Warren Buffett Quotes (1930-)

“Basically, the math of intelligently selling insurance is better than the math of intelligently buying insurance.”

“It’s simply to say that managers and investors alike must understand that accounting numbers are the beginning, not the end, of business valuation.”

“The stock market is a no-called-strike game. You don't have to swing at everything — you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, "Swing, you bum!"”

“Dynastic wealth, the enemy of a meritocracy, is on the rise. Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy.”

“I hope you come to this year’s meeting, which will be held on May 20 in Omaha. There will be only one change: after 48 years of allegiance to another soft drink, your Chairman, in an unprecedented display of behavioral flexibility, has converted to the new Cherry Coke. Henceforth, it will be the Official Drink of the Berkshire Hathaway Annual Meeting.”

“Any time you combine ignorance and borrowed money, you can get some pretty interesting consequences.”

“We believe in trying to stick with businesses ... where we think we can see the future reasonably well.”

“We dress more or less the same. I mean, I pay more for my clothes, but they look cheap when I put them on.”

“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.”

“What we learn from history is that people don't learn from history — and you certainly see that in financial markets all the time.”

“A venerable caution will forever be true when advice from Wall Street is contemplated: Don’t ask the barber whether you need a haircut.”

“I tell my kids ... "Tell me when I'm going gaga — but all three of you had better come in, because if it's just one of you, you're out of the will.''”

“Managements are frequently more conscious of what numbers they want to report than they are of what has actually transpired in a given quarter or a given year.”

“Charlie and I never will operate Berkshire in a manner that depends on the kindness of strangers – or even that of friends who may be facing liquidity problems of their own.”

“We all know that π = 3.14159 and little kids can sometimes give it out to hundreds of decimal places. But the stock market is not like that. There's a range of reasonableness ...”

“A very important principle in investing is that you don't have to make it back the way you lost it. And, in fact, it's usually a mistake to try and make it back it the way you lost it.”

“What I must understand is why someone will continue to get out of bed in the morning once they have all the money they could want. Do they love the business, or do they love the money?”

“Can you really explain to a fish what it's like to walk on land? One day on land is worth a thousand years of talking about it, and one day running a business has exactly the same kind of value.”

“You should always adapt your consumption to your income — you shouldn't try and adjust your income to your consumption. That's a basic principle for individuals, businesses, and everything else.”

“... we simply try to give you all of the information about our businesses, in a large general way, that Charlie and I would want if our positions were reversed. ... The facts are out about what we do.”

“Even though we issue lots of credit cards and everything, we’d say, probably, if I had one piece of advice to give to young people, you know, across the board, it would be just to don’t get in debt.”

“Life in financial markets has got no relation to sigmas. I mean, if everybody who had ever operated in financial markets had never had any concept of standard errors, and so on, they would be a lot better off.”

“I had the advantage of a home where people talked about interesting things, and I had intelligent parents and I went to decent schools ... I was born at the right time and place. I won the ‘Ovarian Lottery.'”

“I worry much more about the things I do than the things I don't do ... I missed all kinds of opportunities in my life. ... You just want to make sure that you're on the side of the house when you bet rather than betting against the house.”

“If I had a group under me, they would try and figure out what I wanted the answer to be, and they would tell me what I wanted to hear ... I've watched that approach at 20 public companies ... The main thing is: Are you reasonably sure that you know what you're doing?”

“... they copycat. That's a great danger in any business. If anybody comes to me and says we want to do this because the other guy is doing it then I say go back to square one and come up with a better reason. Human nature is such that you do want to do what others are doing.”

“The number two risk factor is that this business gets the wrong management. And you get a guy or a woman in charge of it that are presentable — the directors like 'em — they don't what they're doing — but they know how to put on an appearance. That's the biggest single danger.”

“Charlie and I cringe when we hear analysts talk admiringly about managements who always “make the numbers.” In truth, business is too unpredictable for the numbers always to be met. Inevitably, surprises occur. When they do, a CEO whose focus is centered on Wall Street will be tempted to make up the numbers.”

“... The first law of capital allocation – whether the money is slated for acquisitions or share repurchases – is that what is smart at one price is dumb at another. (One CEO who always stresses the price/value factor in repurchase decisions is Jamie Dimon at J.P. Morgan; I recommend that you read his annual letter.)”

“Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.”

“... the best way to think about investments is to be in a room with no one else and just think. And if that doesn't work — nothing else is going to work. ... what you are looking for is some way to get one good idea a year ... and then ride it to its full potential. ... Wall Street makes its money on activity — you make your money on inactivity.”

“A 2003 book that investors can learn much from is Bull! by Maggie Mahar. Two other books I’d recommend are The Smartest Guys in the Room by Bethany McLean and Peter Elkind, and In an Uncertain World by Bob Rubin. All three are well-reported and well-written. Additionally, Jason Zweig last year did a first-class job in revising The Intelligent Investor, my favorite book on investing.”

“Clearly the attitude of disrespect that many executives have today for accurate reporting is a business disgrace. And auditors, as we have already suggested, have done little on the positive side. Though auditors should regard the investing public as their client, they tend to kowtow instead to the managers who choose them and dole out their pay. (“Whose bread I eat, his song I sing.”)”

“You know, when I was sixteen I was only thinking about two things: cars and girls ... I wasn't very good with girls so that kind of narrowed it down a little bit. ... Although if you had the right car, it helped with girls, too. ... I mean, Americans love cars ... They are loving their cars. And, it all started here, too. ... There is really nothing more quintessentially American than the car.”

“What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while.”

“We feel change ... is likely to work against us. ... We do not think we have great ability to predict ... where change is going to lead. We think we have some ability to find businesses where we don't think change is going to be very important. ... we think we know in a general way what the soft drink industry, or the shaving industry, or the candy business is going to look like 10 or 20 years from now.”

“Investors should remember that their scorecard is not computed using Olympic-diving methods: Degree-of-difficulty doesn't count. If you are right about a business whose value is largely dependent on a single key factor that is both easy to understand and enduring, the payoff is the same as if you had correctly analyzed an investment alternative characterized by many constantly shifting and complex variables.”

“Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life. The calculation of intrinsic value, though, is not so simple. As our definition suggests, intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised.”

“True independence – meaning the willingness to challenge a forceful CEO when something is wrong or foolish – is an enormously valuable trait in a director. It is also rare. The place to look for it is among high-grade people whose interests are in line with those of rank-and-file shareholders – and are in line in a very big way. ... Charlie and I love such honest-to-God ownership. After all, who ever washes a rental car?”

“One of the important things in stocks is that the stock does not know that you own it. You know, you have all theses feelings about it ... you remember what you paid ... you remember who told you about it ... all these little things ... and it doesn't give a damn. It just sits there ... A stock at 50 — somebody has paid 100 for it — they feel terrible — somebody else paid 10 — they fell wonderful. All these feelings — and it has no impact whatsoever. As Charlie says, gambling is the classic example.”

“High rates of inflation create a tax on capital that makes much corporate investment unwise — at least if measured by the criterion of a positive real investment return to owners. This “hurdle rate” — the return on equity that must be achieved by a corporation in order to produce any real return for its individual owners — has increased dramatically in recent years. The average tax-paying investor is now running up a down escalator whose pace has accelerated to the point where his upward progress is nil.”

“The free market’s the best mechanism ever devised to put resources to their most efficient and productive use. … The government isn’t particularly good at that. But the market isn’t so good at making sure that the wealth that’s produced is being distributed fairly or wisely. Some of that wealth has to be plowed back into education, so that the next generation has a fair chance, and to maintain our infrastructure, and provide some sort of safety net for those who lose out in a market economy. And it just makes sense that those of us who’ve benefited most from the market should pay a bigger share.”

“Insurers have always found it costly to ignore new exposures. Doing that in the case of terrorism, however, could literally bankrupt the industry. No one knows the probability of a nuclear detonation in a major metropolis this year (or even multiple detonations, given that a terrorist organization able to construct one bomb might not stop there). Nor can anyone, with assurance, assess the probability in this year, or another, of deadly biological or chemical agents being introduced simultaneously (say, through ventilation systems) into multiple office buildings and manufacturing plants. An attack like that would produce astronomical workers' compensation claims.”

“I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It is like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die.”

