Warren E. Buffett is very famous vor his quotes. Because of his amazing knowledge and his witty and dry style is he able to pack economical complicated things into sentences that make sense and are easy to understand even for people who are not familiar with Business 101.
I will give you an overview of some of his quotes and also an brief explanation of what he meant or could have meant from my point of view. Visiting the wisdom of Buffett is always reasonable advice for an Investor. The range of topics which are important for us Investors is the same since 50 years and since Buffett started investing a long time ago. There are just some fundamental basics in earning money in the stock markets. And no one is more qualified to talk about the basics of investing then the superinvestor himself: Warren Edward Buffett
Lets start with some famous Buffett Quotes:
Quote : “No matter how much talent or effort, some things just take time into complete: you can never be a baby in one month by nine women pregnant.”
My explanation: This means that it just takes time for your investing ideas to work off. Sitting still with your A** on your hands is sometimes the most reasonable thing you can do when it comes to Valueinvesting. You buy a cheap stock that met your valuation criteria and then you have to wait and have to patient. Sometimes it takes some months and sometimes it will even take years until your investment idea and your stock finally comes closer to their real intrinsic worth and the stock price goes up. A short term horizon in Investing is almost always a short road to speculation and the road to speculation is never a good one. Be an Investor, be patient and the success and the results will come.
Quote : “You should buy a company that can be run by fools, because that´s what will happen someday"
Explanation of the Buffett Quote: You should look out for very easy to understand companies. Look out for companies who are not in the needs of constantly putting millions and billions into research. Beware the companies who needs to invest billion after billion into new machinery and research just to stay competitive. The best company to invest is a company with a simple business modell (like the stock of Coca Cola Co.), a simple product which is not getting outdated every few weeks like mobile phones or the newest PC-Hardware. This are companies where management can focus on the business itself and where you dont have to be a rocket scientist to look some years into the future. The internet, new gadgets and technologies will never change the way human people will drink a Coca Cola or will need some Gilette razors. And now thinks of the myriads of problems the typical Hardware, Software and Technology companies can run into. That´s good advise from Warren Buffett i think and also follows his circle of competence logic. Stay in your circle of competence and never go out of this circle. Maybe if you are Bill Gates you can touch technology otherwise keep it simple. Buffett made Billions out of solid and really tried companies which are in business 50 years or even 150 years. A fancy technology and a promising product is not enough to guarantee you success with your stock investments in the long run.
Quote from Buffett : “With enough inside information and some million dollars, you can go broke in a year.”
Explanation : There is no such thing like insider information and hot stock tips that will allow you to make quick and almost guaranteed profits. Why should anybody with a hot information give this information to others for free and risking that the stock goes up ? Why doesn´t the insider keeps his mouth shout - wouldn´t it be better for him ? Besides that there is plenty of information and very good research and statistics out there that you can´t win with insider information. Even the CEO´s of companies do not know where the business will be in 4 months. You can find research that is statistically significant and that proves that even the highest paid investment managers and billionaires have a hard time beating just the S&P500 or the DJIA30 in the long run. Think about that. In the stock market you are playing against millions and millions of very sharp minded and deep pocketed investors. For every buyer of a stock there must be a seller. Do you think all sellers are that stupid ? There really is no free lunch in the stock markets.