Buffet's quote on Money

1. "Rule No. 1: never lose money; rule No. 2: don't forget rule No. 1"


This is the most important quote to remember. By following this rule, you will at least not lose any of your money.





2. "I am a better investor because I am a businessman and a better businessman because I am an investor."


When investing in stocks, look at it as if you’re buying the entire business. Invest for the long-term and not short-term, especially do NOT trade.





3. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

Look for great companies to invest in, even if you can’t buy it at a cheap price. This is much better than buying mediocre companies at a really cheap price. The longer you hold the great companies, the better your returns will be.





4. "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ."

Although you need to be somewhat intelligent, you don’t need to be a genius to do well in investing. You just need to have patience and temperament.






5. "Time is the friend of the wonderful business, the enemy of the mediocre."


The longer you hold the wonderful business, the better your ROI (return on investment) will be. And the longer you hold the mediocre business, the more lagging your ROI will be.







6. "Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful."

Do not trade, but invest for the long-term. Trading will incur more commissions, spread fees, and taxes. Investing for the long-term will eliminate most of these fees and save you time.





7. "When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."


You should buy businesses which you would want to hold forever if the business and the management are wonderful.







8. "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!'"

You do not have to buy or sell because something is going up or down like mutual fund managers. Wait for the opportunity of a wonderful business at a pretty good price to buy it at. You can wait indefinitely and there’s no harm in it.





9. "Long ago, Ben Graham taught me that 'Price is what you pay; value is what you get.' Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down."


Buy a wonderful business when the price is going down and not up. Think about buying groceries when it’s on sale.







10. "The best thing that happens to us is when a great company gets into temporary trouble...We want to buy them when they're on the operating table."


When a great company’s stock declines due to the economy or temporary trouble, this is the best time to buy it.







11. "Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it's the lack of change that appeals to me. I don't think it is going to be hurt by the Internet. That's the kind of business I like."


You want a company that will be stable for decades to come. You want its products to last for a lifetime and people will keep using it.







12. “You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing."

Wait for the opportunities and don’t buy a stock just because you have the money. Too many people buy and sell because they like to move their money around, but it’s quite unnecessary.





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

Only buy companies that you don’t mind holding for 10 years. Which stocks will you purchase?





14. Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.

Cash loses to inflation and doesn’t bring in income (passive income). Invest in something that will bring in passive income.





15. Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".

Buy companies you really like, because you will hold it for the long-term and not sell it mindlessly.





16. Wide diversification is only required when investors do not understand what they are doing.

It’s better to focus on only a few holdings with in depth research about each investment, rather than diversify and not know much about what you’re holding.





17. You only have to do a very few things right in your life so long as you don't do too many things wrong.

Just by buying a few wonderful companies and holding it for the long-term and you will make a lot of money. You don’t need to pick hundreds of stocks correctly.





18. Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.

Don’t lose to your emotions. Be in control of them. Invest for the long-term and do NOT trade.





19. I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.

Buy companies which have such great brands and products that it basically sells itself.





20. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.

Always buy stocks at a discount, so that even when you sell at a fair price you will make money from it.

Warren Buffett's 10 Ways to Get Rich

With an estimated fortune of $62 billion, Warren Buffett is the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a share cost $7.50. Today, Warren Buffett, 78, is Berkshire's chairman and CEO, and one share of the company's class A stock worth close to $119,000. He credits his astonishing success to several key strategies, which he has shared with writer Alice Schroeder. She spend hundreds of hours interviewing the Sage of Omaha for the new authorized biography The Snowball. Here are some of Warren Buffett's money-making secrets -- and how they could work for you.

1. Reinvest Your Profits: When you first make money in the stock market, you may be tempted to spend it. Don't. Instead, reinvest the profits. Warren Buffett learned this early on. In high school, he and a pal bought a pinball machine to put in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Warren Buffett used the proceeds to buy stocks and to start another small business. By age 26, he'd amassed $174,000 -- or $1.4 million in today's money. Even a small sum can turn into great wealth.

