Warren Buffet: Wikis


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Warren Buffett

Buffett speaking to students from the Kansas University School of Business, May 6, 2005
Born Warren Edward Buffett
August 30, 1930 (1930-08-30) (age 79)
Omaha, Nebraska, U.S.
Nationality American
Alma mater University of Pennsylvania
University of Nebraska–Lincoln
Columbia University
Occupation Chairman & CEO, Berkshire Hathaway
Salary US$100,000[1]
Net worth US$47 billion (2010)[2]
Spouse(s) Susan Thompson Buffett (1952–2004) (deceased),
Astrid Menks (2006–)[3]
Children Susan Alice Buffett,
Howard Graham Buffett,
Peter Andrew Buffett

Warren Edward Buffett (born August 30, 1930) is an American investor, businessman, and philanthropist. He is one of the most successful investors in the world, the primary shareholder and CEO of Berkshire Hathaway.[4]

Buffett is called the "Oracle of Omaha"[5] or the "Sage of Omaha"[6] and is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth.[7] Buffett is also a notable philanthropist, having pledged to give away 85 percent of his fortune to the Gates Foundation. He also serves as a member of the board of trustees at Grinnell College.[8] Warren Buffett currently sits third on the list of the world's richest people. [9]


Early life

Buffett was born in Omaha, Nebraska, the second of three children and only son of Leila (née Stahl) and businessman/politician Howard Buffett.[10]

Buffett began his education at Rose Hill Elementary School in Omaha. In 1942 his father was elected to the first of four terms in Congress and after moving with his family to Washington, D.C., Warren finished elementary school, attended junior high school, and graduated from Woodrow Wilson High School.[11]

Buffett entered college in 1947 at the Wharton School of the University of Pennsylvania (1947–49). After two years he transferred to the University of Nebraska–Lincoln, where in 1950, at the age of nineteen, he finished his studies for a B.S. in Economics.[12]

Even as a child Buffett displayed an interest in making and saving money. He went door to door selling chewing gum, Coca-Cola, or weekly magazines. For a while he worked in his grandfather's grocery store. While still in high school, he carried out several successful money-making ideas: delivering newspapers, selling golfballs and stamps, and detailing cars among them. Filing his first income tax return in 1944, Buffett took a $35 deduction for the use of his bicycle and watch on his paper route.[13] In 1945, in his sophomore year of high school, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in the local barber shop. Within months, they owned several machines in different barber shops.

Buffett's interest in the stock market and investing also dated to his childhood, to the days he spent in the customers' lounge of a regional stock brokerage near the office of his father's own brokerage company. On a trip to New York at the age of ten he made a point to visit the New York Stock Exchange. And about this same time he purchased shares of Cities Service for himself and his sister. While in high school he invested in a business owned by his father and bought a farm worked by a tenant farmer. By the time he finished college, Buffett had accumulated more than $90,000 in savings measured in 2009 dollars.

Benjamin Graham (1894–1976)
Phil Fisher (1907–2004)

Buffett enrolled at Columbia Business School after learning that Benjamin Graham (author of "The Intelligent Investor" - one of his favorite books on investing) and David Dodd, two well-known securities analysts, taught there. He received a M.S. in Economics from Columbia University in 1951.

In Buffett’s own words:

I’m 15 percent Fisher and 85 percent Benjamin Graham.[14]

The basic ideas of investing are to look at stocks as business, use the market's fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing.[15]


Buffett was employed from 1951–54 at Buffett-Falk & Co., Omaha as an Investment Salesman, from 1954–1956 at Graham-Newman Corp., New York as a Securities Analyst, from 1956–1969 at Buffett Partnership, Ltd., Omaha as a General Partner and from 1970 – Present at Berkshire Hathaway Inc, Omaha as its Chairman, CEO.

In April 1952, Buffett discovered Graham was on the board of GEICO insurance. Taking a train to Washington, D.C. on a Saturday, he knocked on the door of GEICO's headquarters until a janitor allowed him in. There he met Lorimer Davidson, Geico's Vice President, and the two discussed the insurance business for hours. Davidson would eventually become Buffett's life-long friend and a lasting influence [16] and later recall that he found Buffett to be an "extraordinary man" after only fifteen minutes. Buffett graduated from Columbia and wanted to work on Wall Street, however, both his father and Ben Graham urged him not to. He offered to work for Graham for free, but Graham refused.[citation needed]

Buffett returned to Omaha and worked as a stockbroker while taking a Dale Carnegie public speaking course.[citation needed] Using what he learned, he felt confident enough to teach an "Investment Principles" night class at the University of Nebraska-Omaha. The average age of his students was more than twice his own. During this time he also purchased a Sinclair Texaco gas station as a side investment. However, this did not turn out to be a successful business venture.

In 1952[17] Buffett married Susan Thompson and the next year they had their first child, Susan Alice Buffett. In 1954, Buffett accepted a job at Benjamin Graham's partnership. His starting salary was $12,000 a year (approximately $97,000 adjusted to 2008 dollars). There he worked closely with Walter Schloss. Graham was a tough man to work for. He was adamant that stocks provide a wide margin of safety after weighting the trade-off between their price and their intrinsic value. The argument made sense to Buffett but he questioned whether the criteria were too stringent and caused the company to miss out on big winners that had more qualitative values.[citation needed] That same year the Buffetts had their second child, Howard Graham Buffett. In 1956, Benjamin Graham retired and closed his partnership. At this time Buffett's personal savings were over $174,000 and he started Buffett Partnership Ltd., an investment partnership in Omaha.

In 1957, Buffett had three partnerships operating the entire year. He purchased a five-bedroom stucco house in Omaha, where he still lives, for $31,500. In 1958 the Buffett's third child, Peter Andrew Buffett, was born. Buffett operated five partnerships the entire year. In 1959, the company grew to six partnerships operating the entire year and Buffett was introduced to Charlie Munger. By 1960, Buffett had seven partnerships operating: Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff, Mo-Buff and Underwood. He asked one of his partners, a doctor, to find ten other doctors willing to invest $10,000 each in his partnership. Eventually eleven agreed, and Buffett pooled their money with a mere $100 original investment of his own. In 1961, Buffett revealed that Sanborn Map Company accounted for 35% of the partnership's assets. He explained that in 1958 Sanborn stock sold at only $45 per share when the value of the Sanborn investment portfolio was $65 per share. This meant that buyers valued Sanborn stock at "minus $20" per share and were unwilling to pay more than 70 cents on the dollar for an investment portfolio with a map business thrown in for nothing. This earned him a spot on the board of Sanborn.


