardest things to reverse.”
- Indulging in negative emotions that can cloud judgment and lead to irrational decision-making.
- “What is elementary, worldly wisdom? Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form.”
- Importance of organizing knowledge into a coherent framework to make informed decisions.
Wealth Creation
- “The big money is not in the buying and selling. But in the waiting.”
- Patience in investing and avoiding short-term speculation.
- “The secret to success is to be rational.”
- Advocates for a logical and systematic approach to decision-making.
- “The best way to get what you want is to deserve what you want.”
- Focusing on personal growth and development to achieve success.
- “If I know where I am going to die, I’ll never go there.”
- Avoiding situations with known risks and unfavorable outcomes.
The Importance of Learning
- “There is no formula for success except, perhaps, an unconditional acceptance of life and what it brings.”
- Success is a combination of various factors and cannot be achieved through a single formula or system.
- “If you’re not learning, you’re falling behind.”
- Importance of continuous learning and self-improvement to stay ahead of the curve.
- “In my whole life, I have known no wise people who didn’t read all the time – none, zero.”
- Encourages reading and lifelong learning as essential habits for personal and professional growth.
- “Try to be a little wiser today than you were yesterday, but not too much. It’s not good to get too much smarter too fast.”
- Advises incremental progress and avoiding overconfidence.
Ability Circle Theory
- “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
- Avoiding common mistakes and errors can provide a significant advantage over trying to be exceptionally smart.
- “If something is too hard, we move on to something else.”
- Focusing on areas where you have a competitive advantage and avoiding overly difficult tasks.
- “You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time.”
- Consistent progress and incremental improvement can lead to significant long-term advantages.
15 Investment Maxims of Warren Buffett
- The first rule of investing is to never lose money. The second rule is to never forget the first rule.
- Buffett’s golden rule is that investors should prioritize capital preservation when investing in the market. In other words, stay rational and avoid impulsive decisions.
- Someone is sitting in the shade today because they planted a tree a long time ago.
- This is the core pillar of Buffett’s long-term investment philosophy. In life and investing, one must think about the trajectory of things.
- If you are not willing to own a stock for ten years, don’t even think about owning it for ten minutes.
- This is Buffett’s best insight into active and passive investing.
- Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
- The core of value investing is to seek out undervalued companies to invest in.
- It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
- Finding undervalued companies is not the only criterion. You also need to look at the stock’s fundamentals and assess whether the company is outstanding.
- Risk comes from not knowing what you’re doing.
- Research and market understanding can reduce a lot of risk. Learn more about the market.
- Never invest in a business you cannot understand.
- After understanding the asset’s returns and risks, try to invest in it.
- The best investment you can make is in yourself.
- Investment comes down to two things: your ability to earn money and your ability to make money work for you. Work has a certain time limit, but money can work around the clock, forever.
- Never rely on a single income; make investment your second income source.
- Diversification and long-term investment are the secrets to success.
- Be fearful when others are greedy, and be greedy when others are fearful.
- Humans are irrational.
- Don’t risk what is important to you, by taking a chance on something you don’t need.
- A bird in the hand is worth two in the bush.
- The best time to allocate capital is when things are going badly.
- Market downturns are the best times to find undervalued, excellent companies.
- Only when the tide goes out do you discover who’s been swimming naked.
- After short-term irrational market factors recede, you will know who is investing and who is speculating.
- Reputation is like fine china; it’s expensive to acquire but cheap to lose.
- The first rule of investment is to think independently and maintain inner calm.