Learn the over 100 Investment Rules of Warren Buffett

[Dennis Ng]

This is posted by a forumer named Apong in another forum, which listed over 100 Rules of Investing of Warren Buffett, said by Warren Buffett in the many interviews/comments he made over the last 50 years.

Mary Buffett is ex-daughter in law of Warren Buffett.

In the bookstores, there are many books on Warren Buffett, but none of them written by Mr Warren Buffett himsefl, but are all written by other people, trying to interpret what he said...

Cheers!

Dennis Ng, http://www.HousingLoanSG.com

The Tao of Warren Buffett – Mary Buffett & David Clark

Getting & staying rich

#1 – Rule No. 1: never lose money. Rule No. 2: never forget rule no. 1.

#2 – I made my first investment at age eleven. I was wasting my life up until then.

#3 – Never be afraid to ask for too much when selling or offer too little when buying.

#4 – You can’t make a good deal with a bad person.

#5 – The great personal fortunes in this country weren’t built on a portfolio of fifty companies. There were built by someone who identified one wonderful business.

#6 – It is impossible to un-sign a contract, so do all your thinking before you sign.

#7 – It is easier to stay out of trouble than it is to get out of trouble.

#8 – You should invest like a Catholic marries – for life.

#9 – Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway.

#10 – Happiness does not buy you money.

#11 – It takes twenty years to build a reputation and five minutes to lose it. If you think about that, you will do things differently.

#12 – The market, like the Lord, helps those who help themselves. But unlike the Lord, the market does not forgive those who know not what they do.

#13 – I don’t try to jump over seven-foot bars; I look around for one-foot bars that I can step over.

#14 – The chains of habit are too light to be felt until they are too heavy to be broken.

#15 – Marrying for money is probably a bad idea under any circumstances, but it is absolutely nuts if you are already rich.

#16 – It’s not necessary to do extraordinary things to get extraordinary results.

#17 – You should look at stocks as small pieces of a business.

#18 – My idea of a group decision is to look in the mirror.

#19 – If I can’t make money in a $5 trillion U.S. market, it may be a little bit of wishful thinking to think that all I have to do is get a few thousand miles offshore and I’ll start showing my stuff.

#20 – You should invest in a business that even a fool can run, because someday a fool will.

#21 – With each investment you make, you should have the courage and the conviction to place at least 10% of your net worth in that stock.

#22 – Money, to some extent, sometime lets you be in more interesting environments. But it can’t change how many people love you or how healthy you are.

Business

#23 – Anything that can’t go on forever will end.

#24 – When management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.

#25 – Accounting is the language of business.

#26 – Turnarounds seldom turn.

#27 – If a business does well, the stock eventually follows.

#28 – Managing your career is like investing – the degree of difficulty does not count. So you can save yourself money and pain by getting on the right train.

#29 – The reaction of weak management to weak operations is often weak accounting.

#30 – There is a huge difference between the business that grows and requires lots of capital to do so and the business that grows and doesn’t require capital.

#31 – In a difficult business, no sooner is one problem solved than another surfaces – never is there just one cockroach in the kitchen.

#32 – You can always juice sales by going down-market, but it’s hard to go back upmarket.

#33 – When a chief executive officer is encouraged by his advisers to make deals, he responds much as would a teenage boy who is encouraged by his father to have a normal sex life. It’s not a push he needs.

#34 – You don’t have to make money back the same way you lost it.

#35 – I look for businesses in which I think I can predict what they’re going to look like in ten to fifteen years’ time. Take Wrigley’s chewing gum. I don’t think the Internet is going to change how people chew gum.

Warren’s Mentors

#36 – Someone is sitting in the shade today because someone planted a tree a long time ago.

#37 – With enough inside information and a million dollars, you can go broke in a year.

#38 – Read Ben Graham and Phil Fisher, read annual reports, but don’t do equations with Greek letters in them.

#39 – I am a better investor because I am a businessman and a better businessman because I am an investor.