Path to wealth

In 1962, Buffett became a millionaire, because of his partnerships, which in January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to Buffett. Buffett merged all partnerships into one partnership. Buffett discovered a textile manufacturing firm, Berkshire Hathaway. Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships aggressively began purchasing Berkshire, they paid $14.86 per share while the company had working capital of $19 per share. This did not include the value of fixed assets (factory and equipment). Buffett took control of Berkshire Hathaway at the board meeting and named a new president, Ken Chace, to run the company. In 1966, Buffett closed the partnership to new money. Buffett wrote in his letter:

unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL.

In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn and Co, a privately owned Baltimore department store. In 1967, Berkshire paid out its first and only dividend of 10 cents. In 1969, following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners. Among the assets paid out were shares of Berkshire Hathaway. In 1970, as chairman of Berkshire Hathaway, Buffett began writing his now-famous annual letters to shareholders.

However, he lived solely on his salary of $50,000 per year, and his outside investment income. In 1979, Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.

In 2006, Buffett announced in June that he gradually would give away 85% of his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006. The largest contribution would go to the Bill and Melinda Gates Foundation.[18]

In 2007, in a letter to shareholders, Buffett announced that he was looking for a younger successor, or perhaps successors, to run his investment business.[19] Buffett had previously selected Lou Simpson, who runs investments at Geico, to fill that role. However, Simpson is only six years younger than Buffett.

In 2008, Buffett became the richest man in the world dethroning Bill Gates, worth $62 billion according to Forbes,[20] and $58 billion according to Yahoo.[21] Bill Gates had been number one on the Forbes list for 13 consecutive years.[22] March 11, 2009, Bill Gates regained number one of the list according to Forbes magazine, with Buffett second. Their values have dropped to $40 billion and $37 billion respectively,[23] Buffett having (according to Forbes) lost $25 billion in 12 months during 2008/2009.[24]

Berkshire Hathaway

Measured by market capitalization in the Financial Times Global 500 Berkshire Hathaway as of June 2009 was the eighteenth largest corporation on earth.[25]


In 1973, Berkshire began to acquire stock in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors.

In 1974, the SEC opened a formal investigation into Warren Buffett and Berkshire's acquisition of WESCO, due to possible conflict of interest. No charges were brought.

In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million. Antitrust charges started, instigated by its rival, the Buffalo Courier-Express. Both papers lost money, until the Courier-Express folded in 1982.

In 1979, Berkshire began to acquire stock in ABC. Capital Cities' announced $3.5 billion purchase of ABC on March 18, 1985 surprised the media industry, as ABC was some four times bigger than Capital Cities was at the time. Berkshire Hathaway chairman Warren Buffett helped finance the deal in return for a 25 percent stake in the combined company.[26] The newly merged company, known as Capital Cities/ABC (or CapCities/ABC), was forced to sell off some stations due to FCC ownership rules. Also, the two companies owned several radio stations in the same markets.[27]

In 1987, Berkshire Hathaway purchased 12% stake in Salomon Inc., making it the largest shareholder and Buffett the director. In 1990, a scandal involving John Gutfreund (former CEO of Salomon Brothers) surfaced. A rogue trader, Paul Mozer, was submitting bids in excess of what was allowed by the Treasury rules. When this was discovered and brought to the attention of Gutfreund, he did not immediately suspend the rogue trader. Gutfreund left the company in August 1991.[28] Buffett became Chairman of Salomon until the crisis passed; on September 4, 1991, he testified before Congress.[29]

In 1988, Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7 percent of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which it still holds.

In 2002, Buffett entered in $11 billion worth of forward contracts to deliver U.S. dollars against other currencies. By April 2006, his total gain on these contracts was over $2 billion.

In 1998, he acquired General Re, (in a rare move, for stock). In 2002, Buffett became involved with Maurice R. Greenberg at AIG, with General Re providing reinsurance. On March 15, 2005, AIG's board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism from Eliot Spitzer, attorney general of the state of New York. On February 9, 2006, AIG and the New York State Attorney General's office agreed to a settlement in which AIG would pay a fine of $1.6 billion.[30]

In 2009, Warren Buffett invested $2.6 billion as a part of Swiss Re's raising equity capital.[31][32] Berkshire Hathaway already owns a 3% stake, with rights to own more than 20%.[33]

In 2009, Warren Buffett acquired Burlington Northern Santa Fe Corp. for $34 billion in cash and stocks. Alice Schroeder author of Snowball stated that a reason for the purchase was to diversify Berkshire Hathaway from the financial industry.[3]

Late 2000s recession

Buffett ran into criticism[34] during the subprime crisis of 2007–2008, part of the late 2000s recession, that he had allocated capital too early resulting in suboptimal deals. “Buy American. I am.” he wrote for an opinion piece published recently in the New York Times.[35]

Buffett has called the 2007—present downturn in the financial sector "poetic justice".[36]

Buffett's Berkshire Hathaway suffered a 77% drop in earnings during Q3 2008 and several of his recent deals appear to be running into large mark-to-market losses.[37]

Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs[38]. Some of Buffett's Index put options (European exercise at expiry only) that he wrote (sold) are currently running around $6.73 billion mark-to-market losses.[39] The scale of the potential loss prompted the SEC to demand that Berkshire produce, "a more robust disclosure" of factors used to value the contracts.[39]

Buffett also helped Dow Chemical pay for its $18.8 billion takeover of Rohm & Haas. He thus became the single largest shareholder in the enlarged group with his Berkshire Hathaway, which provided $3 billion, underlining his instrumental role during the current crisis in debt and equity markets.[40]

In October 2008, the media reported that Warren Buffett had agreed to buy General Electric (GE) preferred stock.[41] The operation included extra special incentives: he received an option to buy 3 billion GE at $22.25 in the next five years, and also received a 10% dividend (callable within three years). In February 2009, Warren Buffett sold part of Procter & Gamble Co, and Johnson & Johnson shares from his portfolio.[42]

In addition to suggestions of mistiming, questions have been raised as to the wisdom in keeping some of Berkshire's major holdings, including The Coca-Cola Company (NYSE:KO) which in 1998 peaked at $86. Buffett discussed the difficulties of knowing when to sell in the company's 2004 annual report: "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".[43] In March 2009, Buffett stated in a cable television interview that the economy had "fallen off a cliff... Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen". Additionally, Buffett fears we may revisit a 1970s level of inflation, which led to a painful stagflation that lasted many years.[44][45]

In 2009, Buffett divested his failed investment in ConocoPhillips, saying to his Berkshire investors "I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars".[46]

2009 - Proposed merger with the Burlington Northern Santa Fe Railway (BNSF), to close upon BNSF shareholder approval in 1Q2010. This deal is valued at approximately $34 billion and reflects an increase of a previously existing stake of about 22%.