“With unimportant exceptions, such as bankruptcies in which some of a company’s losses are borne by creditors, the most that owners in aggregate can earn between now and Judgment Day is what their businesses in aggregate earn. True, by buying and selling that is clever or lucky, investor A may take more than his share of the pie at the expense of investor B. And, yes, all investors feel richer when stocks soar. But an owner can exit only by having someone take his place. If one investor sells high, another must buy high. For owners as a whole, there is simply no magic – no shower of money from outer space – that will enable them to extract wealth from their companies beyond that created by the companies themselves.”

“... ultimately, there's one investment that supersedes all others: Invest in yourself. Address whatever you feel your weaknesses are, and do it now. I was terrified of public speaking when I was young. I couldn't do it. It cost me $100 to take a Dale Carnegie course, and it changed my life. I got so confident about my new ability, I proposed to my wife during the middle of the course. It also helped me sell stocks in Omaha, despite being 21 and looking even younger. Nobody can take away what you've got in yourself—and everybody has potential they haven't used yet. If you can increase your potential 10%, 20% or 30% by enhancing your talents, they can't tax it away. Inflation can't take it from you. You have it the rest of your life.”

“Though the pie to be shared by the next generation will be far larger than today’s, how it will be divided will remain fiercely contentious. Just as is now the case, there will be struggles for the increased output of goods and services between those people in their productive years and retirees, between the healthy and the infirm, between the inheritors and the Horatio Algers, between investors and workers and, in particular, between those with talents that are valued highly by the marketplace and the equally decent hard-working Americans who lack the skills the market prizes. Clashes of that sort have forever been with us – and will forever continue. Congress will be the battlefield; money and votes will be the weapons. Lobbying will remain a growth industry.”

“Most managements feel that, on the price of their shares, the higher the better — and that's an understandable feeling. But, the trouble is that the game isn't over at any time. We really feel — the fairer the better. Our goal is that every shareholder participates in the progress that Berkshire makes as a business during their holding period. We don't want one party getting wealthy off the other. We want them to share based on the gain in value of the business .. In economics the most important question ... — maybe important beyond economics, too — ... when ... somebody ... tells you something, the first question to ask yourself is, "And then what?" ... the stock going up is not an end of itself ... we really like the idea of the price tracking intrinsic value over time ...”

“Ben Graham told a story 40 years ago that illustrates why investment professionals behave as they do: An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. "You're qualified for residence," said St. Peter, "but, as you can see, the compound reserved for oil men is packed. There's no way to squeeze you in." After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, "Oil discovered in hell." Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. "No," he said, "I think I'll go along with the rest of the boys. There might be some truth to that rumor after all."”

“I don't see any reason why there should be some huge influx of people, immediately subsequent to the offering, that didn't hear about it in the offering period. ... I think most of the demand will be retail, not so much institutional. Most new offerings are done in a manner, where the idea is to have far more demand than supply and therefore cause people to maybe order stock they didn't even want — just on the idea that this restricted supply will cause a big jump the first day ... if you've seen Yahoo or a number of other offerings. Personally, I don't like that sort of distribution arrangement, because you'll find that 30 to 40 percent of the issue will perhaps trade the first day ... and perhaps at a lot higher price. I think there's something a little wrong with that kind of an offering. ... favored customers get the chance to flip the stock and really are getting paid an exorbitant underwriting fee themselves — even though they are called purchasers — because they sell it the first day.”

“      It seems highly likely to me that climate change poses a major problem for the planet. I say “highly likely” rather than “certain” because I have no scientific aptitude and remember well the dire predictions of most “experts” about Y2K. It would be foolish, however, for me or anyone to demand 100% proof of huge forthcoming damage to the world if that outcome seemed at all possible and if prompt action had even a small chance of thwarting the danger.       This issue bears a similarity to Pascal’s Wager on the Existence of God. Pascal, it may be recalled, argued that if there were only a tiny probability that God truly existed, it made sense to behave as if He did because the rewards could be infinite whereas the lack of belief risked eternal misery. Likewise, if there is only a 1% chance the planet is heading toward a truly major disaster and delay means passing a point of no return, inaction now is foolhardy. Call this Noah’s Law: If an ark may be essential for survival, begin building it today, no matter how cloudless the skies appear.”

