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I Am Out Of Step With Present Conditions. When The Game Is No Longer Played Your Way, It Is Only Human To Say The New Approach Is All Wrong, Bound To Lead To Trouble, And So On. On One Point, However, I Am Clear. I Will Not Abandon A Previous Approach Whose Logic I Understand ( Although I Find It Difficult To Apply ) Even Though It May Mean Foregoing Large, And Apparently Easy, Profits To Embrace An Approach Which I Don't Fully Understand, Have Not Practiced Successfully, And Which Possibly Could Lead To Substantial Permanent Loss Of Capital.

-Warren Buffett

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I Am Out Of

Warren Buffett

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I Am Out Of Step With Present Conditions. When The Game Is No Longer Played Your Way, It Is Only Human To Say The New Approach Is All Wrong, Bound To Lead To Trouble, And So On. On One Point, However, I Am Clear. I Will Not Abandon A Previous Approach Whose Logic I Understand ( Although I Find It Difficult To Apply ) Even Though It May Mean Foregoing Large, And Apparently Easy, Profits To Embrace An Approach Which I Don't Fully Understand, Have Not Practiced Successfully, And Which Possibly Could Lead To Substantial Permanent Loss Of Capital.

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That's Been Lost. It's A Huge Problem. What You Have Is You Have The Major Institutions Of The World All Wanting To Deleverage. They Want To Take Down Their Assets And Liabilities. What Seemed So Easy To Borrow Against A Year Ago Now Looks Like Rat Poison To Them. So They're Trying To Deleverage. There Is Only One Institution In The World That Can Leverage Up In A Way That's All A Countervailing Force To That, And That's The United States Treasury.

With A Wonderful Business, You Can Figure Out What Will Happen; You Can't Figure Out When It Will Happen. You Don't Want To Focus On When, You Want To Focus On What. If You're Right About What, You Don't Have To Worry About When

Outstanding Long-term Results Are Produced Primarily By Avoiding Dumb Decisions, Rather Than By Making Brilliant Ones.

Returns Decrease As Motion Increases.

Cash Never Makes Us Happy, But It's Better To Have The Money Burning A Hole In Berkshire's Pocket Than Resting Comfortably In Someone Else's.

The Key To Investing Is Not Assessing How Much An Industry Is Going To Affect Society, Or How Much It Will Grow, But Rather Determining The Competitive Advantage Of Any Given Company And, Above All, The Durability Of That Advantage.

Only When You Combine Sound Intellect With Emotional Discipline Do You Get Rational Behavior.

You Don't Want 300 Million Americans Putting Their Money Under The Mattress.

Suppose That An Investor You Admire And Trust Comes To You With An Investment Idea. This Is A Good One, He Says Enthusiastically. I'm In It, And I Think You Should Be, Too.

The Rich Are Always Going To Say That, You Know, Just Give Us More Money And We'll Go Out And Spend More And Then It Will All Trickle Down To The Rest Of You. But That Has Not Worked The Last 10 Years, And I Hope The American Public Is Catching On.

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.

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Investing Money

Turnarounds Seldom Turn.

For Some Reason, People Take Their Cues From Price Action Rather Than From Values. What Doesn't Work Is When You Start Doing Things That You Don't Understand Or Because They Worked Last Week For Somebody Else. The Dumbest Reason In The World To Buy A Stock Is Because It's Going Up.

An Irresistable Footnote: In 1971, Pension Fund Managers Invested A Record 122% Of Net Funds Available In Equities - At Full Prices They Couldn't Buy Enough Of Them. In 1974, After The Bottom Had Fallen Out, They Committed A Then Record Low Of 21% To Stocks.

I Insist On A Lot Of Time Being Spent, Almost Every Day, To Just Sit And Think. That Is Very Uncommon In American Business.

Mark Zuckerberg Will Be A Hero To Many Young Entrepreneurs 20 Years From Now. Bill Gates Will Be A Hero To Others, And They Will Look To Those [people] Like I Read Books When I Was In My Teens About Rockefeller Or Carnegie.

Young Entrepreneurs

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I've Made Money Over The Years By Buying Into Good Companies, Run By Good People, At Attractive Prices. And I Don't Try And Make It Out Of Buying Into The Market At One Point And Selling At Another Point.

