Quotes from Warren Buffett

Year-to-year variances, however, cannot consistently be in our favor. Even if our partially-owned businesses continue to perform well in an economic sense, there will be years when they perform poorly in the market. At such times our net worth could shrink significantly. We will not be distressed by such a shrinkage; if the businesses continue to look attractive and we have cash available, we simply will add to our holdings at even more favorable prices.

History teaches us that a crisis often causes problems to correlate in a manner undreamed of in more tranquil times.

Accounting numbers, of course, are the language of business and as such are of enormous help to anyone evaluating the worth of a business and tracking its progress. Charlie and I would be lost without these numbers: they invariably are the starting point for us in evaluating our own businesses and those of others. Managers and owners need to remember, however, that accounting is but an aid to business thinking, never a substitute for it.

In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.

If an investor's entry point into Berkshire stock is unusually high — at a price, say, approaching double book value, which Berkshire shares have occasionally reached — it may well be many years before the investor can realize a profit. In other words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire is not exempt from this truth.

But we will never allow Berkshire to become some monolith that is overrun with committees, budget presentations and multiple layers of management. Instead, we plan to operate as a collection of separately-managed medium-sized and large businesses, most of whose decision-making occurs at the operating level. Charlie and I will limit ourselves to allocating capital, controlling enterprise risk, choosing managers and setting their compensation.

My direct experience (limited, thankfully) with CEOs who have played with a company's numbers indicates that they were more often prompted by ego than by a desire for financial gain.

Loss of focus is what most worries Charlie and me when we contemplate investing in businesses that in general look outstanding.

The bedrock challenge for directors, nevertheless, remains constant: Find and retain a talented CEO — possessing integrity, for sure — who will be devoted to the company for his/her business lifetime. Often, that task is hard. When directors get it right, though, they need to do little else. But when they mess it up, . . . . . .

One of the lessons your management has learned—and, unfortunately, sometimes re-learned—is the importance of being in businesses where tailwinds prevail rather than headwinds.

you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his... Mr. Market has another endearing characteristic: He doesn't mind being ignored. p 209

Good behavior by each party begets good behavior in return.

It's class warfare; my class is winning, but they shouldn't be.

When "dumb" money acknowledges its limitations, it ceases to be dumb.

Go to bed a little smarter each day.

Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.

Some Thoughts About Investing

A CEO's behavior has a huge impact on managers down the line: If it's clear to them that shareholders' interests are paramount to him, they will, with few exceptions, also embrace that way of thinking.

If you are not happy being in the top one tenth of one percent wealthiest people on earth, being in the top one hundreth of one percent isn't going to do anything for you.

If our noneconomic values were to be lost, much of Berkshire's economic value would collapse as well. "Tone at the top" will be key to maintaining Berkshire's special culture.

It is comforting to be in a business where some mistakes can be made and yet a quite satisfactory overall performance can be achieved. In a sense, this is the opposite case from our textile business where even very good management probably can average only modest results. One of the lessons your management has learned—and, unfortunately, sometimes re-learned—is the importance of being in businesses where tailwinds prevail rather than headwinds.

If you invested in a low-cost index fund--where you don't put the money in at one time, but average in over 10 years--you'll do better than 90% of people who start investing at the same time.

In business, I look for economic castles protected by unreachable moats.

Indeed, the unsophisticated investor who is realistic about his shortcomings is likely to obtain better long-term results than the knowledgeable professional who is blind to even a single weakness.