95 Lessons from the GOATš
Celebrating Warren Buffett's 95th Birthdayš„³
Hi Multis
It's a special day, even if it may not feel like that to you.
Warren Buffett turns 95 today!
That's why I compiled 95 Lessons from the greatest investor ever, starting from his quotes. I explain them very shortly.
If you are a starting investor or an experienced on, there's wisdom for all of you. You will know some of the quotes but I also tried to look at many less-known quotes and avoided the obvious ones a bit.
1/95
"The most important investment you can make is in yourself. Nobody can take away what you've got in your head, and everybody has potential they haven't used yet."
Knowledge will bring you success and nobody can tax it.
2/95
"Time is the friend of the wonderful business, the enemy of the mediocre."
Great companies with strong moats compound wealth exponentially over decades, while weak businesses deteriorate, even if they are "undervalued."
3/95
"I insist on a lot of time being spent, almost every day, to just sit and think. That is very uncommon in American business. I read and think. So I do more reading and thinking, and make less impulse decisions than most people in business."
In these days of distraction (will you read this whole article?), reading and thinking is even more of a competitive advantage than it has ever been.
4/95
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
From his 1989 letter to Berkshire Hathaway (BRK.A) (BRK.B) shareholders. This quote emphasized the shift from pure value investing to quality investing. Charlie Munger was the "architect" behind this change.
5/95
"Our favorite holding period is forever."
One of my favorites. The best investments are those you never need to sell. When you own pieces of exceptional businesses, you can just let time do its magic.
6/95
"Risk comes from not knowing what you're doing."
The biggest danger isn't market volatility, it's investing in things you don't understand.
Deep knowledge reduces risk more than any diversification strategy ever could.
7/95
"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."
His famous contrarian investing principle emphasizes that the best buying opportunities come when everyone else is panicking. Contrarian thinking separates great investors from the crowd.
8/95
"You only have to do a very few things right in your life so long as you don't do too many things wrong."
Success (in investing and life) doesn't require being right constantly. Just avoid major mistakes and let winners compound.
9/95
"The more you learn, the more you earn."
Continuous learning provides returns that compound throughout your life. Iām not 100% sure these are Buffettās words but they could have been.
10/95
"Invest in businesses you can understand. If you can't explain how a company makes money to a 10-year-old, you probably shouldn't own it."
Stay within your circle of competence but expand it gradually.
11/95
"You only get one mind and one body. And it's got to last a lifetime. It's what you do right now, today, that determines how your mind and body will operate ten, twenty, and thirty years from now."
Compounding works with money, knowledge, but also for treating yourself well.
12/95
"You should invest in a business that even a fool can run, because someday a fool will."
The business model should be so strong that even a bad manager can't derail it completely.
13/95
"The most important quality for an investor is temperament, not intellect."
You don't need to be brilliant to invest successfully. You need discipline, patience, and the ability to think independently when others panic or celebrate.
14/95
"Buy businesses, not stocks."
When you buy shares, you're purchasing a piece of a real company with employees, customers, and cash flows. Think like an owner, not a trader watching price movements.
15/95
"There comes a time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning. I think you are out of your mind if you keep taking jobs that you don't like because you think it will look good on your resume."
Buffett says he 'tapdances to work' every day. I have the same feeling with Potential Multibaggers.
16/95
"Someone's sitting in the shade today because someone planted a tree a long time ago."
Buffett's metaphor for the importance of long-term thinking and patience in investing.
17/95
"If you aren't thinking about owning a stock for 10 years, don't even think about owning it for 10 minutes."
This should always be the mindset when you invest. If it doesn't work out, sure, you can sell. But don't start with that in mind.
18/95
"Lethargy bordering on sloth remains the cornerstone of our investment style."
From his 1990 annual letter, explaining why inactivity can be intelligent behavior in investing. Also:
19/95
"Inactivity strikes us as intelligent behavior."
Sometimes the best investment decision is making no decision at all.
20/95
"Isn't that a little like saving up sex for your old age?"
Buffett's colorful way of saying don't defer happiness and meaningful work for some imagined future benefit. Donāt exaggerate.
21/95
"If you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well."
From his 2024 letter, on the importance of honesty in business leadership. It also shows why so many investors are fooled by convincing CEOs. They believe their own lies.
22/95
"The cardinal sin is delaying the correction of mistakes or what Charlie (Munger) called 'thumb-sucking.'
Problems cannot be wished away. They require action, however uncomfortable that may be.
23/95
"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."
Sometimes, when things can't be mended, radical changes are necessary.
24/95
"During the 2019-23 period, I have used the words 'mistake' or 'error' 16 times in my letters to you. Many other huge companies have never used either word over that span."
Admitting mistakes to yourself is the first step to learning. Then share what you have learned with the world.
25/95
"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway."