Too Often, A Vast Collection Of Possessions Ends Up Possessing Its Owner. The Asset I Most Value, Aside From Health, Is Interesting, Diverse, And Long-standing Friends.

The Secret Is To Find What You Love To Do.i Mean, I Tell The Students Look For The Job That You Would Take If You Didn't Need A Job. I Mean, It's That Simple. And I Was Lucky Enough To Find It Very Early In Life. And Then The Second Thing Is To Have People Around You That Make Feel Good Every Day, And Make You A Better Person Than You Otherwise Would Be.

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Our Marketable Equities Tell Us By Their Operating Results - Not By Their Daily, Or Even Yearly, Price Quotations - Whether Our Investments Are Successful. The Market May Ignore Business Success For A While, But Eventually Will Confirm It.

Business Success

Never Lie Under Any Circumstances.

We Try To Exert A Ted Williams Kind Of Discipline. In His Book The Science Of Hitting, Ted Explains That He Carved The Strike Zone Into 77 Cells, Each The Size Of A Baseball. Swinging Only At Balls In His "best" Cell, He Knew, Would Allow Him To Bat .400; Reaching For Balls In His "worst" Spot, The Low Outside Corner Of The Strike Zone, Would Reduce Him To .230. In Other Words, Waiting For The Fat Pitch Would Mean A Trip To The Hall Of Fame; Swinging Indiscriminately Would Mean A Ticket To The Minors.

I Wouldn’t Mind Going To Jail If I Had Three Cellmates Who Played Bridge

The True Investor Welcomes Volatility ... A Wildly Fluctuating Market Means That Irrationally Low Prices Will Periodically Be Attached To Solid Businesses.

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If You Own The Only Newspaper In Town, Up Until The Last Five Years Or So, You Have Pricing Power And You Didn't Have To Go To The Office.

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Franklin Delano Roosevelt

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You're Neither Right Nor Wrong Because Other People Agree With You. You're Right Because Your Facts Are Right And Your Reasoning Is Right - That's The Only Thing That Makes You Right. And If Your Facts And Reasoning Are Right, You Don't Have To Worry About Anybody Else.

Bad Terminology Is The Enemy Of Good Thinking.

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I Made My First Investment At Age Eleven. I Was Wasting My Life Up Until Then.

I Know That Congress Will Do The Right Thing.

Tell Me Your Heroes And I'll Tell You How Your Life Will End Up

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Investment Decision Should Be Made On The Basis Of The Most Probable Compounding Of After-tax Net Worth With Minimum Risk.

Everybody's Got A Different Circle Of Competence. The Important Thing Is Not How Big The Circle Is. The Important Thing Is Staying Inside The Circle.

What's Going To Happen - Things We're Doing Are Going To Have Some Inflationary Consequences.

I Would Say That An Rfc-like Thing Might Make Sense. I Probably Would Do It Myself. But I Don't Think Trying To Combine That With What's Going Through Now, I Think What Is Needed Now Is Liquidity.

People Will Always Try To Stop You From Doing The Right Thing If It Is Unconventional.

What Could Be More Advantageous In An Intellectual Contest - Whether It Be Chess, Bridge, Or Stock Selection - Than To Have Opponents Who Have Been Taught That Thinking Is A Waste Of Energy?

Someone Is Sitting In The Shade Today Because Someone Planted A Tree A Long Time Ago.

I Think The Biggest Thing We Need Is To Unclog The Credit Markets, And We May Need Another Stimulus - If We Do, It's - It Should Go To The Lower And Middle-income People.

Games Are Won By Players Who Focus On The Playing Field -- Not By Those Whose Eyes Are Glued To The Scoreboard.

The Fundamental Basis Of Above-average Performance In The Long Run Is Sustainable Competitive Advantage.

If You Look At The Forbes 400, They Are Paying A Lower Rate, Accounting Payroll Taxes, Than Their Secretary Or - Whomever Around Their Office.

... But The Important Thing Is That When You Do Find One Where You Really Do Know What You Are Doing, You Must Buy In Quantity.... Charlie And I Have Made A Dozen Or So Very Big Decisions Relative To Net Worth, Although Not As Big As They Should Have Been. And In Each Of Those, We've Known That We Were Almost Certain To Be Right Going In.