“      The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day’s supply.       Charlie and I don’t expect to win many of you over to our way of thinking – we’ve observed enough human behavior to know the futility of that – but we do want you to be aware of our personal calculus. And here a confession is in order: In my early days I, too, rejoiced when the market rose. Then I read Chapter Eight of Ben Graham’s The Intelligent Investor, the chapter dealing with how investors should view fluctuations in stock prices. Immediately the scales fell from my eyes, and low prices became my friend. Picking up that book was one of the luckiest moments in my life.”

“… productivity gains frequently cause upheaval: Both capital and labor can pay a terrible price when innovation or new efficiencies upend their worlds. We need shed no tears for the capitalists (whether they be private owners or an army of public shareholders). It’s their job to take care of themselves. ... A long-employed worker faces a different equation. When innovation and the market system interact to produce efficiencies, many workers may be rendered unnecessary, their talents obsolete. Some can find decent employment elsewhere; for others, that is not an option. … The answer in such disruptions is not the restraining or outlawing of actions that increase productivity. Americans would not be living nearly as well as we do if we had mandated that 11 million people should forever be employed in farming. The solution, rather, is a variety of safety nets aimed at providing a decent life for those who are willing to work but find their specific talents judged of small value because of market forces. (I personally favor a reformed and expanded Earned Income Tax Credit that would try to make sure America works for those willing to work.) The price of achieving ever-increasing prosperity for the great majority of Americans should not be penury for the unfortunate.”

“As is well-known, the U.S. went off the rails in its home-ownership and mortgage-lending policies, and for these mistakes our economy is now paying a huge price. All of us participated in the destructive behavior – government, lenders, borrowers, the media, rating agencies, you name it. At the core of the folly was the almost universal belief that the value of houses was certain to increase over time and that any dips would be inconsequential. The acceptance of this premise justified almost any price and practice in housing transactions. Homeowners everywhere felt richer and rushed to “monetize” the increased value of their homes by refinancings. These massive cash infusions fueled a consumption binge throughout our economy. It all seemed great fun while it lasted. (A largely unnoted fact: Large numbers of people who have “lost” their house through foreclosure have actually realized a profit because they carried out refinancings earlier that gave them cash in excess of their cost. In these cases, the evicted homeowner was the winner, and the victim was the lender.)       In 2007, the bubble burst, just as all bubbles must. We are now in the fourth year of a cure that, though long and painful, is sure to succeed. Today, household formations are consistently exceeding housing starts.”

“When we took over Berkshire, gold was at twenty dollars and Berkshire was at fifteen — so, gold is now at sixteen hundred and Berkshire is at a hundred and twenty thousand. So, you can pick different starting periods. Obviously, if you pick anything that has gone up a lot ... in the last month or year, it will beat ninety ... or ninety-five percent of other investments. The one thing I would bet my life on, essentially, is over a fifty-year period not only will Berkshire do considerably better than gold, but common stocks as a group will do better than gold ... and, probably, farmland will do better than gold. ... If you own an ounce of gold now and ... you caress it over the next hundred years, you'll have an ounce of gold a hundred years from now. If you own a hundred acres of farmland, you'll also have a hundred acres of farmland a hundred years from now and you will have taken the crops for a hundred years and sold them — and, presumably, bought more farmland with the process. It's very hard for an unproductive investment to beat productive investments over any long period of time. ... I can say bonds are no good — and Ben Bernanke still smiles at me. ... If you say anything negative about gold, ... it arouses passions with people — which is kind of fascinating — because, usually, if you thought through something intellectually, it really shouldn't make much difference what people say.”

