Business

“Most of the people who have accumulated the greatest wealth in this business have done so not by predicting the future, but by buying companies at such attractive prices, thereby discounting the majority of the problems people fear.”

“Failure to be honest with yourself is a problem in any business, but it is especially disastrous in an entrepreneurial company, where the risk-reward stakes are so high.”

“Too many businesspeople delude themselves. They want so much to believe that they listen only to what they want to hear and see only what they want to see.”

“Many business success stories are due at least in part to simple good luck.”

“The biggest problem in starting high-tech businesses is the shortage of superior managers. There is too much money chasing too few good managers.”

“While the Stock Exchange list exhibits the widest diversity, in both directions, between market prices and book values, the underlying explanation is simple enough. In general, prosperous enterprises sell for more than their assets, and unsuccessful ones sell for less.”

“The worth of a business is measured not by what has been put into it, but by what can be taken out of it.”

“Perhaps nothing is more indicative of the quality of a company’s management than its accounting methods.”

“Those with enterprise haven’t the money, and those with money haven’t the enterprise, to buy stocks when they are cheap.”

“A common stock investor is one who regards his common stock holdings as a proprietary interest in various businesses, not as a series of quotations in a newspaper.”

“The idea of measuring investment risks by price fluctuations is repugnant to me, for the very reason that it confuses what the stock market says with what actually happens to the owners’ stake in the business.”

“I think this business of greed — the excessive hopes and fears and so on — will be with us as long as there will be people.”

“Probably the largest aggregate losses are suffered by people who invest overenthusiastically in a basically sound company.”

“The higher the quality of a company the more inescapable is the speculative component in its price, and the more subject it is to wide price variations.”

“These chaps start out reading Graham and Dodd and I’m sure most of them are quite impressed by it in business school. I take some malicious pleasure in saying it’s the book on finance that’s been read by more people and disregarded by more people than any other that I know of.”

“The market cycle of the future may prove to be surprisingly independent of the business cycle, and it may even exist if there is no business cycle — which is in itself quite an assumption, but not an entire impossibility.”

“If the relative stability of general business and corporate profits produces an unlimited enthusiasm and demand for common stocks, then it must eventually produce instability in stock prices.”

“There are two principal mistakes that nearly all amateurs in the stock market make. The first is to have an inexact knowledge of the securities in which one is dealing, to know too little about a company’s management, its earnings, and prospects for future growth. The second mistake is to trade beyond one’s financial resources, to try to run up a fortune on a shoestring.”

“People invest in stocks for two opposite reasons — in hope and confidence in the future of an enterprise or in fear that the value of their capital will be lost through inflation.”

“The stock market registers the judgments of multitudes of buyers and sellers about the many factors which affect business — what business is like today; what it will be like in the future.”

“No one, not even the most experienced trader, economist or businessman can predict with certainty the course of the stock market.”

“Stock prices change far more rapidly than does intrinsic business value.”

“The most common error in investing is confusing business fundamentals with investment merit.”

“As I often remind our analysts, 100% of the information you have about a company represents the past, and 100% of the value depends on the future.”

“About the only advantage of being old in this business is that you have seen a lot of markets, and sometimes market patterns recur that you believe you have seen before.”

“Economic numbers report the past, and corporations observe the present, while the market lives in the future.”

“Inflation can only arise if labor or business, or both, have pricing power.”

“If you have a valuation discipline, then you know that stock prices change more rapidly than business value. You also know that rising stock prices mean lower future rates of return and falling stock prices mean higher rates of return.”

“Valuation is determined by the relation between a stock price and the present value of the free cash the business will generate over one’s forecast time horizon. The problem comes with assessing the future free cash flow. It is a highly subjective and uncertain exercise.”

“I have made bad business decisions. You can’t live a successful life without doing some difficult things that go wrong. That’s just the nature of the game.”

“Averaged out, betting on the quality of a business is better than betting on the quality of management. In other words, if you have to choose one, bet on the business momentum, not the brilliance of the manager.”

“The concept that investment risk is less a function of the individual company than the price of its stock is not recognized by many investors.”

“Wall Street has this wonderful business about how to create transactions. They set up what we believe are false expectations, and that’s what I call the “beat by a penny, missed by a penny syndrome.””

“If you are selling because of a missed earnings report or the trend of the market or something, you’ve stopped looking at the rate of return the company can achieve over time.”

“I have this motto in life as well as in business, which is: every day, I’m lucky if I have learned something new and I’m doubly lucky if it hadn’t cost too much.”