2009 Verisk stock acquisition- before Verisk (ISO [Insurance Services Office]) went public, Buffett owned about 5%. When Verisk went public in May 2009, Buffett purchased 6% more of Verisk.

Personal life

Buffett married Susan Buffett née Thompson in 1952. They had three children, Susie, Howard, and Peter. The couple began living separately in 1977, although they remained married until her death in July 2004. Their daughter, Susie, lives in Omaha and does charitable work through the Susan A. Buffett Foundation and is a national board member of Girls, Inc. In 2006, on his seventy-sixth birthday, Warren married his never-married longtime-companion, Astrid Menks, who was then sixty years old. She had lived with him since his wife's departure in 1977 to San Francisco.[47] It was Susan Buffett who arranged for the two to meet before she left Omaha to pursue her singing career. All three were close and holiday cards to friends were signed "Warren, Susie and Astrid".[48] Susan Buffett briefly discussed this relationship in an interview on the Charlie Rose Show shortly before her death, in a rare glimpse into Buffett's personal life.[49]

His 2006 annual salary was about $100,000, which is small compared to senior executive remuneration in comparable companies.[50] In 2007, and 2008, he earned a total compensation of $175,000, which included a base salary of just $100,000.[51][52] He lives in the same house in the central Dundee neighborhood of Omaha that he bought in 1958 for $31,500, today valued at around $700,000 (although he also does have a $4 million house in Laguna Beach, California).[53] In 1989 after having spent nearly 10 million dollars[54] of Berkshire's funds on a private jet, Buffett sheepishly named it "The Indefensible". This act was a break from his past condemnation of extravagant purchases by other CEOs and his history of using more public transportation.[55]

He remains an avid player of the card game bridge, which he learned from Sharon Osberg, and plays with her and Bill Gates.[56] He spends twelve hours a week playing the game.[57] In 2006, he sponsored a bridge match for the Buffett Cup. Modeled on the Ryder Cup in golf, held immediately before it, and in the same city, a team of twelve bridge players from the United States took on twelve Europeans in the event.

He is a dedicated, lifelong follower of Nebraska football, and attends as many games as his schedule permits. He supported the hire of Bo Pelini following the 2007 season stating, "It was getting kind of desperate around here".[58] He watched the 2009 game against Oklahoma from the Nebraska sideline after being named an honorary assistant coach.[59]

Warren Buffett worked with Christopher Webber on an animated series with chief Andy Heyward, of DiC Entertainment, and then A Squared Entertainment. The series features Buffett and Munger, and teaches children healthy financial habits for life.[60][61]

Buffett was raised Presbyterian but has since described himself as agnostic [62] when it comes to religious beliefs. In December 2006 it was reported that Buffett does not carry a cell phone, does not have a computer at his desk, and drives his own automobile,[63] a Cadillac DTS.[64]

Buffett wears tailor-made suits from the Chinese label Trands; earlier he used to wear Ermenegildo Zegna.[65]


Buffett's DNA report revealed that his paternal ancestors hail from northern Scandinavia, while his maternal ancestors most likely have roots in Iberia or Estonia.[66] On his mother's side he is a distant cousin of singer Harry Chapin[67] Despite widespread suggestions to the contrary, and the casual friendship which has developed between their families, Buffett has no clear relation to the well-known singer Jimmy Buffett.


In 1999, Buffett was named the top money manager of the twentieth century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton.[68] In 2007, he was listed among Time's 100 Most Influential People in the world.[69]


In addition to other political contributions over the years, Buffett has formally endorsed and made campaign contributions to Barack Obama's presidential campaign. On July 2, 2008, Buffett attended a $28,500 per plate fundraiser for Obama's campaign in Chicago hosted by Obama's National Finance Chair, Penny Pritzker and her husband, as well as Obama advisor Valerie Jarrett.[70] Buffett backed Obama for president, and intimated that John McCain's views on social justice were so far from his own that McCain would need a "lobotomy" for Buffett to change his endorsement.[71] During the second 2008 U.S. presidential debate, candidates John McCain and Barack Obama, after being asked first by presidential debate mediator Tom Brokaw, both mentioned Buffett as a possible future Secretary of the Treasury.[72] Later, in the third and final presidential debate, Obama mentioned Buffett as a potential economic advisor.[73] Buffett was also finance advisor to California Republican Governor Arnold Schwarzenegger during his 2003 election campaign.[74]


Warren Buffett's writings include his annual reports and various articles.

He warned about the pernicious effects of inflation:

The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her savings in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation.[75]

In his article The Superinvestors of Graham-and-Doddsville, Buffett refuted the academic Efficient-market hypothesis, that beating the S&P 500 was "pure chance", by highlighting a number of students of the Graham and Dodd value investing school of thought. In addition to himself, Buffett named Walter J. Schloss, Tom Knapp, Ed Anderson (Tweedy, Brown Inc.), Bill Ruane (Sequoia Fund, Inc.), Charles Munger (Buffett's own business partner at Berkshire), Rick Guerin (Pacific Partners, Ltd.), and Stan Perlmeter (Perlmeter Investments).[76]

In his November, 1999 Fortune article, he warned of investors' unrealistic expectations:

Let me summarize what I've been saying about the stock market: I think it's very hard to come up with a persuasive case that equities will over the next 17 years perform anything like--anything like--they've performed in the past 17. If I had to pick the most probable return, from appreciation and dividends combined, that investors in aggregate--repeat, aggregate--would earn in a world of constant interest rates, 2% inflation, and those ever hurtful frictional costs, it would be 6%.[77]