#40 – If principles become dated, they’re no longer principles.

#41 – You pay a very high price in the stock market for a cheery consensus.

Education

#42 - If calculus or algebra were required to be a great investor, I’d have to go back to delivering newspapers.

#43 – You have to think for yourself. It always amazes me how high-IQ people mindlessly imitate. I never get good ideas talking to other people.

#44 – The smarter the journalists are, the better off society is.

#45 – You want to learn from experience, but you want to learn from other people’s experience when you can.

The workplace

#46 – It’s hard to teach a young dog old tricks.

#47 – In looking for someone to hire, you look for three qualities: integrity, intelligence and energy. But the most important is integrity, because if they don’t have that, the other two qualities, intelligence and energy, are going to kill you.

#48 – Can you really explain to a fish what it is like to walk on land? One day on land is worth a thousand years talking about it, and one day running a business has exactly the same kind of value.

#49 – It’s only when the tide goes out that you learn who’s been swimming naked.

#50 – When ideas fail, words come in very handy.

#51 – The really good business manager doesn’t wake up in the morning and say, “This is the day that I am going to cut costs,” any more than he wakes up and decides to practise breathing.

#52 – Wouldn’t it be great if we could buy love for $1 million. But the only way to be loved is to be lovable. You always get back more than you give away. If you don’t give any, you won’t get any. There’s nobody I know who commands the love of others who doesn’t feel like a success. And I can’t imagine people who aren’t loved feel very successful.

#53 – We enjoy the process far more than the proceeds, though I have learned to live with those also.

#54 – If you hit a hole in one on every hole, you wouldn’t play golf for very long.

#55 – 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 that it will look good on your resume. Isn’t that a little like saving up sex for your old age?

#56 – A friend of mine spent twenty years looking for the perfect woman; unfortunately, when he found her, he discovered that she was looking for the perfect man.

Analysts, advisers, brokers – follies to avoid

#57 – Never ask a barber if you need a haircut.

#58 – Forecasts usually tell us more of the forecaster than of the forecast.

#59 – A public-opinion poll is no substitute for thought.

#60 – The business schools reward difficult, complex behaviour more than simpler behaviour, but simple behaviour is more effective.

#61 – There seems to be some perverse human characteristic that likes to make easy things difficult.

#62 – Recommending something to be held for thirty years is a level of self-sacrifice you’ll rarely see in a monastery, let alone a brokerage house.

Why not to diversify

#63 – I can’t be involved in fifty or seventy-five things. That’s a Noah’s ark way of investing – you end up with a zoo that way. I like to put meaningful amounts of money in a few things.

#64 – Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.

#65 – Wall Street makes its money on activity. You make your money on inactivity.

#66 – Why not invest your assets in the companies you really like? As Mae West said, “Too much of a good thing can be wonderful.”

#67 – Wide diversification is only required when investors do not understand what they are doing.

#68 – You only have to do a very few things right in your life so long as you don’t do too many things wrong.

Discipline, prudence, and patience

#69 – If you let yourself be undisciplined on the small things, you will probably be undisciplined on the large things as well.

#70 – There is nothing like writing to force you to think and get your thoughts straight.

#71 – The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.

#72 – I’ve never swung at a ball while it’s still in the pitcher’s glove.

#73 – Imagine that you had a car and that was the only car you’d have for your entire lifetime. Of course, you’d care for it well, changing the oil more frequently than necessary, driving carefully, etc. Now, consider that you only have one mind and one body. Prepare them for life, care for them. You can enhance your mind over time. A person’s main asset is themselves, so preserve and enhance yourself.

#74 – I buy expensive suits. They just look cheap on me.

#75 – In the search for companies to acquire, we adopt the same attitude one might find appropriate in looking for a spouse: it pays to be active, interested, and open-minded, but it does not pay to be in a hurry.

Beware the folly of greed

#76 – When proper temperament joins up with the proper intellectual framework, then you get rational behaviour.

#77 – The fact that people are full of greed, fear, or folly is predictable. The sequence is not predictable.