Investing Is Not As Tough As Being A Top-notch Bridge Player. All It Takes Is The Ability To See Things As They Really Are.

I Mean, If Pearl Harbor Came Along, You Could Have Said The Planning Was Wrong By The Military Ahead Of Time Or Maybe The Battleships Shouldn't Have All Been In The Harbor And All That Kind Of Thing.

What's Nice About Investing Is You Don't Have To Swing At Every Pitch.

I Mean, You Can Explain The Fact That These Are Depressed Prices, You Know. We Think These Assets Are Going To Be Worth A Lot More. And I Think That Case Can Be Made In Certain Situations. But I Think To Just Say, You Know, We're Going To Say A Dollar Of Cash Is Worth $2 All Of A Sudden, It Isn't Worth $2. It's Worth A Dollar Today.

I Could End The Deficit In 5 Minutes. You Just Pass A Law That Says That Anytime There Is A Deficit Of More Than 3% Of Gdp All Sitting Members Of Congress Are Ineligible For Reelection.

The Smartest Side To Take In A Bidding War Is The Losing Side.

Getting Fired Can Produce A Particularly Bountiful Payday For A Ceo. Indeed, He Can 'earn' More In That Single Day, While Cleaning Out His Desk, Than An American Worker Earns In A Lifetime Of Cleaning Toilets. Forget The Old Maxim About Nothing Succeeding Like Success: Today, In The Executive Suite, The All-too-prevalent Rule Is That Nothing Succeeds Like Failure.

The Time To Buy Stocks Is Consistently Over Time. You Should Never Buy Your Investments With The Idea, 'i Have To Get A Certain Return.' You Should Look At The Best Return Possible And Learn To Live With That. But You Should Not Try To Make Your Investments Earn What You Feel You Need. It Doesn't Work That Way. The Stock Doesn't Know You Own It.

The Reaction Of Weak Management To Weak Operations Is Often Weak Accounting.

We've Got A Wonderful Economic Formula In This Country.

During Inflation, Goodwill Is The Gift That Keeps On Giving.

Mental Toughness

I Think I Could Make You Fifty Percent A Year On One Million Dollars. No, I Know I Could. I Guarantee That.

Guarantees That

A Low-cost Index Fund Is The Most Sensible Equity Investment For The Great Majority Of Investors. My Mentor, Ben Graham, Took This Position Many Years Ago, And Everything I Have Seen Since Convinces Me Of Its Truth.

My Net Worth Is The Market Value Of Holdings Less The Tax Payable Upon Sale. The Liability Is Just As Real As The Asset Unless The Value Of The Asset Declines (ouch), The Asset Is Given Away (no Comment), Or I Die With It. The Latter Course Of Action Would Appear To At Least Border On A Pyrrhic Victory.

When We Went Crazy, And We Did Go Crazy On Residential Real Estate, It Set Things In Motion That Just - The Dominoes Started Toppling.

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.

Too Often, Executive Compensation In The U.s. Is Ridiculously Out Of Line With Performance. That Won't Change, Moreover, Because The Deck Is Stacked Against Investors When It Comes To The Ceo's Pay.

This Economy Doesn't Work Well Without The Lubrication Of Credit And Trust.

In Some Corner Of The World They Are Probably Still Holding Regular Meetings Of The Flat Earth Society. We Derive No Comfort Because Important People, Vocal People, Or Great Numbers Of People Agree With Us. Nor Do We Derive Comfort If They Don't.

The U.s. Treasury Has Got Borrowing Costs Like Nobody Else Has.

There Is One Thing Of Which I Can Assure You. If Good Performance Of The Fund Is Even A Minor Objective, Any Portfolio Encompassing One Hundred Stocks (whether The Manager Is Handling One Thousand Dollars Or One Billion Dollars) Is Not Being Operated Logically. The Addition Of The One Hundredth Stock Simply Can't Reduce The Potential Variance In Portfolio Performance Sufficiently To Compensate For The Negative Effect Its Inclusion Has On The Overall Portfolio Expectation.