This is Buffett's way of criticizing expensive financial advice that's often not valuable.
26/95
"The difference between successful people and really successful people is that really successful people say no to almost everything."
Focus and selectivity create success.
27/95
"Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities."
The reality of finding good investment opportunities is sporadic but many investors feel money burning into their pockets.
28/95
"Paper money can see its value evaporate if fiscal folly prevails. Businesses, however, will usually find a way to cope with monetary instability as long as their goods or services are desired."
Buffett on why you should invest.
29/95
"If a moody fellow with a farm bordering my property yelled out a price every day to me... how in the world could I be other than benefited by his erratic behavior? If his daily shout-out was ridiculously low, and I had some spare cash, I would buy his farm. If the number he yelled was absurdly high, I could either sell to him or just go on farming."
His 2013 analogy about market volatility.
30/95
"There have been three times since we acquired Berkshire that Berkshire has gone down 50% in a fairly short period of time ā three different times."
Even the stocks of the very best companies drop by 50%+. If you can't stand that, you should probably not invest in stocks.
31/95
"I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over."
Focus on what's achievable rather than what's impressive.
32/95
"Only when the tide goes out do you discover who's been swimming naked."
When the market drops, that's when you see if businesses are really strong or just surfing the market waves. We saw that in 2022.
33/95
"Honesty is a very expensive gift. Don't expect it from cheap people."
Character and integrity have real value. People who only value money can't be trusted.
34/95
"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."
Your reputation is your most valuable asset. Treat it like that.
35/95
"Chains of habit are too light to be felt until they are too heavy to be broken."
What a quote! Build good habits early before you can't break your bad habits.
36/95
"Tell me who your heroes are and I'll tell you who you'll turn out to be."
Choose your role models carefully. They shape who you become. Buffett himself is, of course, a great role model.
37/95
"Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don't have the first, the other two will kill you."
Integrity is the most important thing in business.
38/95
"The only way to get love is to be lovable. It's very irritating if you have a lot of money. You'd like to think you could write a check: 'I'll buy a million dollars' worth of love.' But it doesn't work that way. The more you give love away, the more you get."
The quote speaks for itself. Money won't buy you love.
39/95
"We enjoy the process far more than the proceeds."
Find joy in the work itself, not just the rewards.
40/95
"Of the billionaires I have known, money just brings out the basic traits in them."
Wealth magnifies your character; it doesn't create it.
41/95
"I always knew I was going to be rich. I don't think I ever doubted it for a minute."
Conviction and belief in yourself are powerful forces. Believe in what you do and have a long-term goal.
42/95
"Games are won by players who focus on the playing field ā not by those whose eyes are glued to the scoreboard."
Focus on the process, not just the results.
43/95
"No matter how great the talent or efforts, some things just take time. You can't produce a baby in one month by getting nine women pregnant."
One of his funniest quotes. But the message is also very valuable: some achievements simply require time.
44/95
"Predicting rain doesn't count. Building arks does."
Action matters more than prediction or analysis. Thinking is only valuable if action follows.
45/95
"The most important thing to do if you find yourself in a hole is to stop digging."
When you realize you're wrong, stop making it worse. Admit your mistake and move on.
46/95
"Never ask a barber if you need a haircut."
Be cautious of advice from people who benefit from the advice they give.
47/95
"The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective."
Complicated models don't mean much. Simplicity often outperforms complexity.
48/95
"If you cannot control your emotions, you cannot control your money."
Emotional discipline is essential for success in all areas of life.
49/95
"It's good to learn from your mistakes. It's better to learn from other people's mistakes."
Wisdom comes from studying both success and failure. Compounding wisdom about failures goes faster and better if you look at your own mistakes AND those of others.
50/95
"There's a whole bunch of things I don't know a thing about. I just stay away from those. I stay within what I call my circle of competence."
You can only make good decisions about things you know about. That doesn't mean you shouldn't try to keep learning to expand your circle of competence, of course.
51/95
"When you combine ignorance and leverage, you get some pretty interesting results."
Knowledge is essential before taking big risks. Don't follow 'successful' traders with YTD results only and never use leverage.
52/95
"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
Put otherwise: you can't make a diamond from a rock.
53/95
"An investor should act as though he had a lifetime decision card with just twenty punches on it."
You should be very selective with your choices in investing.
54/95
"Beware the investment activity that produces applause; the great moves are usually greeted by yawns."
The best decisions often look boring to others or sometimes plainly dumb.
55/95
"The stock market is designed to transfer money from the active to the patient."
Patience is rewarded over constant activity.
56/95
"Uncertainty actually is the friend of the buyer of long-term values."
Investors hate uncertainty but it creates excellent opportunities for those who can see through it.
57/95
"Pick the kind of person to work for you that you want to marry your son or daughter. You won't go wrong."
Character matters most in choosing partners or employees.