2. Be Willing To Be Different: Don't base your decisions upon what everyone is saying or doing. When Warren Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. He worked in Omaha, not Wall Street, and he refused to tell his parents where he was putting their money. People predicted that he'd fail, but when he closed his partnership 14 years later, it was worth more than $100 million. Instead of following the crowd, he looked for undervalued investments and ended up vastly beating the market average every single year. To Warren Buffett, the average is just that -- what everybody else is doing. to be above average, you need to measure yourself by what he calls the Inner Scorecard, judging yourself by your own standards and not the world's.

3. Never Suck Your Thumb: Gather in advance any information you need to make a decision, and ask a friend or relative to make sure that you stick to a deadline. Warren Buffett prides himself on swiftly making up his mind and acting on it. He calls any unnecessary sitting and thinking "thumb sucking." When people offer him a business or an investment, he says, "I won't talk unless they bring me a price." He gives them an answer on the spot.

4. Spell Out The Deal Before You Start: Your bargaining leverage is always greatest before you begin a job -- that's when you have something to offer that the other party wants. Warren Buffett learned this lesson the hard way as a kid, when his grandfather Ernest hired him and a friend to dig out the family grocery store after a blizzard. The boys spent five hours shoveling until they could barely straighten their frozen hands. Afterward, his grandfather gave the pair less than 90 cents to split. Warren Buffett was horrified that he performed such backbreaking work only to earn pennies an hour. Always nail down the specifics of a deal in advance -- even with your friends and relatives.

5. Watch Small Expenses: Warren Buffett invests in businesses run by managers who obsess over the tiniest costs. He one acquired a company whose owner counted the sheets in rolls of 500-sheet toilet paper to see if he was being cheated (he was). He also admired a friend who painted only on the side of his office building that faced the road. Exercising vigilance over every expense can make your profits -- and your paycheck -- go much further.


6. Limit What You Borrow: Living on credit cards and loans won't make you rich. Warren Buffett has never borrowed a significant amount -- not to invest, not for a mortgage. He has gotten many heart-rendering letters from people who thought their borrowing was manageable but became overwhelmed by debt. His advice: Negotiate with creditors to pay what you can. Then, when you're debt-free, work on saving some money that you can use to invest.

7. Be Persistent: With tenacity and ingenuity, you can win against a more established competitor. Warren Buffett acquired the Nebraska Furniture Mart in 1983 because he liked the way its founder, Rose Blumkin, did business. A Russian immigrant, she built the mart from a pawnshop into the largest furniture store in North America. Her strategy was to undersell the big shots, and she was a merciless negotiator. To Warren Buffett, Rose embodied the unwavering courage that makes a winner out of an underdog.

8. Know When To Quit: Once, when Warren Buffett was a teen, he went to the racetrack. He bet on a race and lost. To recoup his funds, he bet on another race. He lost again, leaving him with close to nothing. He felt sick -- he had squandered nearly a week's earnings. Warren Buffett never repeated that mistake. Know when to walk away from a loss, and don't let anxiety fool you into trying again.

9. Assess The Risk: In 1995, the employer of Warren Buffett's son, Howie, was accused by the FBI of price-fixing. Warren Buffett advised Howie to imagine the worst-and-bast-case scenarios if he stayed with the company. His son quickly realized that the risks of staying far outweighed any potential gains, and he quit the next day. Asking yourself "and then what?" can help you see all of the possible consequences when you're struggling to make a decision -- and can guide you to the smartest choice.

10. Know What Success Really Means: Despite his wealth, Warren Buffett does not measure success by dollars. In 2006, he pledged to give away almost his entire fortune to charities, primarily the Bill and Melinda Gates Foundation. He's adamant about not funding monuments to himself -- no Warren Buffett buildings or halls. "I know people who have a lot of money," he says, "and they get testimonial dinners and hospital wings named after them. But the truth is that nobody in the world loves them. When you get to my age, you'll measure your success in life by how many of the people you want to have love you, actually do love you. That's the ultimate test of how you've lived your life."

Money Quotes