Investors... Can't Pick Stocks That Are Better Than Average. Stocks Are A Good Thing To Own Over Time. There's Only Two Things You Can Do Wrong: You Can Buy The Wrong Ones, And You Can Buy Or Sell Them At The Wrong Time. And The Truth Is You Never Need To Sell Them.

Only Those Who Will Be Sellers Of Equities In The Near Future Should Be Happy At Seeing Stocks Rise. Prospective Purchasers Should Much Prefer Sinking Prices.

If You’re In The Luckiest One Per Cent Of Humanity, You Owe It To The Rest Of Humanity To Think About The Other 99 Per Cent.

You Don't Need To Have Extraordinary Effort To Achieve Extraordinary Results. You Just Need To Do The Ordinary, Everyday Things Exceptionally Well.

Everyday Things

Opportunities Come Infrequently. When It Rains Gold, Put Out The Bucket, Not The Thimble.

If You Can Tell Me Who Your Heroes Are, I Can Tell You How You're Going To Turn Out In Life.

Inflation Could Be A Very - Is A Likely Consequence Out Of What's Going On Now.

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The Strategy We've Adopted Precludes Our Following Standard Diversification Dogma. Many Pundits Would Therefore Say The Strategy Must Be Riskier Than That Employed By More Conventional Investors. We Disagree. We Believe That A Policy Of Portfolio Concentration May Well Decrease Risk If It Raises, As It Should, Both The Intensity With Which An Investor Thinks About A Business And The Comfort-level He Must Feel With Its Economic Characteristics Before Buying Into It.

The Wise Man Once Said Invest Young

I Have Pledged - To You, The Rating Agencies And Myself - To Always Run Berkshire With More Than Ample Cash. We Never Want To Count On The Kindness Of Strangers In Order To Meet Tomorrow's Obligations. When Forced To Choose, I Will Not Trade Even A Night's Sleep For The Chance Of Extra Profits.

I Would Say The Biggest Single Cause Was We Had An Incredible Residential Real Estate Bubble.

The Truth Is That I've Got All My Net Worth Safely In Berkshire And I Will Never Sell A Share So There Is No One More Concerned About What Happens After My Death Than I Am.

By Periodically Investing In An Index Fund, The Know-nothing Investors Can Actually Outperform Most Investment Professionals.

It Makes A Difference Who The Treasury Secretary Is.

Making A Difference

Investment Philosophy Is The Clear Understanding That By Owning Shares Of Stocks He Owns Businesses, Not Pieces Of Paper.

Somebody's Buying These Treasury Bills At 1/20th Of One Percent. Consuming About $2 Billion A Day Of Goods And Services Beyond What We're Producing. In Other Words, The Rest Of The World Sends About $2 Billion A Day Net Of Something.we Got To Send Them Something In Return, Don't We. So We Send Them Little Pieces Of Paper.

I’ve Never Believed In Risking What My Family And Friends Have And Need In Order To Pursue What They Don’t Have And Don’t Need.

Family And Friends

You Can Lose Leverage, And It's The Only Way A Smart Guy Can Go Broke.

There Is No Perfect Mathematical Formula For Pricing A Business.

If You Want A Government That's Going To Do The Things We Ask Our Government To Do, You've Got To Get It From Somebody.

We Are Trading Away A Little Bit Of Our Country All The Time For This Access Consumption That We Have Over What We've Produced. That Is Not Good. I Think It's Terrible Over Time. But Our Country's Productive Grows Enough So We Actually Can Do That, And We'll Still Be Better Off. We Just Don't Be As Well Off As If We Hadn't Done It.

All Day You Wait For The Pitch You Like; Then When The Fielders Are Asleep, You Step Up And Hit It.

Your Money Can Be Inflated Away But Your Knowledge And Talent Cannot.

I Can Do Anything I Want, Basically, As Long As It Doesn't Involve Athletic Ability, Or Something Like That.

Every Company That Has An Economist Working For Him Has One Employee Too Many.

It's Easy To Identify Many Investment Managers With Great Recent Records. But Past Results, Though Important, Do Not Suffice When Prospective Performance Is Being Judged. How The Record Has Been Achieved Is Crucial.

So If You Are Evaluating Others (or Yourself!) In The Investment Field, Think Out Some Standards - Apply Them - Interpret Them.

Ignore The Stock Market, Ignore The Economy, And Buy A Business You Understand.