In 2008 he was ranked by Forbes as the richest person in the world with an estimated net worth of approximately US$62 billion.[78] In 2009, after donating billions of dollars to charity, Buffett was ranked as the second richest man in the United States with a net worth of US$37 billion[79][80] with only Bill Gates ranked higher than Buffett. His net worth is up to $47 billion in past 12 months. [4]


The following quotation from 1988 highlights Warren Buffett's thoughts on his wealth and why he long planned to re-allocate it:

I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die. (Lowe 1997:165–166)

From a NY Times article: "I don't believe in dynastic wealth", Warren Buffett said, calling those who grow up in wealthy circumstances "members of the lucky sperm club".[81] Buffett has written several times of his belief that, in a market economy, the rich earn outsized rewards for their talents:

A market economy creates some lopsided payoffs to participants. The right endowment of vocal chords, anatomical structure, physical strength, or mental powers can produce enormous piles of claim checks (stocks, bonds, and other forms of capital) on future national output. Proper selection of ancestors similarly can result in lifetime supplies of such tickets upon birth. If zero real investment returns diverted a bit greater portion of the national output from such stockholders to equally worthy and hardworking citizens lacking jackpot-producing talents, it would seem unlikely to pose such an insult to an equitable world as to risk Divine Intervention.[82]

His children will not inherit a significant proportion of his wealth. These actions are consistent with statements he has made in the past indicating his opposition to the transfer of great fortunes from one generation to the next.[83] Buffett once commented, "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing".[84]

In 2006, he auctioned his 2001 Lincoln Town Car[85] on eBay to raise money for Girls, Inc.[86]

In 2007, he auctioned a luncheon with himself that raised a final bid of $650,100 for a charity.[87]

In 2006, he announced a plan to give away his fortune to charity, with 83% of it going to the Bill & Melinda Gates Foundation.[88] In June 2006, Buffett gave approximately 10 million Berkshire Hathaway Class B shares to the Bill & Melinda Gates Foundation (worth approximately US$30.7 billion as of 23 June 2006)[89] making it the largest charitable donation in history and Buffett one of the leaders in the philanthrocapitalism revolution.[90] The foundation will receive 5% of the total donation on an annualised basis each July, beginning in 2006. Buffett also will join the board of directors of the Gates Foundation, although he does not plan to be actively involved in the foundation's investments.[91][92][citation needed]

This is a significant shift from previous statements Buffett has made, having stated that most of his fortune would pass to his Buffett Foundation.[93] The bulk of the estate of his wife, valued at $2.6 billion, went to that foundation when she died in 2004.[94]

He also pledged $50-million to the Nuclear Threat Initiative, in Washington, where he has served as an adviser since 2002.[95]

On 27 June 2008, Zhao Danyang, a general manager at Pure Heart China Growth Investment Fund, won the 2008 5-day online "Power Lunch with Warren Buffett" charity auction with a bid of $2,110,100. Auction proceeds benefit the San Francisco Glide Foundation.[96][97]

Public positions

Buffett's speeches are known for mixing business discussions with humor. Each year, Buffett presides over Berkshire Hathaway's annual shareholder meeting in the Qwest Center in Omaha, Nebraska, an event drawing over 20,000 visitors from both United States and abroad, giving it the nickname "Woodstock of Capitalism".[98] Berkshire's annual reports and letters to shareholders, prepared by Buffett, frequently receive coverage by the financial media. Buffett's writings are known for containing literary quotes ranging from the Bible to Mae West,[99] as well as Midwestern advice, and numerous jokes. Various websites extol Buffett's virtues while others decry Buffett’s business models or dismiss his investment advice and decisions.

Buffett and tobacco

During the RJR Nabisco, Inc. hostile takeover fight in 1987, Buffett was quoted as telling John Gutfreund:

I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.[100]

Speaking at Berkshire Hathaway Inc.'s 1994 annual meeting, Buffett said investments in tobacco are:

fraught with questions that relate to societal attitudes and those of the present administration. I would not like to have a significant percentage of my net worth invested in tobacco businesses. The economy of the business may be fine, but that doesn't mean it has a bright future.[101]

Buffett and coal

In 2007, Buffett's PacifiCorp, a subsidiary of his MidAmerican Energy Company, canceled six proposed coal-fired power plants. These included Utah's Intermountain Power Project Unit 3, Jim Bridger Unit 5, and four proposed plants previously included in PacifiCorp's Integrated Resource Plan. The cancellations came in the wake of pressure from regulators and citizen groups, including a petition drive organized by Salt Lake City commercial real estate broker Alexander Lofft and directed at Buffett personally. The 1,600 petitioners, who described themselves in a letter to Buffett as "a collection of citizens, business owners and managers, service professionals, public servants, and organization representatives ... your friends and new customers here in Utah," explained that, in their view, any further expansion of coal generation in Utah would "compromise our health, obscure our viewsheds, shrink and contaminate our watersheds, and thin out our most beloved snow pack," concluding that "our attractiveness as a place to live and work is also threatened, and so is our economic competitiveness as a major metro area and a state, compromising our recent gains in income and property values".[102]

Klamath river

American Indian tribes and salmon fisherman sought to win support from Warren Buffett for a proposal to remove four hydroelectric dams from the Klamath River. He had David Sokol respond that the FERC would decide the question.[103][104]

Trade deficit

Buffett views the United States' expanding trade deficit as a trend that will devalue the US dollar and US assets. He believes that the US dollar will lose value in the long run, as a result of putting a larger portion of ownership of US assets in the hands of foreigners.

In his letter to shareholders in March, 2005, Warren Buffett predicted that in another ten years’ time the net ownership of the U.S. by outsiders would amount to $11 trillion.

Americans ... would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an ‘ownership society’ will not find happiness in — and I’ll use hyperbole here for emphasis — a 'sharecropping society’.