“If you talk to a businessman, a businessman is going to feed the winners and kill the losers. But in the investment world, when you’ve got a winner you should be suspicious about what’s next. And if you’ve got a loser, you should be hopeful — although not naively hopeful.”

“It is only fair to admit that the commonest and most expensive blunder that all exceptionally brilliant business men make is being right too soon.”

“You can’t imagine how many shrewd, experienced business men forget in Wall Street what it took them years to learn.”

“Nobody knows what the stock market is going to do or even what it ought to do. Hence, the most valuable asset in all business, which is knowledge, is necessarily absent.”

“Happy is the man who has no past! The same seems to be true of corporations in a bull market.”

“Buying stocks of prosperous concerns may be good business — but only at a certain price. But if you will make sure you know what you are getting for your money, you will be doing what nobody does in a bull market.”

“In the end, we have to sell when basically the reasons for purchasing a company in the first place are not valid anymore.”

“I know that stocks represent fractional ownership in businesses and that, over time, the stock market will reflect their true intrinsic values. And crises bring worries and fears that make many investors forget that simple fact.”

“It becomes more and more evident that stock prices are not alone determined by high or low credit, earnings or carloadings. There is another mighty factor which cannot be charted along with the various business indices. It is how high or how low are the hearts of men and women during the given period.”

“We tried to buy good companies to start with. We don’t think there are supermen who can renovate them and transform them into wonderful, highly profitable enterprises. We can’t do it, and history shows that nobody else can do it, either.”

“I do not define my job in any rigid terms but in terms of having the freedom to do what seems to me to be in the best interests of the company at any time.”

“Our attitude toward cash generation and asset management came out of our own thought process. It is not copied. After we acquired a number of businesses we reflected on aspects of business. Our own conclusion was that the key was cash flow.”

“It’s good to buy a large company with fine businesses when the price is beaten down over worry about one problem.”

“It’s not what you buy, it’s what you pay. And success in investing doesn’t come from buying good things, but from buying things well. And if you don’t know the difference, you’re in the wrong business.”

“Investing is a funny business. It’s really easy to be average. Just buy an index fund. It’s really hard to be above average.”

“I think that the business about volatility being risk is a con job which was perpetrated primarily because volatility is machinable.”

“A gambler seeks and makes risks which it is not necessary to assume, whereas the speculator is one who merely volunteers to assume those risks of business which must inevitably fall somewhere.”

“Value investors tend to look for what they perceive to be stable businesses and technology is fast changing almost by definition.”

“We look at the management of corporations that tend to overstate or massage profits as promoters. And that is a kind word.”

“If you don’t understand how a company makes money, it probably doesn’t.”

“We like a reasonable amount of volatility. In our business we want some action.”

“In this business it’s easy to confuse luck with brains.”

“Over the very long run, it is the economics of investing — enterprise — that has determined total return; the evanescent emotions of investing — speculation — so important over the short run, have ultimately proven to be virtually meaningless.”

“We all know that the best rule for investors — the clients of the investment business — is, “Don’t just do something — stand there.””

“Businessmen play a mixed game of skill and chance, the average results of which to the players are not known by those who take a hand.”

“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.”

“The best investors think like business owners, not stock traders”

“Time is the ally of superior businesses.”

“Buying outstanding businesses eliminates the need for constant decisions.”

“A strong business reduces the need for precision.”

“The ability to wait is the rarest skill in business.”

“You make the most money by owning a few great businesses for a long time.”

“If you really understand a business, you don’t need 50 of them.”

“Time is the friend of a good business”

“Patience is a competitive advantage.”

“Even the world’s greatest business is not a good investment if the price is too high.”

“Risk is not volatility; risk is paying too much for a business”

“A great business bought at the wrong price can be a poor investment”

“As a value investor, what you are interested in is whether the company is creating wealth.”

“I don’t even worry about the overall market. I worry about the business and the market will take care of itself.”

“Having a mutual fund management company is like having a toll booth on the George Washington bridge all for yourself.”

“A sustainable competitive advantage allows a firm to earn excess returns for longer.”

“Moats are dynamic, not static”

“Patience is a competitive advantage”

“What a company is worth depends on who wants to buy it.”

“It’s not the answers that make you good in this business, it’s the questions you ask. If you ask the right questions you will always find out more than the next guy.”

“When you look carefully at the economics of shorting, it makes no sense to take the bet. The lowest price a company’s stock can go to is zero, but there’s an unlimited upside. An unleveraged short position has a maximum payoff of 2:1.”