In The Insurance Business, There Is No Statute Of Limitation On Stupidity.

Risk Comes From Not Knowing What You Are Doing So Wide Diversification Is Only Required When Investors Are Ignorant. You Only Have To Do A Very Few Things In Your Life So Long As You Don't Do Too Many Things Wrong.

Much Success Can Be Attributed To Inactivity. Most Investors Cannot Resist The Temptation To Constantly Buy And Sell.

I Don't Think It Would Be Crazy To Have A Model Or An Entity Model On The Reconstruction Finance Corp.

Diversification May Preserve Wealth, But Concentration Builds Wealth.

Concentration Of Wealth

Asking For Financial Advice From A Financial Planner Is Like Asking A Barber If You Need A Hair Cut.

Lethargy Bordering On Sloth Remains The Cornerstone Of Our Investment Style. The Exception Was Wells Fargo, A Superbly-managed, High-return Banking Operation In Which We Increased Our Ownership To Just Under 10%, The Most We Can Own Without The Approval Of The Federal Reserve Board.

The Banking Business Is No Favorite Of Ours. When Assets Are Twenty Times Equity - A Common Ratio In This Industry - Mistakes That Involve Only A Small Portion Of Assets Can Destroy A Major Portion Of Equity. And Mistakes Have Been The Rule Rather Than The Exception At Many Major Banks.

I Like To Buy Things I Can Understand. I Do A Lot Of Research On Things.

I Mean The Truth Is, I've Never Had It So Good In Terms Of Taxes. I Am Paying The Lowest Tax Rate That I've Ever Paid In My Life.

Occasionally, A Man Must Rise Above Principles.

It's Better To Hang Out With People Better Than You. Pick Out Associates Whose Behavior Is Better Than Yours And You'll Drift In That Direction.

I Don't Have My Diploma From The University Of Nebraska Hanging On My Office Wall, And I Don't Have My Diploma From Columbia Up There Either-but I Do Have My Dale Carnegie Graduation Certificate Proudly Displayed.

At This Point, When Treasury Bills, Seven Day Treasury Bills At 1/20th Of One Percent, It's Not Because People Want To Earn 1/20th Of One Percent, It's Because They Trust The Fact The Treasury Will Give It Back To Them Next Week.

We Want To Use Cash. The Reason We Haven't Used Our Cash Two Years Ago, We Just Didn't Find Things That Were That Attractive. But When People Talk About Cash Being King, It's Not King If It Just Sits There And Never Does Anything. There Are Times When Cash Buys More Than Other Times, And This Is One Of The Other Times When It Buys A Fair Amount More, So We Use It.

We Don't Get Paid For Activity, Just For Being Right. As To How Long We'll Wait, We'll Wait Indefinitely.

I Think It Will Get Moving Faster. I Mean Once You Get It Off The - Once Credit Flows - Now The Recession Is Going To Get Worse.

Exercise Humility And Restraint.

I Mean, You Know, You're Not Going To Change The Human Animal. And The Human Animal Really Doesn't Get A Lot Smarter.

If You Don't Make Mistakes You Can't Make Decisions.

Be Fearful When The Markets Get Greedy, Be Greedy When The Markets Get Fearful.

If You Have A Harem Of 40 Women, You Never Get To Know Any Of Them Very Well.

Investors, Of Course, Can, By Their Own Behavior Make Stock Ownership Highly Risky. And Many Do. Active Trading, Attempts To "time" Market Movements, Inadequate Diversification, The Payment Of High And Unnecessary Fees To Managers And Advisors, And The Use Of Borrowed Money Can Destroy The Decent Returns That A Life-long Owner Of Equities Would Otherwise Enjoy. Indeed, Borrowed Money Has No Place In The Investor's Tool Kit.

I Prefer Liquor Store Robbers With Hungry Kids To Companies That Locate Offshore To Avoid U.s. Taxes.

Rule No.1: Never Lose Money. Rule No.2: Never Forget Rule No.1.

If We Start Deciding, Based On Guesses Or Emotions, Whether We Will Or Won't Participate In A Business Where We Should Have Some Long Run Edge, We're In Trouble.

Take The Job You Would Take If You Were Independently Wealthy. You're Going To Do Well At It.