Author Ann Pettifor has adopted the image in her writings and has stated: "He is right. And so the thing we must fear most now, is not just the collapse of banks and investment funds, or of the international financial architecture, but of a 'sharecropper society, angry at its downfall".[105]

Dollar and gold

This induced Buffett to enter the foreign currency market for the first time in 2002. However, he substantially reduced his stake in 2005 as changing interest rates increased the costs of holding currency contracts. Buffett continues to be bearish on the dollar, and says he is looking to make acquisitions of companies which derive a substantial portion of their revenues from outside the United States.

Buffett emphasized the non-productive aspect of a gold standard for the USD in 1998 at Harvard:

It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

In 1977 Buffett was also quoted as saying about stocks, gold, farmland, and inflation:

stocks are probably still the best of all the poor alternatives in an era of inflation — at least they are if you buy in at appropriate prices.[106]


Buffett stated that he only paid 19% of his income for 2006 ($48.1 million) in total federal taxes (due to them being from dividends & capital gains), while his employees paid 33% of theirs, despite making much less money.[107] On the other hand in 2008 Berkshire Hathaway paid $1.9 billion in federal corporate income taxes on $7.5 billion in earnings (more than 26% in federal taxes alone).[108] Buffett favors the inheritance tax, saying that repealing it would be like "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics".[109] In 2007, Buffett testified before the Senate and urged them to preserve the estate tax so as to avoid a plutocracy.[110] Some critics have argued that Buffett (through Berkshire Hathaway) has a personal interest in the continuation of the estate tax, since Berkshire Hathaway has benefited from the estate tax in past business dealings and had developed and marketed insurance policies to protect policy holders against future estate tax payments.[111]

Buffett believes government should not be in the business of gambling, or legalizing casinos, calling it a tax on ignorance.[112]

Expensing of stock options

He has been a strong proponent of stock option expensing, on the Income Statement. At the 2004 annual meeting, he lambasted a bill before the United States Congress that would consider only some company-issued stock options compensation as an expense, likening the bill to one once passed by the Indiana House of Representatives that 'changed' Pi from 3.14159 to 3.2 .[113]

When a company gives something of value to its employees in return for their services, it is clearly a compensation expense. And if expenses don't belong in the earnings statement, where in the world do they belong?[114]

Investment in China


Buffett invested in PetroChina Company Limited and in a rare move, posted a commentary[115] on Berkshire Hathaway's website stating why he would not divest from the company despite calls from some activists to do so, due to its connection with the Sudanese civil war that caused Harvard to divest from the company in 2005. He did, however, sell this stake soon afterwards, sparing him the billions of dollars he would have lost had he held on to the company in the midst of the steep drop in oil prices beginning in the summer of 2008.


In October 2008, Buffett invested in new energy automobile business by paying $230 million for 10% of BYD Company(SEHK: 1211), which runs a subsidiary of electric automobile manufacturer BYD Auto. In less than one year, the investment has reaped him over 500% return of profit[116].


  • The Essays of Warren Buffett : Lessons for Corporate America, Warren Buffett and Lawrence A. Cunningham, The Cunningham Group; revised edition (April 11, 2001), ISBN 978-0966446111
  • The Essays of Warren Buffett: Lessons for Corporate America, Second Edition, Warren E. Buffett and Lawrence A. Cunningham, The Cunningham Group; 2nd edition (April 14, 2008), ISBN 978-0966446128

Books about Warren Buffett

Numerous books have been written about Warren Buffett and his investment strategies. In October 2008, USA Today reported that there were at least 47 books in print with Buffett's name in the title. The article quoted the CEO of Borders Books, George Jones, as saying that the only other living persons named in as many book titles were U.S. presidents, major world political figures, and the Dalai Lama.[117] Buffett said that his own personal favorite is a collection of his essays called The Essays of Warren Buffett,[118] which he described as "a coherent rearrangement of ideas from my annual report letters" as edited by Larry Cunningham.[117]

Some best-selling, or otherwise notable, books about Buffett:

  • Roger Lowenstein, Buffett, Making of an American Capitalist
  • Robert Hagstrom, The Warren Buffett Way.[119] (As of 2008, the bestselling book about Buffett.)[117]
  • Alice Schroeder, The Snowball: Warren Buffett and the Business of Life.[120] (Written with Buffett's cooperation.)[121]
  • Mary Buffett and David Clark, Buffettology[122] and four subsequent books. (Combined sales of more than 1.5 million copies.)[117]
  • Janet Lowe, Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor.[123]
  • John Train, The Midas Touch: The Strategies That Have Made Warren Buffett 'America's Preeminent Investor'.[124]
  • Andrew Kilpatrick, Of Permanent Value: The Story of Warren Buffett.[125] (The longest of the books about Buffett, with 330 chapters, 1,874 pages and 1,400 photos, weighing 10.2 pounds.)[117]
  • Warren Buffett, Lawrence Cunningham (editor), The Essays of Warren Buffett.[126] (A rearrangement of the Chairman's letters by topic.)
  • Janet M. Tavakoli, Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street[127]


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  116. ^ "Warren Buffet's 500% Return from BYD: The Show Just Begun?". ChinaStakes. http://www.chinastakes.com/2009/9/warren-buffets-500-return-from-byd-the-show-just-begun.html. Retrieved 2009-09-16. 
  117. ^ a b c d e Del Jones, "Book titles like to play the Warren Buffett name game," USA Today, October 22, 2008.
  118. ^ Buffett, Warren; Cunningham, Lawrence. The Essays of Warren Buffett: Lessons for Corporate America, Second Edition. The Cunningham Group. ISBN 978-0-9664461-2-8. 
  119. ^ Hagstrom, Robert G.; Miller, Bill R.; Fisher, Ken (2005). The Warren Buffett Way. Hoboken, N.J.: John Wiley. ISBN 0-471-74367-4. 
  120. ^ Schroeder, Alice. The Snowball: Warren Buffett and the Business of Life. Bantam Dell Pub Group 2008.. ISBN 978-0-553-80509-3. 
  121. ^ Janet Maslin, "Books of The Times: The Richest Man and How He Grew (and Grew His Company, Too)," New York Times, September 28, 2008.
  122. ^ Buffett, Mary; Clark, David. Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett The World's Most Famous Investor. Scribner. ISBN 978-0-684-84821-1. 
  123. ^ Lowe, Janet. Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor. Wiley. ISBN 978-0-470-15262-1. 
  124. ^ Train, John (1987). The midas touch: the strategies that have made Warren Buffett America's pre-eminent investor. New York: Harper & Row. ISBN 978-0-06-015643-5. 
  125. ^ Kilpatrick, Andrew. Of Permanent Value: The Story of Warren Buffett/2008 Cosmic Edition/2 volumes. Andy Kilpatrick Publishing Empire (AKPE). ISBN 978-1-57864-455-1. 
  126. ^ Buffett, Warren (April 11, 2001). Lawrence Cunningham. ed. The Essays of Warren Buffett. The Cunningham Group. pp. 256. ISBN 978-0966446111. 
  127. ^ [|Tavakoli, Janet] (January 9, 2009). Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street. Wiley. pp. 304. ISBN 978-0470406786. 

