Famous Warren Buffett quotes and what they mean

Born on 30 October 1930, Warren Buffett has achieved legendary status in the world of investment. He is estimated to be worth more than $100 billion and is affectionately known as the "Oracle of Omaha". Famous for his basic investment approach, based on value for money, he has uttered many extremely helpful quotes. 

 

We will now look at some of his more famous quotes, what they mean and whether they still stand good today.

 

“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

 

While some may see this as a bit of a tongue-in-cheek quote, it has a strong underlying message. Don't let ego take over if you get an investment wrong (as we all do). Take a loss if required.

 

“Price is what you pay. Value is what you get.”

 

Even though Warren Buffett’s investment principles relate to undervalued stocks and long-term value, he is not averse to taking a position if a stock has been oversold. His recent investment in HP (Hewlett-Packard) is perhaps a prime example of investing in a company overlooked by many,where Warren Buffett sees value.

 

“Never invest in a business you could not understand.”

 

This quote has been attributed to Warren Buffett on numerous occasions, and he readily admits not fully understanding investment in tech shares. However, like any realistic investor, he has technology sector experts in charge of Berkshire Hathaway's technology investments. Never one to miss out on a growing market!

 

“In the business world, the rearview mirror is always clearer than the windshield.”

 

Hindsight is a beautiful thing! Unfortunately, the future can be clouded by numerous investment opinions, bias and undereducated comments. Nevertheless, detailed research into potential investments can unearth interesting indicators of future price performance.

 

“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”

 

In other words, buy into value. Of course, many companies might have enormous potential in the future, but this can often be priced into the shares, leaving little room for disappointment.

 

“Time is the friend of the wonderful company, the enemy of the mediocre.”

 

The idea here is that a wonderful company will grow and mature over time while a mediocre one will struggle.

 

“Forecasts tell you a great deal about the forecaster; they’ll tell you nothing about the future.”

 

This would appear to be a criticism of research analysts who may look at different stocks from different angles. While it is essential to consider all views, investors should always have their own opinions created by in-depth research.

 

“Diversification is protection against ignorance. It makes little sense if you know what you are doing.”

 

Many people would disagree with this particular comment. The suggestion is that if you do your research and know what you are doing, then the need for diversification may be reduced. However, nobody knows what may happen tomorrow in a sector, local economy and the global economy.

 

“Widespread fear is your friend as an investor because it serves up bargain purchases.”

 

While tagged by many as a long-term investor, this quote by Warren Buffett is something many day traders and short-term traders will appreciate. Stocks can become highly overbought and oversold, the perfect environment for swing traders.

 

“The most important investment you can make is in yourself.”

 

Perhaps one of his finest quotes, Warren Buffett recognises the value of research, experience and common sense. Those with an ego tend to fly high when markets do well but struggle in more difficult times. So never stop learning, always attempt to better yourself and most importantly, never dismiss the opinions of others.

 

“If returns are going to be 7 or 8 percent and you’re paying 1 percent for fees that makes an enormous difference in how much money you’re going to have in retirement.”

 

You need to monitor dealing costs against expected returns and compare this against the risk/reward ratio. Here at GIS UK Ltd, we appreciate the importance of high-tech reliable trading services while maintaining a competitive charging structure.


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