“Time is the friend of a wonderful business”

“We seek to own businesses that make customers richer”

“Businesses that share scale benefits widen their moat over time.”

“Owning a few exceptional businesses beats owning many average ones.”

“Inactivity is a competitive advantage.”

“Great businesses think in decades, not quarters.”

“The ability to create its own market is the strategic, the dominating, and the single most distinguishing characteristic of a true growth company.”

“In investing, nothing beats the discovery of an undervalued stock, no matter what the nature of its business or the past trend of its earnings.”

“Neither the corporate executive nor the investment manager can allow himself to be lulled into the belief that any company, regardless of its record of achievement, must necessarily provide satisfactory rates of growth.”

“The whole institutional structure of the marketplace rests on the assumption that the other side of the trade will always be there; without that assumption, even the gutsiest of market-makers would refuse to stay in business.”

“Stocks aren’t lottery tickets. Behind every stock is a company.”

“If it’s a choice between investing in a good company in a great industry, or a great company in a lousy industry, I’ll take the great company in the lousy industry any day. Good management, a strong balance sheet, and a sensible plan of action will overcome many obstacles, but when you’ve got weak management, a weak balance sheet, and a misguided plan of action, the greatest industry in the world won’t bail you out.”

“If you don’t understand a company, if you can’t explain it to a 10-year-old in 2 minutes or less, don’t own it.”

“I don’t think people understand there’s 100% correlation with what happens to a company’s earnings over several years and what happens to the stock.”

“In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.”

“If a stock has gone sideways for a couple of years, and the fundamentals are decent, and you can find something new that’s positive in the company, then if you’re wrong, the stock will probably continue to go sideways, and you won’t lose a lot of money. But if you’re right, that stock is going north.”

“Ultimately, to be an investor in stocks, you have to believe that American business has a decent future, as well as business worldwide, and that corporations will continue to increase their profits.”

“As corporate profits increase, corporations become more valuable, and sooner or later, their shares will sell for a higher price.”

“It’s worth reminding ourselves from time to time that gyrations in a stock price may tell us absolutely nothing about the prospects of the company involved.”

“Here’s my investment motto of the month: It’s the company, stupid.”

“My idea of a great business is one that has a shortage of competitors.”

“It’s in the nature of Wall Street to imagine that whenever a company sets a record for earnings, it will go on setting new ones.”

“With every company, there is something to worry about, but the question is, which worries are valid and which are not?”

“Stocks are not lottery tickets. There’s a company behind every stock. If the company does well, the stock does well. It’s not that complicated.”

“You’re going to make mistakes. If you’re terrific in this business you’re right six times out of 10.”

“I want a company that’s simple. They don’t have to make seven brilliant decisions every six months to keep going.”

“The very top officers of a company ought to have the equivalent of one year’s salary invested in the company. If they can’t demonstrate such faith in their own ability, why should I?”

“If a company has a sound balance sheet with minimal long-term debt, good growth prospects and responsible management, then the stock should be interesting.”

“Despite the advantages of size, wealth, a good name and a long tradition, a large enterprise will cease to be profitable if the men at the head get hardening of the arteries or atrophy of the brain tissue or if their heirs prove unequal to inherited responsibilities. Momentum alone will not carry a business forward under such circumstances. Some younger and more aggressive group will assume the leadership of the industry.”

“The history of business the world over is full of examples of businesses which have grown from modest beginnings to stupendous earning power.”

“The general state of business thus does not forecast the course of stock prices except in the apparently paradoxical fashion that great prosperity affords an advantageous time for selling stocks, extreme business depression an opportunity for purchase.”

“Anomalies are always to be found in the business situation.”

“The factors that affect the state of what we call “general business” are innumerable.”

“In a public service corporation, bad management may curtail profits or produce losses, good management may turn a weak corporation into a strong one.”

“The official who keeps one eye on his business and one on the stock market is not likely long to be numbered among the leaders.”

“Even a great company can be priced too high if there’s a lot of glamour attached to it.”

“My stocks sometimes get overpriced, but in the long run this kind of company, if you can find it, will outperform the market and the economy. The worst thing you can do is try to catch the swings, sell out too soon and be afraid to buy back in.”

“I think it is more conservative in the long run to be in a company that is really progressing and really has an edge.”

“I am vitally interested in companies that are going to survive, but I don’t think a big cap company is necessarily one that will.”

“My business is to find unusual companies and judge whether the price is too high.”

“It is true that you don’t go broke taking a profit, but that assumes you will make a profit on everything you do. It doesn’t allow for the mistakes you’re bound to make in the investment business.”

