Warren Buffett is a man with a lot of investing experience and skill. Through his investments, Buffett built one of the largest conglomerates in history in Berkshire Hathaway, after all.
Fortunately for many investors, Warren Buffett has been kind enough to share many of his insights over the years. Here are what I think are some of his greatest sayings.
#1 Warren Buffett & stocks with quality
“Buy companies with strong histories of profitability and with a dominant business franchise.”
I think Buffett’s past decision to buy a lot of shares of Apple for his firm, Berkshire Hathaway, illustrates this wise quote well. First, Apple have many years of strong profits before Buffett’s entry. The tech giant also had a great brand, good management, and many competitive advantages. In addition, Apple had a lot of growth potential given its exposure to many secular trends such as 5G.
Buffett’s firm has since made tens of billions from the Apple shares purchase.
#2 Finding the right opportunity
I think another useful Warren Buffett quote is,
“The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch.”
Even though he liked railroad companies before, for example, Buffett waited until shortly after the global financial crisis before buying Burlington Northern Sante Fe for Berkshire Hathaway.
Given that the financial crisis caused shares of many railroad stocks to trade lower, Buffett was likely able to buy Burlington Northern Sante Fe for his firm at a cheaper price than if the financial crisis had not occurred. Given that many railroad companies have done very well since November 2009, the purchase was pretty savvy in hindsight.
#3 The stock market can decline and the timing could be unexpected
I reckon another useful Warren Buffett saying is,
“The years ahead will occasionally deliver major market declines — even panics — that will affect virtually all stocks. No one can tell you when these traumas will occur.“
The market is full of uncertainty because the world is full of unexpected events and they can happen when people least expect it. As Buffett mentioned, no one can really accurately predict exactly when all the crises and economic recessions will occur. In the short term, many stocks can go down a lot if there is a recession or economic calamity.
Given this mind set, I think having a long-term investing horizon is useful. Buffett often just buys and holds stocks. By not buying and selling as much, he doesn’t have to pay as many fees. Meanwhile, Buffett often benefits from his investments because he holds quality companies that grow earnings over time given their competitive advantages.
Warren Buffett has been more conservative
Warren Buffett’s performance has been about the same as the overall market’s performance over the past decade or so. I don’t think it means that the investment legend has lost his investing touch, however. I think it just means that he has gotten more conservative over the years. Although Buffett has a lot of ammo in his ‘elephant gun’, he hasn’t jumped on the opportunity to do big acquisitions despite the pandemic, for example.
Although markets will change in the future, I think many of Warren Buffett’s sayings will still remain useful for many years ahead.