Never Give Up Searching For The Job That You’re Passionate About. Try To Find The Job You’d Have If You Were Independently Rich. Forget About The Pay. When You’re Associating With The People That You Love, Doing What You Love, It Doesn’t Get Any Better Than That.

Doing What You Love

I Mean, We'll Be Pounding On The Guy's Chest, You Know, On The Floor, And You Know, He's Not Going To Just Jump Up All Of A Sudden. So It Makes It Tough. I Mean, It's Tough To Be In The Legislature, You Know, And Vote For Something And Then People Say, Well, You Voted All This Money And You Know, It's All Getting Spent. It Isn't Getting Spent. It's Getting Invested. But It's All Getting Spent. Nothing's Happening.

You Know, People Talk About This Being An Uncertain Time. You Know, All Time Is Uncertain. I Mean, It Was Uncertain Back In - In 2007, We Just Didn't Know It Was Uncertain. It Was - Uncertain On September 10th, 2001. It Was Uncertain On October 18th, 1987, You Just Didn't Know It.

Uncertain Times

I Am Quite Serious When I Say That I Do Not Believe There Are, On The Whole Earth Besides, So Many Intensified Bores As In These United States. No Man Can Form An Adequate Idea Of The Real Meaning Of The Word, Without Coming Here.

I'm Putting All My Money In The Chinese Toy Market.

The Financial Calculus That Charlie And I Employ Would Never Permit Our Trading A Good Night's Sleep For A Shot At A Few Extra Percentage Points Of Return. I've Never Believed In Risking What My Friends And Family Have And Need In Order To Pursue What They Don't Have And Don't Need.

We Have To Live With The Rest Of The World. And It's A Mistake, In My View. Trade Has Generally Developed In This Country. We Actually Export 12 Or 13 Percent Of Our Gdp. It Was Only 5 Percent In 1970. But It Benefits Us. It Benefits The Rest Of The World. It Doesn't Benefit The Steelworker Maybe In Ohio. And That's The Problem That Has To Be Addressed, Because When You Have Something That's Good For Society, But Terribly Harmful For Given Individuals, We Have Got To Make Sure Those Individuals Are Taken Care Of.

Taking Jobs To Build Up Your Resume Is The Same As Saving Up Sex For Old Age.

Banking Is Very Good Business If You Don't Do Anything Dumb.

The Only Time To Buy These Is On A Day With No 'y' In It.

We're Perfectly Willing To Trade Away A Big Payoff For A Certain Payoff.

In The Search [of A Deal], We Adopt The Same Attitude One Might Find Appropriate In Looking For A Spouse: It Pays To Be Active, Interested, And Open-minded, But It Does Not Pay To Be In A Hurry.

Let Blockheads Read What Blockheads Wrote.

Never Invest In A Business You Can't Understand

Be Fearful When There Is Greed And Be Greedy When There Is Fear.

Failing Conventionally Is The Route To Go; As A Group, Lemmings May Have A Rotten Image, But No Individual Lemming Has Ever Received Bad Press

In A Commodity Business, It's Very Hard To Be Smarter Than Your Dumbest Competitor.

The Value Of Market Esoterica To The Consumer Of Investment Advice Is A Different Story. In My Opinion, Investment Success Will Not Be Produced By Arcane Formulae, Computer Programs Or Signals Flashed By The Price Behavior Of Stocks And Markets. Rather An Investor Will Succeed By Coupling Good Business Judgment With An Ability To Insulate His Thoughts And Behavior From The Super-contagious Emotions That Swirl About The Marketplace.

Investment Success

When Forced To Choose, I Will Not Trade Even A Night's Sleep For The Chance Of Extra Profits.

If You Get To My Age In Life And Nobody Thinks Well Of You, I Don't Care How Big Your Bank Account Is, Your Life Is A Disaster.

Activity Is The Enemy Of Investment Returns.

It's Good To Learn From Your Mistakes. It's Better To Learn From Other People's Mistakes.

Learn From Your Mistakes

It Isn't Given To Man To Be Able To Run A Financial Institution Where Different Interest-rate Scenarios Will Prevail On All Of That So As To Produce Kind Of Smooth, Regular Earnings From A Very Large Base To Start With.

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