External links

Honorary titles
Preceded by
Ingvar Kamprad
World's Richest Person
Succeeded by
Bill Gates
Preceded by
Bill Gates
World's Richest Person
Succeeded by
Bill Gates


Up to date as of January 14, 2010
(Redirected to Warren Buffett article)

From Wikiquote

Warren Buffett

Warren Edward Buffett (born 30 August 1930) is an American investor and the CEO of Berkshire Hathaway.


  • [The perfect amount of money to leave children is] enough money so that they would feel they could do anything, but not so much that they could do nothing.
  • I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GNP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die.
    • Quoted by Janet C. Lowe, in Warren Buffett Speaks: Wit and Wisdom from the world's Greatest Investor, (1997) John Wiley & Sons, Inc., pp. 165-166 (ISBN 0-471-16996-X).
  • [Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.
    • Harvard, 1998[citation needed]
  • If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.
  • The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands.
  • Someone's sitting in the shade today because someone planted a tree a long time ago.
    • As quoted in The Real Warren Buffett : Managing Capital, Leading People (2002) by James O'Loughlin
  • Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.
  • Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.
  • I've reluctantly discarded the notion of my continuing to manage the portfolio after my death – abandoning my hope to give new meaning to the term 'thinking outside the box.'
  • Take me as an example. I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I'd been born into a tribe of hunters, this talent of mine would be pretty worthless. I can't run very fast. I'm not particularly strong. I'd probably end up as some wild animal's dinner.
  • Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
  • Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective. Keeping them in their homes should be the ambition.
    • Berkshire Hathaway 2008 Chairman's Letter
  • We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits.
    • Berkshire Hathaway 2008 Chairman's Letter
  • Upon leaving [the derivatives business], our feelings about the business mirrored a line in a country song: “I liked you better before I got to know you so well.”
    • Berkshire Hathaway 2008 Chairman's Letter
  • I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.
    • In a panel discussion after the premier of the 2008 documentary I.O.U.S.A.
    • "Panel at the Premier", 0:05:42ff., DVD extras, I.O.U.S.A. (2008)
  • If you have a great manager, you want to pay him very well. BRK Annual Meeting 04
Chains of habit are too light to be felt until they are too heavy to be broken.