58/95
"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."
Relationships matter more than wealth.
59/95
"If past history was all there was to the game, the richest people would be librarians."
Classic Buffett quote on why investing is about the future, not the past.
60/95
"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."
Long-term investing at its best.
61/95
"I made my first investment at age eleven. I was wasting my life up until then."
Another classic Buffett quip. But the message is clear: start with investing as early as possible. We've been investing for nine years now for our daughter (she's 11 now).
62/95
"If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety."
Knowledge is also a margin of safety.
63/95
"We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'"
Don't confuse trading for investing.
64/95
"I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out."
About waiting for obvious opportunities.
65/95
"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."
There's always a reason to be cautious about investing, but it's often the best use of your money. By the way, the Dow Jones is now at 45.544,88.
66/95
"The reaction of weak management to weak operations is often weak accounting."
About management quality and accounting.
67/95
"Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised."
Some attribute this to value investing but in growth investing, the same goes.
68/95
"I don't read economic forecasts. I don't read the funny papers."
99% of what you read is noise. Ignore predictions.
69/95
"Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."
Don't buy cheap junk; buy quality at a low price.
70/95
"I am a better investor because I am a businessman, and a better businessman because I am an investor."
Both are intertwined because, as a long-term holder, you think like a business owner, not a trader.
71/95
"Charlie and I decided long ago that in an investment lifetime, it's too hard to make hundreds of smart decisions."
Another quote on focus and selectivity. Buffett called Munger jokingly 'the abominable no-man.'
72/95
"I bought a company in the mid-'90s called Dexter Shoe and paid $400 million for it. And it went to zero. And I gave about $400 million worth of Berkshire stock, which is probably now worth $400 billion. But I've made lots of dumb decisions. That's part of the game."
Everyone makes mistakes, even the GOAT. Accept it as an inherent part of investing.
73/95
"Turnarounds seldom turn."
Buffett warns against chasing companies in trouble expecting a rebound.
74/95
"We eat our own cooking."
Buffett wants skin in the game. I also look for that with companies I own.
75/95
"We will only do with your money what we would do with our own."
This is the consequence of 74.
76/95
"We will always tell you how many strokes we have taken on each hole and never play around with the scorecard."
Radical transparency, even if it's tough.
77/95
"We like to make hay while the sun sets, knowing that it will surely rise again."
Patience and continuing to invest when others don't want to.
78/95
"Our trust is in people rather than process. A āhire well, manage littleā code suits both them and me."
Great people, not great processes, buy great companies.
79/95
"Iāve never believed in risking what my family and friends have and need in order to pursue what they donāt have and donāt need."
If you have enough money, concentrate on preservation rather than on growing it even more.
80/95
"Approvalā¦ is not the goal of investing."
Often, when stocks are the most attractive, you hear scorning comments about investing in them.
81/95
"Itās better to have a partial interest in the Hope Diamond than to own all of a rhinestone."
Own quality, not junk.
82/95
"Short-term price changes are meaningless for us except to the extent they offer us an opportunity to increase our ownership at an attractive price."
Many only look at price. That's not investing.
83/95
"Some truths can only be fully learned through experience."
You can read about losing money in an investment all you want, you will only know what it means if you experience it.
84/95
"A public-opinion poll is no substitute for thought."
Think independently. Always.
85/93
"A pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons."
Investors have to learn the same lessons over and over again.
86/93
"Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future."
Be very careful with forecasters. Or better: ignore them altogether.
87/95
"A horse that can count to ten is a remarkable horse, not a remarkable mathematician."
You should always look at the context.
88/95
"If you want to guarantee yourself a lifetime of misery, compare yourself to other people."
Have your 'inner scorecard' as Charlie Munger called it.
89/95
"We try to buy businesses with the same attitude that most people buy houses: they think of them not as stocks but as properties."
Stocks represent companies, not just charts.
90/95
"Itās easier to stay out of trouble than get out of trouble."
Think before you act.
91/95
"What counts for most people is not what they know, but how realistically they define what they donāt know."
Know very well what your circle of competence is.
92/95
"You donāt need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ."
Again the same idea. Simplicity beats complexity.
93/95
"We have no idea what the stock market will do tomorrow or next week or next year. We never have."
If the GOAT doesn't know, nobody does. Ignore all the X commenters, the self-appointed market timing 'specialists' and pundits.
94/95
"If you canāt communicate, itās like winking at a girl in the dark: nothing happens."
Communication is still underrated in business. I always listen to earnings calls and podcasts with CEOs of companies I am interested in.
95/95
"Wall Street makes its money on activity. You make your money on inactivity."
This is what I also apply at Potential Multibaggers. Not too much activity, just finding the best companies that have multibagger potential.
I hope you have learned as much from reading this as I did from compiling this wisdom.
In the meantime, keep learning!