When I first began investing, the most generous thing anyone could have called me was a Nervous Nellie. I made an embarrassing number of investment mistakes based on fear rather than trusting myself to develop a sound investment strategy. That’s when I first dove into Warren Buffett quotes.
As a business reporter, I’d written about Buffett and knew him as one of the most successful investors ever. What took me a bit longer to figure out was how shockingly steady the guy is. After a while, I sought out Buffett quotes to calm my nerves when financial waters were choppy.
Here are some I would happily tattoo somewhere on my body if I weren’t also nervous around needles.
Image source: Getty Images.
1. Prepare to commit
“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
One of Buffett’s most famous pieces of advice to those serious about long-term profit is to pick investments wisely and hold on to them. While day traders seek short-term price fluctuations, that’s not how Buffett became wealthy. “Buy and hold” is Buffett’s bread and butter.
2. Forever is a good holding period
“Our favorite holding period is forever.”
While Buffett’s above quote talks about holding a stock for 10 years, his focus is on the long term (sometimes, very long term). His dream stock is one that he can buy and hold forever. And that’s possible when you put the work required into investigating all there is to know about a company.
As we look at more quotes, you’ll notice that Buffett believes in ignoring small market fluctuations. Everything he invests in is considered long-term, so what happens over a short period is not especially important.
3. Seek value
“Price is what you pay. Value is what you get.”
Buffett is all about looking for strong companies with deeply discounted stock. It’s not about finding a cheap stock for the sake of paying less. Rather, Buffett’s approach is to actively seek the discounted stock of companies doing things right and appearing poised to profit.
4. See fear for what it is
“Fear is the most contagious disease you can imagine. It makes the virus look like a piker.”
No one would make money in the stock market if every investor were a Nervous Nellie and tempted to sell at the first sign of decline. And if you’re the kind of person who “catches” anxiety based on what a particular news station tells you or what you hear around the water cooler, you’re not doing yourself any favors by following the herd.
If you did your homework and invested in a company you have confidence in, don’t let other people’s interpretation of what’s going on knock you off track.
5. What to focus on
“Do not take yearly results too seriously. Instead, focus on four- or five-year averages.”
Buffett believes that short-term price movements do not reflect a company’s underlying value. He suggests that investors hold off on making a judgment until they’ve had an opportunity to study four to five years’ worth of movement. It’s all about taking a longer — more realistic — view.
6. You probably don’t want to bet against Uncle Sam
“It’s never paid to bet against America. We come through things, but it’s not always a smooth ride.”
As a history buff, this Buffett quote resonates with me. We like to believe that the U.S. was once perfect, nearly anointed. The truth is messier than that.
Since its birth as an independent nation less than 250 years ago, America has experienced dramatic highs and lows. In addition to serious civil justice issues, we’ve faced ugly political upheavals, infighting, world wars, pandemics, serious outbreaks (including smallpox, cholera, polio, and measles), recessions, depressions, and plenty of bear markets. In other words, it’s never smooth sailing for long.
And yet, through it all, Buffett says the U.S. takes its lumps but gets up off the canvas ready to fight. In other words, no matter how hard we’ve been hit, we have survived. There are no guarantees, but given the dramatic scope of American history and the resilient nature of the market, betting against the U.S. may not be a wise move for a serious investor.
The announcement that Buffett is retiring as CEO of Berkshire Hathaway at the end of this year struck me as sad. At first, I wasn’t sure why, given that Buffett is a 94-year-old man with the right to do whatever his heart desires. It wasn’t until I began looking through my favorite Buffett quotes that I realized how much I would miss the periodic nuggets of wisdom, which made me a more courageous investor.
The good news is that Buffett made his first stock purchase 83 years ago at the age of 11, giving him a lifetime of investing wisdom. I plan to revisit those quotes whenever the market gets shaky and I’m tempted to do something impulsive. Thus far, his advice has served me well.