Warren Buffett – Chair and CEO of Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) – is one of the greatest investors of all time. Luckily for us mere mortals, Buffett has a long and illustrious history of dishing out bite-sized pearls of investing wisdom. As he is nearly 90 years old, there is a pretty large collection of his wisdom available for our perusal. Luckily, our Fool colleagues over in the United States have compiled and distilled a fantastic collection of Buffett’s best quotes. Here are 3 to start your week off right:
“An investor should act as though he had a lifetime decision card with just twenty punches on it.”
This gem of a quote is an interesting one, conceptually. Warren Buffett is trying to tell us that investing is about research and conviction and that we should only invest in a company if we are willing to back it to the hilt. So rather than actually trying to limit yourself to 20 investments over your lifetime, just ask yourself whether you would buy this company if it represented 5% of your lifetime’s allocation to shares. You might find yourself reconsidering your investing career to date, as well as reevaluating your potential next target.
“All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.”
It sounds so easy when Buffett puts it like this! But he does have the track record to back it up. Some of the best investments Berkshire Hathaway holds today were picked by Warren Buffett decades ago. For example, Buffett acquired his current stake in American Express back in the 1960s – a position Berkshire still holds today. I like to ask myself if I can see a potential ASX share in my portfolio forever. It’s a good starting point for choosing a company to invest in. If the answer is no, then this might be telling.
“In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
I think this quote is a great one to end on, as it perfectly encapsulates the current difficulties the market is facing as a result of the coronavirus pandemic. Share markets, and the companies that trade on them, are built around free markets – the mechanism that has unleashed human potential and technological change for centuries now. If companies can survive and thrive through all of the catastrophes that Buffett lists above, then I think we can do the same over the course of this pandemic. So invest with caution but without fear, just like Warren Buffett does.
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.