“      In recent years, probity has eroded. Many major corporations still play things straight, but a significant and growing number of otherwise high-grade managers — CEOs you would be happy to have as spouses for your children or as trustees under your will — have come to the view that it’s okay to manipulate earnings to satisfy what they believe are Wall Street’s desires. Indeed, many CEOs think this kind of manipulation is not only okay, but actually their duty.       These managers start with the assumption, all too common, that their job at all times is to encourage the highest stock price possible (a premise with which we adamantly disagree). To pump the price, they strive, admirably, for operational excellence. But when operations don’t produce the result hoped for, these CEOs resort to unadmirable accounting stratagems. These either manufacture the desired “earnings” or set the stage for them in the future.       Rationalizing this behavior, these managers often say that their shareholders will be hurt if their currency for doing deals — that is, their stock — is not fully-priced, and they also argue that in using accounting shenanigans to get the figures they want, they are only doing what everybody else does. Once such an everybody’s-doing-it attitude takes hold, ethical misgivings vanish. Call this behavior Son of Gresham: Bad accounting drives out good.”

“      In 1924, Edgar Lawrence Smith, an obscure economist and financial advisor, wrote Common Stocks as Long Term Investments, a slim book that changed the investment world. Indeed, writing the book changed Smith himself, forcing him to reassess his own investment beliefs.       Going in, he planned to argue that stocks would perform better than bonds during inflationary periods and that bonds would deliver superior returns during deflationary times. That seemed sensible enough. But Smith was in for a shock.       His book began, therefore, with a confession: “These studies are the record of a failure – the failure of facts to sustain a preconceived theory.” Luckily for investors, that failure led Smith to think more deeply about how stocks should be evaluated.       For the crux of Smith’s insight, I will quote an early reviewer of his book, none other than John Maynard Keynes: “I have kept until last what is perhaps Mr. Smith’s most important, and is certainly his most novel, point. Well-managed industrial companies do not, as a rule, distribute to the shareholders the whole of their earned profits. In good years, if not in all years, they retain a part of their profits and put them back into the business. Thus there is an element of compound interest (Keynes’ italics) operating in favour of a sound industrial investment. Over a period of years, the real value of the property of a sound industrial is increasing at compound interest, quite apart from the dividends paid out to the shareholders.”       And with that sprinkling of holy water, Smith was no longer obscure.”

“Warren Buffett, one of the richest guys in the world, openly admits that his effective tax rate is lower than his secretary's. It's time to tell the billionaire class that if they want to enjoy the benefits of America, they have to accept their responsibilities, and they have to start paying their fair share of taxes.”

“What J.P. Morgan and John D. Rockefeller were to the Age of Robber Barons, Microsoft's Bill Gates and Berkshire Hathaway's Warren Buffett, as well as digital moguls like Mark Zuckerberg and Jeff Bezos are to the contemporary age of the rule of the 1%. Then as now, the super-rich used governments to write laws and rules to allow them to accumulate unlimited wealth; then as now, creating monopolies by enclosing the commons and killing competition is the strategy for becoming the 1%.”

“The world's second-richest person called on Washington policymakers to adopt fundamental reforms on such costs to address what he called a "national emergency." He said health care eats up 17 percent of U.S. gross domestic product, at a time when many other countries pay only nine or 10 percent of GDP but have more doctors, nurses and hospital beds per capita. "It's like a tapeworm eating at our economic body," Buffett said on CNBC television. "If it was a choice today between Plan A, which is what we've got, or Plan B, which is the Senate bill, I would vote for the Senate bill," he said. "But I would much rather see a Plan C that really attacks costs, and I think that's what the American public wants to see." Rising costs, Buffett said, are holding back an economy that faced an "economic Pearl Harbor" in late 2008 when capital markets seized up.”

“I have no large desire to sacrifice much of my personal habits, intellectual pleasures, and personal standards in order to become a billionaire like Warren Buffet, and I... do not see the point of becoming one if I were to adopt Spartan (even miserly) habits and live in my starter house. Something about the praise lavished upon him for living in austerity while being so rich escapes me; if austerity is the end, he should become a monk or a social worker... becoming rich is a purely selfish act, not a social one. ...[T]here is no need to extol ...greed as a moral (or intellectual) accomplishment.”

“As taxpayers we gave one of Warren Buffet's companies, in 2006, an interest-free loan of $665 million dollars, and he only has to pay half of it back 28 years from now. ...Imagine ...you bought a house in 1980 at the price in 1980. Up until now [2009] you haven't made any payments on the house, and this year you have to pay half in the... dollars you agreed to back then, no adjustment for inflation. Do you think that alone might make you a wealthy man?”