  • Chains of habit are too light to be felt until they are too heavy to be broken.[citation needed]
  • I always knew I was going to be rich. I don't think I ever doubted it for a minute.[citation needed]
  • Can you really explain to a fish what it's like to walk on land? One day on land is worth a thousand years of talking about it, and one day running a business has exactly the same kind of value.[citation needed]
On Benjamin Graham
  • A story that was passed down from Ben Graham illustrates the lemminglike behavior of the crowd: "Let me tell you the story of the oil prospector who met St. Peter at the Pearly Gates. When told his occupation, St. Peter said, "Oh, I'm really sorry. You seem to meet all the tests to get into heaven. But we've got a terrible problem. See that pen over there? That's where we keep the oil prospectors waiting to get into heaven. And it's filled—we haven't got room for even one more." The oil prospector thought for a minute and said, "Would you mind if I just said four words to those folks?" "I can't see any harm in that," said St. Pete. So the old-timer cupped his hands and yelled out, "Oil discovered in hell!" Immediately, the oil prospectors wrenched the lock off the door of the pen and out they flew, flapping their wings as hard as they could for the lower regions. "You know, that's a pretty good trick," St. Pete said. "Move in. The place is yours. You've got plenty of room." The old fellow scratched his head and said, "No. If you don't mind, I think I'll go along with the rest of 'em. There may be some truth to that rumor after all."[citation needed]
Price conscious
  • Price is what you pay. Value is what you get.[citation needed]
  • For some reason, people take their cues from price action rather than from values. What doesn't work is when you start doing things that you don't understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it's going up.[citation needed]
  • Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.[citation needed]
  • We have tried occasionally to buy toads at bargain prices with results that have been chronicled in past reports. Clearly our kisses fell flat. We have done well with a couple of princes - but they were princes when purchased. At least our kisses didn't turn them into toads. And, finally, we have occasionally been quite successful in purchasing fractional interests in easily-identifiable princes at toad-like prices.
    • 1981 Chairman's Letters to Shareholders
  • Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.
    • 1974 Letter to Shareholders
  • Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid.
    • Berkshire Hathaway 1998 Annual Meeting
  • If you're an investor, you're looking on what the asset is going to do, if you're a speculator, you're commonly focusing on what the price of the object is going to do, and that's not our game.
    • 1997 Berkshire Hathaway Annual Meeting
  • Despite three years of falling prices, which have significantly improved the attractiveness of common stocks, we still find very few that even mildly interest us. That dismal fact is testimony to the insanity of valuations reached during The Great Bubble. Unfortunately, the hangover may prove to be proportional to the binge.
    • March 2003[citation needed]
  • On acquiring bad companies for cheap prices: "In my early days as a manager I, too, dated a few toads. They were cheap dates - I've never been much of a sport - but my results matched those of acquirers who courted higher-price toads. I kissed and they croaked."[citation needed]
  • 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.
    • October 2003 talking with Wharton MBA students[specific citation needed]
  • The important thing is to keep playing, to play against weak opponents and to play for big stakes.
    • November 2002 talking with students at Gaston Hall[specific citation needed]
Circle of competency
  • Sometimes you're outside your core competency. Level 3 is one of those times but I've made a bet on the people and I feel I understand the people. There was a time when people made a bet on me.
    • Oct. 2002 when questioned about his investment in Level 3[specific citation needed]
    • See also wikipedia on Level 3 Communications.
  • There are all kinds of businesses that Charlie and I don't understand, but that doesn't cause us to stay up at night. It just means we go on to the next one, and that's what the individual investor should do.
    • Morningstar Interview[citation needed]
Sense of humour
  • Berkshire's arbitrage activities differ from those of many arbitrageurs. First, we participate in only a few, and usually very large, transactions each year. Most practitioners buy into a great many deals perhaps 50 or more per year. With that many irons in the fire, they must spend most of their time monitoring both the progress of deals and the market movements of the related stocks. This is not how Charlie nor I wish to spend our lives. (What's the sense in getting rich just to stare at a ticker tape all day?)[citation needed]
  • When they open that envelope, the first instruction is to take my pulse again.
    • 2001 Annual Meeting after mentioning that the instructions of his succession are sealed in an envelope at headquarters.[specific citation needed]
  • Those who attended (the annual meeting) last year saw your Chairman pitch to Ernie Banks. This encounter proved to be the titanic duel that the sports world had long awaited. After the first few pitches...I fired a brushback at Ernie just to let him know who was in command. Ernie charged the mound, and I charged the plate. But a clash was avoided because we became exhausted before reaching each other.
    • 1999 Letter to Shareholders
  • We've long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.Template:1992 Berkshire Hathaway Chairman's Letter
  • At the bottom of the bear market in October 1974 a Forbes article interviewed Buffett. Buffett, for the first time in his life, made public prediction about the stock market.
    • "How do you feel? Forbes asked.
    • "Like an oversexed guy in a whorehouse. Now is the time to invest and get rich."[citation needed]
  • In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond.
    • Letter to Berkshire Hathaway shareholders, 1997
  • A girl in a convertible is worth five in the phonebook.
    • Berkshire Hathaway 2000 Chairman’s Letter.
Intelligent decision making
  • Charlie and I decided long ago that in an investment lifetime it's too hard to make hundreds of smart decisions. That judgement became ever more compelling as Berkshire's capital mushroomed and the universe of investments that could significantly affect our results shrank dramatically. Therefore, we adopted a strategy that required our being smart - and not too smart at that - only a very few times. Indeed, we'll now settle for one good idea a year. (Charlie says it's my turn.)[citation needed]
  • The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable.
    • Financial Review, 1985
  • I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.
    • Lecturing to a group of students at Columbia U. He was 21 years old.[citation needed]
  • We're more comfortable in that kind of business. It means we miss a lot of very big winners. But we wouldn't know how to pick them out anyway. It also means we have very few big losers - and that's quite helpful over time. We're perfectly willing to trade away a big payoff for a certain payoff.
    • 1999 Berkshire Hathaway Annual Meeting[specific citation needed]
  • The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.
    • July 1999 at Herb Allen's Sun Valley, Idaho Retreat[citation needed]
  • The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
    • 1990 Chairman's Letter to Shareholders
  • Success in investing doesn't correlate with I.Q. once you're above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.
    • BusinessWeek Interview June 25 1999
  • Our future rates of gain will fall far short of those achieved in the past. Berkshire's capital base is now simply too large to allow us to earn truly outsized returns. If you believe otherwise, you should consider a career in sales but avoid one in mathematics (bearing in mind that there are really only three kinds of people in the world: those who can count and those who can't).
    • 1998 Chairman's Letter to Shareholders
  • Time is the enemy of the poor business and the friend of the great business. If you have a business that's earning 20%-25% on equity, time is your friend. But time is your enemy if your money is in a low return business.
    • 1998 Berkshire Annual Meeting[specific citation needed]
  • Ben's Mr. Market allegory may seem out-of-date in today's investment world, in which most professionals and academicians talk of efficient markets, dynamic hedging and betas. Their interest in such matters is understandable, since techniques shrouded in mystery clearly have value to the purveyor of investment advice. After all, what witch doctor has ever achieved fame and fortune by simply advising 'Take two aspirins'?
    • 1987 Chairman's Letter to Shareholders
  • We will reject interesting opportunities rather than over-leverage our balance sheet.
    • Berkshire Hathaway Owners Manual[specific citation needed]
  • "If you expect to be a net saver during the next 5 years, should you hope for a higher or lower stock market during that period?"Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall."This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.
    • 1997 Chairman's Letter to Shareholders
Career decision
  • "It's crazy to take little in between jobs just because they look good on your resume. That's like saving sex for your old age. Do what you love and work for whom you admire the most, and you've given yourself the best chance in life you can."
    • 2001? speech at Terry College of Business at the University of Georgia[citation needed]
  • "I asked him what he wanted to do for his career, and he replied that he wanted to go into a particular field, but thought he should work for McKinsey for a few years first to add to his resume. To me that's like saving sex for your old age. It makes no sense."[citation needed]
Inactivity as intelligent
  • We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely.
    • 1998 Berkshire Hathaway Annual Meeting[specific citation needed]