#78 – A stock doesn’t know that you own it.

#79 – When you combine ignorance and borrowed money, the consequences can get interesting.

#80 – Of the seven deadly sins, envy is the silliest, because if you have it, you don’t feel bitter. You feel worse. I’ve had some good times with gluttony.. we won’t get into lust.

#81 – We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

When to sell, when to leave

#82 – The most important thing to do if you find yourself in a hole is to stop digging.

#83 – If at first you do succeed, quit trying.

#84 – I buy stocks when the lemmings are headed the other way.

#85 – 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.

#86 – We don’t go into companies with the thought of effecting a lot of changes. That doesn’t work any better in investments than it does in marriage.

#87 – Risk comes from not knowing what you are doing.

#88 – The only time to buy these is on a day with no y in it.

#89 – We also believe candour benefits us as managers: The CEO who misleads others in public may eventually mislead himself in private.

#90 – That which is not worth doing at all is not worth doing well.

#91 – A good managerial record is far more a function of what business boat you get into than it is of how effectively you row. 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.

Mistakes to beware of

#92 – We never look back. We just figure there is so much to look forward to that there is no sense thinking of what we might have done. It just doesn’t make any difference. You can only live life forward.

#93 – I want to be able to explain my mistakes. This means I do only the things I completely understand.

#94 – If you don’t make mistakes, you can’t make decisions.

Your circle of competence

#95 – Investment must be rational; if you don’t understand it, don’t do it.

#96 – If you understand an idea, you can express it so others can understand it.

#97 – If they need my help to manage the enterprise, we are probably both in trouble.

#98 – Our method is very simple. We just try to buy businesses with good-to-superb underlying economics run by honest and able people and buy them at sensible prices. That’s all I’m trying to do.

#99 – If we can’t find things within our circle of competence, we don’t expand the circle. We’ll wait.

#100 – Any business craving of the leader, however foolish, will be quickly supported by studies prepared by his troops.

#101 – In the business world, the rear view mirror is always better than the windshield.

#102 – I’m very suspect of the person who is very good at one business – it also could be a good athlete or a good entertainer – who starts thinking they should tell the world how to behave on everything. For us to think that just because we made a lot of money, we’re going to be better at giving advice on every subject – well, that’s just crazy.

#103 – It won’t be the economy that will do in investors; it will be investors themselves.

The price you pay

#104 – For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.

#105 – That which goes up doesn’t necessarily have to come down.

#106 – The key is that the stock market basically just sets prices, so it exists to serve you, not instruct you.

#107 – At the beginning, prices are driven by fundamentals, and at some point, speculation drives them. It’s that old story: What the wise man does in the beginning, the fool does in the end.

#108 – The smartest side to take in a bidding war is the losing side.

#109 – A pin lies in wait for every bubble, and when the two eventually meet, a new wave of investors learn some very old lessons.

#110 – 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 economic value is the secret to exploiting short-term stock market folly

#111 – 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!”

#112 – What we learn from history is that people don’t learn from history.

#113 – Look at stock market fluctuations as you friend rather than your enemy – profit from folly rather than participate in it.

#114 – Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be mis-appraised.

#115 – Uncertainty actually is the friend of the buyer of long-term values.

#116 – To many on Wall Street, both companies and stocks are seen only as raw materials for trades.

#117 – No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.

#118 – If past history was all there was to the game, the richest people would be librarians.

#119 – Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.

#120 – The investor of today does not profit from yesterday’s growth.

#121 – I’d be a bum on the street with a tin cup if the markets were efficient.

#122 – As far as I am concerned, the stock market doesn’t exist. It is only there as a reference to see if anybody is offering to do anything foolish.

#123 – 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.

#124 – We do not have, never have had, and never will have an opinion about where the stock market, interest rates, or business activity will be a year from now.

#125 – Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.

[Stradlinz]

Very interesting read. Thks Dennis for sharing. Everything is there to guide us the way to successful investing..