Warren Buffett: Most Influential Quotes

As one of the top investors in history, Warren Buffett has had his Berkshire Hathaway annual shareholder letters scrutinized for tips and advice. Some of his most memorable words are shared below, with an analysis provided for three of his influential quotes.

On Greed

“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” – 2004 Annual Shareholder Letter.

Context: Warren was explaining how well the stock market had performed in the past 35 years and how index funds would have been a fantastic investment had people bought them. He continues to give his view on the three things that most investors do wrong: they trade too much and incur too many fees, they do no or little stock analysis, and they have poor skills at timing the market, but try anyway.

On Value Investing

“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.” – This was reported by Bloomberg Businessweek senior writer Anthony Bianco while trailing Buffett for a cover story in 1999.

Context: This quote is a great way to explain value investing. By waiting until a solid company has financial difficulties or is desperate for money, an investor can scoop up its stock at a heavily discounted price. This quote is from 1999, a full nine years before Berkshire Hathaway made huge investments during The Great Recession.

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down” – 2008 Annual Shareholder Letter.

Context: The Great Recession. Warren used his favorite method of stock purchasing – buy at a steep discount – when he picked up shares in many companies that were in desperate trouble in 2008. Unfortunately, Warren had no way to know that the stocks would fall further in 2009, costing him the opportunity to earn hundreds of millions of dollars more.

More Buffett Gems

"Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1."

“If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.”

"Only when the tide goes out do you discover who's been swimming naked."

"Price is what you pay. Value is what you get."

"Someone is sitting in the shade today because someone planted a tree a long time ago."

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."

"Risk comes from not knowing what you're doing."

"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 never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

"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."

"We have learned to turn out lots of goods and services, but we haven’t learned as well how to have everybody share in the bounty. The obligation of a society as prosperous as ours is to figure out how nobody gets left too far behind."

On trading out of a bad investment: "That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, it's the windshield through which investors must peer, and that glass is invariably fogged."

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

Warren’s words of wisdom are in such demand that there have been books compiled that consist solely of his quotes or of his Annual Shareholder Letters. For people trying to get an inside look at how the Oracle of Omaha thinks, reading his quotes is a great way to start!