  • I call investing the greatest business in the world because you never have to swing. You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! and nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it.[citation needed]
  • The stock market is a no-called-strike game. You don't have to swing at everything--you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!'
    • 1999 Berkshire Hathaway Annual Meeting[specific citation needed]
On diversification
  • The strategy we've adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it.
    • 1993 Chairman's Letter to Shareholders
  • Diversification is a protection against ignorance. It makes very little sense for those who know what they're doing.[citation needed]
On margin of safety
  • 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. So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you'd need. If you're driving a truck across a bridge that says it holds 10,000 pounds and you've got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it covers, you may feel okay, but if it's over the Grand Canyon, you may feel you want a little larger margin of safety...
    • 1997 Berkshire Hathaway Annual Meeting[specific citation needed]
  • You leave yourself an enormous margin of safety. You build a bridge that 30,000-pound trucks can go across and then you drive 10,000-pound trucks across it. That is the way I like to go across bridges.
    • Financial World, June 13, 1984.
Efficient market hypothesis
  • I'd be a bum on the street with a tin cup if the markets were always efficient.[citation needed]
General rules
  • Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.[citation needed]
  • It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.[citation needed]
  • You're neither right nor wrong because other people agree with you. You're right because your facts are right and your reasoning is right—and that's the only thing that makes you right. And if your facts and reasoning are right, you don't have to worry about anybody else.[citation needed]
  • Our favourite holding period is forever.
    • Letter to Berkshire Hathaway shareholders, 1988
  • When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.[citation needed]
  • Risk comes from not knowing what you're doing.[citation needed]
  • If you don't know jewelry, know the jeweler.[citation needed]
  • If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes.[citation needed]
  • There seems to be some perverse human characteristic that likes to make easy things difficult.[citation needed]
  • One's objective should be to get it right, get it quick, get it out, and get it over... your problem won't improve with age.[citation needed]
  • A public-opinion poll is no substitute for thought.[citation needed]
  • In the insurance business, there is no statute of limitation on stupidity.[citation needed]
  • If a business does well, the stock eventually follows.[citation needed]
  • The most important quality for an investor is temperament, not intellect... You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.[citation needed]
  • The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.[citation needed]
  • We will only do with your money what we would do with our own.[citation needed]
  • Occasionally, a man must rise above principles.[citation needed]
  • It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.[citation needed]
  • Of one thing be certain: if a CEO is enthused about a particularly foolish acquisition, both his internal staff and his outside advisors will come up with whatever projections are needed to justify his stance. Only in fairy tales are emperors told that they are naked.[citation needed]
  • When asked how he became so successful in investing, Buffett answered: we read hundreds and hundreds of annual reports every year.[citation needed]
  • "I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. "I'm paying $32 billion today for the Coca Cola Company because..." If you can't answer that question, you shouldn't buy it. If you can answer that question, and you do it a few times, you'll make a lot of money."[citation needed]
  • You ought to be able to explain why you're taking the job you're taking, why you're making the investment you're making, or whatever it may be. And if it can't stand applying pencil to paper, you'd better think it through some more. And if you can't write an intelligent answer to those questions, don't do it.[citation needed]
  • I really like my life. I've arranged my life so that I can do what I want.[citation needed]
  • If you gave me the choice of being CEO of General Electric or IBM or General Motors, you name it, or delivering papers, I would deliver papers. I would. I enjoyed doing that. I can think about what I want to think. I don't have to do anything I don't want to do.[citation needed]
Views of government and Wall Street
  • This time Congress should listen to the slim accountants. The logic behind their thinking is simple:
  1. If options aren't a form of compensation, what are they?
  2. If compensation isn't an expense, what is it?
  3. And if expenses shouldn't go into the calculation of earnings, where in the world should they go?[citation needed]
  • First, many in Wall Street - a community in which quality control is not prized - will sell investors anything they will buy.
    • 2000 Letter to Shareholders
  • An irresistable footnote: in 1971, pension fund managers invested a record 122% of net funds available in equities - at full prices they couldn't buy enough of them. In 1974, after the bottom had fallen out, they committed a then record low of 21% to stocks.
    • 1978 Chairman's Letter to Shareholders
  • When returns on capital are ordinary, an earn-more-by-putting-up-more record is no great managerial achievement. You can get the same result personally while operating from your rocking chair. just quadruple the capital you commit to a savings account and you will quadruple your earnings. You would hardly expect hosannas for that particular accomplishment. Yet, retirement announcements regularly sing the praises of CEOs who have, say, quadrupled earnings of their widget company during their reign - with no one examining whether this gain was attributable simply to many years of retained earnings and the workings of compound interest.
    • 1985 Chairman's Letter to Shareholders
  • Wall Street is the only place that people ride to work in a Rolls Royce to get advice from those who take the subway.[citation needed]
  • The Stock Market is designed to transfer money from the Active to the Patient.[citation needed]
  • Managers thinking about accounting issues should never forget one of Abraham Lincoln's favorite riddles: `How many legs does a dog have if you call his tail a leg?' The answer: `Four, because calling a tail a leg does not make it a leg'.[citation needed]
  • Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds... any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops.
  • Working with people who cause your stomach to churn seems much like marrying for money - probably a bad idea under any circumstances, but absolute madness if you are already rich.[citation needed]
  • One of the ironies of the stock market is the emphasis on activity. Brokers, using terms such as "marketability" and "liquidity," sing the praises of companies with high share turnover... but investors should understand that what is good for the croupier is not good for the customer. A hyperactive stock market is the pick pocket of enterprise.[citation needed]
  • The speed at which a business success is recognized, furthermore, is not that important as long as the company's intrinsic value is increasing at a satisfactory rate. In fact, delayed recognition can be an advantage: It may give us the chance to buy more of a good thing at a bargain price.[citation needed]
  • The managers at fault periodically report on the lesson they have learned from the latest disappointment. They then usually seek out future lessons.[citation needed]
Walking away
  • I am out of step with present conditions. When the game is no longer played your way, it is only human to say the new approach is all wrong, bound to lead to trouble, and so on. On one point, however, I am clear. I will not abandon a previous approach whose logic I understand ( although I find it difficult to apply ) even though it may mean foregoing large, and apparently easy, profits to embrace an approach which I don't fully understand, have not practiced successfully, and which possibly could lead to substantial permanent loss of capital.
    • in a letter to his partners in the stock market frenzy of 1969.Template:Cite fix
  • I just don't see anything available that gives any reasonable hope of delivering such a good year and I have no desire to grope around, hoping to 'get lucky' with other people's money. I am not attuned to this market environment, and I don't want to spoil a decent record by trying to play a game I don't understand just so I can go out a hero.[citation needed]
Class war
  • It's class warfare, my class is winning, but they shouldn't be.
    • CNN Interview, May 25 2005, in arguing the need to raise taxes on the rich.
  • There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning.
  • It's got to be the best intellectual exercise out there. You're seeing through new situations every ten minutes…In the stock market you don't base your decisions on what the market is doing, but on what you think is rational….Bridge is about weighing gain/loss ratios. You're doing calculations all the time.
    • Forbes. June 2, 1997.[1]
  • The approach and strategies are very similar in that you gather all the information you can and then keep adding to that base of information as things develop. You do whatever the probabilities indicated based on the knowledge that you have at that time, but you are always willing to modify your behaviour or your approach as you get new information. In bridge, you behave in a way that gets the best from your partner. And in business, you behave in the way that gets the best from your managers and your employees.
  • I wouldn't mind going to jail if I had three cellmates who played bridge.
  • I'll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It's addictive. And there's fantastic brand loyalty.

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