Warren Buffet is regarded by many to be the greatest mind in finance ever and even more would say of this generation. His influence extends even beyond the world of finance. During his annual shareholders meeting he is known to be a quote machine. Below are a few that can provide guidance not only as an investor, but also as an entrepreneur.
“In the business world, the rearview mirror is always clearer than the windshield.”
Isn’t this true of life as well? There is risk in everything you do and we cannot predict the future. However, we can take what we know from the past to make calculated risks moving forward.
“Only when the tide goes out do you discover who’s been swimming naked.”
This quote again is in reference to risk and is one of several nautical themed quotes. When times in the market are well everyone can splash in the water and have fun, but when times are tough only then do you see how much risk they were taking.
“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”
There is risk in all of investing. When you hold cash equivalents your big risk is inflation risk. This risk is that inflation grows faster than your cash grows. For money intended to be used over the long-term it is foolish to park those funds in cash equivalents as they have proven to be losers over long periods of time.
“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.”
Investors and business people alike often have a challenge of seeing the flaws in their own work. As a result you can see a business failing that should “change vessels” continuing to use a bale bucket when there are more efficient ways to accomplish the same goals.
“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”
If you watch major network news you might find it hard to believe that the market ever goes up with all of the negativity that is broadcast. This is not to suggest that there will not be short term volatility, but again for long-term money volatility ends up being to the benefit of the investor.
Which ties well into a 6th bonus Warren Buffett quote:
“The stock market is a device for transferring money from the impatient to the patient.”