Five famous quotes of Warren Buffett

Motley Fool Singapore Bureau,2019 year 5 month 29 day post

Renowned investor Warren Buffett has achieved more than enough success, yet he continues to live in the same house he bought decades ago in Omaha, Nebraska, his hometown, leading a modest life.

He is also famous for his witty sayings.

We present five famous quotes from Warren Buffett that are beneficial for investors.

1.When you notice the boat you’re on keeps leaking, it may be more productive to swap boats than to spend effort fixing it

The above relates to dealing with underperforming companies, acquisitions, and divisions.

Buffett advises that instead of spending time, effort, and resources to fix a hopeless situation, it may be more productive to simply “swap the boat.”

In the business world, “firefighting” consumes a lot of time and energy.

Therefore, it is better to spend energy building another excellent business or seeking a superior acquisition target.

2.A habit of small investment mistakes leads to big failures 

If an investor develops a habit of making small investment mistakes, such bad habits may repeat and lead to large investment failures.

Investors become accustomed to the habit, which brings poor results.

These habits can deeply embed in an investor’s psychology, making changes and corrections very difficult.

To avoid such situations, investors should constantly review their processes and improve as soon as bad habits begin to form.

3.Ignorance combined with leverage leads to disastrous results

If an investor is sufficiently self-aware and possesses the knowledge to invest wisely, their portfolio will be protected from drastic swings.

Moreover, novices should recognize their limits and cling to safer, lower-risk investments.

Among beginners, some may seek to increase profits by piling on leverage, but this can lead to disastrous results.

Therefore, beginners should recognize the pitfalls of leverage and avoid borrowing to maximize returns.

4.Time is a friend of great companies and an enemy of ordinary ones

When investing in excellent companies, you can continue to achieve high returns on invested capital, and as this is reinvested into growth, the power of compounding becomes remarkable.

However, when investing in average, ordinary companies, returns are unlikely to grow over time in the same way.

5.View market fluctuations as a friend rather than an enemy, and profit from others’ mistakes rather than participate in them

Investors who can stay calm and act rationally in unstable markets can capitalize on the mistakes and foolishness of nervous investors who try to pull away from the market.

Such investor behavior can push stock prices well below their intrinsic value.

Therefore, wise investors should see market fluctuations as opportunities to invest in great companies, not as troublesome problems, viewing them as a boon.