Warren Buffett Investing Quotes Explained - Carreira Finance Coaching

Top 11 Warren Buffett Investing Quotes Explained

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Why did I choose Warren Buffett investing quotes? Simply because he’s a living legend and one of the most successful investors of all time.

Warren Buffett is known to make the right investment moves at the right time. He’s the owner of Berkshire Hathaway. His company owns a total of 65 companies, including the auto insurance giant Geico.

He’s the co-founder of The Giving Pledge along with billionaire Bill Gates. The pledge is a commitment by the world’s wealthiest people to give back the majority of their wealth. Warren Buffett’s net worth is $81 billion.



Warren Buffett Investing Quotes Explained

1 – “Do not put all eggs in one basket.”

Warren Buffet could have summarized this investment quote in one word: diversification. However, everyone can picture eggs in a basket. And we know that if we drop the basket on the floor, the majority of the eggs would be lost.

It’s the same for your investments. Let’s say you invest your entire net worth in one single company. After a couple of bad business decisions, the company valuation drops by 50%. Consequently, you’ll lose half of your net worth.

The less diversify your portfolio is, the more risk you take.

2 – “Never depend on a single income. Make investments to create a second source.”

Most people are depending on a single income and struggle to pay for necessities. It’s hard to get out of this cycle because of the way our society works.

We go to school to learn specific skills to get a specific job. And when we get a job, we spend our income on things we don’t need.

In this investing quote, Warren Buffett tells us that we should diversify our incomes. What if you get layoff from work? How will you pay for your monthly expenses?

3 – “Beware the investment activity that produces applause. The great moves are usually greeted by yawns.”

The perfect example to illustrate this Warren Buffett investment quote is Bitcoin.

Do you remember in 2017 when Bitcoin went from $900 to $19,000 in 9 months? A rate of return of 2,000%. And then a month later, its value lost 60%.

This quote wants us to invest in great companies that don’t fluctuate because of the news. Our goal is to find established and steady businesses to invest in.


Warren Buffett Stock Market Investment Quotes Explained

4 – “The Stock Market is designed to transfer money from the active to the patient.”

Why does the stock market fluctuate? It’s the law of supply and demand. Active investors are the ones who drive the stock market valuation up and down.

A patient investor keeps its investments for years without looking at daily valuations. That’s what Warren Buffett tries to teach us here. We should diversify our investments and keep them for the long term.

5 – “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”

Investing in the stock market shouldn’t be a gamble. Before buying any shares, we should do our research about the industry or business we want to invest in.

Not believing in the long term success of an investment will make you lose money. For example, if your investment goes down and you panic, you’ll sell your shares at a loss because you don’t think it can go back up.

6 – “Risk comes from not knowing what you are doing.”

What happened the first time you went to a casino? Were you one of the lucky people that won a few chips? Or did you lose all your money in the first ten minutes?

If you don’t know what you’re doing, investing your money is like going to the casino. You can either win or lose it pretty quickly. But even if you win, it won’t be a sustainable strategy in the long term.

The more you know about your investments, the less risk you take.

7 – “Price is what you pay. Value is what you get.”

We can use this Warren Buffett investing quote in many areas of our lives. Too often, we focus on the price of the things we buy rather than looking at their value.

For example, would you buy a personal finance book for $29 solely based on price? Probably not because there are cheaper options out there. But if this book provides more value than 5 other personal finance books, you might think twice before making your decision.

8 – “Be fearful when others are greedy, and greedy when others are fearful.”

This quote is one of Warren Buffett investing quotes that helped me become a better investor. If the price of a share is too high compared to its value, you won’t get a good return on your investment.

We’ve seen greedy investors making bets on trendy shares recently like Netflix, Bitcoin, and Tesla. As a rule of thumb, if you can’t explain why prices are going up, be fearful.

However, when fearful investors sell shares of a great business. It’s usually a great opportunity to buy high-value shares at a discounted price.


Warren Buffet Investing in Yourself Quotes Explained

9 – “Invest in as much of yourself as you can, you are your own biggest asset by far.”

Nowadays, everything you want is accessible at your fingertips. For example, Amazon can deliver almost anything in one day. If you’re too lazy to cook dinner tonight, Uber eats will deliver your favorite food in the next hour.

We have this habit of wanting everything fast. However, building wealth is not as easy because if it was, everyone would be wealthy.

As Warren Buffet said, the best investment you can make is in yourself. So keep learning new skills, improve what you already know, and enjoy the process.

10 – “The more you learn, the more you earn.”

Think about how we make money in our current society. We trade time for money by using our skills to generate more money for the companies we work for.

But how did we get these skills? We learned them in school or our previous work experiences.

So the more skills we learn, the more we bring to the table, and the more money we earn.

11 – “If you buy things you do not need, soon you will have to sell things you need.”

How often do we buy things we don’t need? To answer this question, we need to know the difference between need and want.

A need is something that we need to survive. A want is something that we desire, but we can live without it.

For example, how many times do we find clothes we never wear inside our closet? Before making your next purchase, try to determine if it’s a need or a want.


Warren Buffett Investing Quotes Explained - Carreira Finance Coaching
Who said the best investing quotes of all time - Carreira Finance Coaching

Conclusion

Let’s take a minute to reflect on these Warren Buffett investing quotes. They are so powerful and yet simple to understand.

Learning how to share a message with simple terms is the key to success. Warren Buffet is a master at it. And that’s why so many people read and analyze his annual letters to shareholders.


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