“The investment counsel business, as it is traditionally practiced, and probably as it should be practiced, is a simple process of making sure that clients never have so much risk exposure that their capital or standard of living can be impaired by some specific negative surprise.”

“A good record doesn’t necessarily prove good management. Outside economic factors such as the business cycle can make any company look good for a while.”

“My attitude towards business school is that there are six courses which are critical and most of those are accounting.”

“For me, business is not a battle to be waged — it’s a puzzle to be solved.”

“I do know, at least in my business, luck must certainly be enhanced by a keen sense of awareness.”

“Growth, demographics, and liquidity drive the real estate business.”

“Investing is buying a fractional interest in a business and buying debt claims on a business.”

“Value to some extent is in the eye of the beholder. It is very hard to pin down what the value of a future set of cash flows from a business, be it cable TV or biotechnology, is going to be.”

“Price is the essential determinant in every investment equation. At some price, every company is a buy; at some price, every company is a hold; and at a still higher price, every company is a sell. We do not really recognize the concept of a value company.”

“The first thing I heard when I got in the business, not from my mentor, was bulls make money, bears make money, and pigs get slaughtered. I’m here to tell you I was a pig. And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig.”

“I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept everywhere.”

“The fact that a stock is considered to be growth stock is no assurance against a decline in income or market value during the downtrend of a business cycle, as growth stocks often depreciate as much as other groups.”

“Sometimes a company which has a relatively low profit margin is able greatly to increase its sales volume without increasing its capital investment and thereby increase its earnings per share.”

“Detecting with a high degree of accuracy when the long-term earnings growth of a company has ceased is difficult because no mathematical formula can be applied to determine when the change from growth to maturity or decadence occurs.”

“Investors should seek a company that can lower the cost of production and develop an expanding market without materially reducing the return on capital invested in the business.”

“While the trend in profit margins is one of the most important factors to consider, it is not always the company which reports the higher profit margin that proves to be the better growth stock.”

““Growth stocks” can be defined as shares in business enterprises which have demonstrated favorable underlying long-term growth in earnings and which, after careful research study, give indications of continued secular growth in the future.”

“Earnings of most corporations pass through a life cycle which, like the human cycle, has three important phases — growth, maturity, and decadence.”

“Once a business is well established, the greatest opportunity for gain is afforded during the period of growth in earning power. The risk factor increases when maturity is reached and decadence begins.”

“Investing is kind of a game of connecting the dots. The nice thing about it is the longer you are in the business, as long as you are intellectually curious, your collection of data points of dots gets bigger and bigger.”

“The more a business serves others, and the more problems they solve, the more profitable they will be and the more an investor in those enterprises should make.”

“It’s a personal quirk of mine that when the CEO shows up on magazine covers as a celebrity, I’m automatically hesitant to invest in the stock.”

“The worst business in the world is the one that doesn’t earn good returns on capital but still needs gobs of it going forward.”

“With every company I own there is always the question of sustainability, that a transformation in its industry will leave it behind.”

“As an investor in businesses, which generate enormous cash flows, my single most important issue to get right is what management will do with cash flow through reinvestment. Do they care about the owner, or do they care about themselves?”

“The thing about buying depressed stocks is that you really have three strings to your bow: 1) earnings will improve and the stocks will go up; 2) someone will come in and buy control of the company; or 3) the company will start buying its own stock and ask for tenders.”

“One of the things you learn in this business is humility because you see your mistakes the next day.”

“One of the tricks of this business is, keep your losses down and then, if you have a few good breaks, the compounding works well for you.”

“I got three ideas out of Ben’s book that have been the cornerstone of everything I’ve done, which are to look at stocks as part of a business rather than simply little things that go up and down. And then I took to heart his Mr. Market saga, which I think is vital to having the right attitude toward market fluctuations. Then third, the margin of safety.”

“You have to really understand the businesses that you’re buying through the medium of stocks. And unless you’re willing to put a lot into that, you shouldn’t expect to get much out of it.”

“Our business is making excellent purchases — not making extraordinary sales.”

“We don’t buy and sell stocks based upon what other people think the stock market is going to do (I never have an opinion) but rather upon what we think the company is going to do.”

“The course of the stock market will determine, to a great degree, when we will be right, but the accuracy of our analysis of the company will largely determine whether we will be right. In other words, we tend to concentrate on what should happen, not when it should happen.”

“The availability of a quotation for your business interest (stock) should always be an asset to be utilized if desired. If it gets silly enough in either direction, you take advantage of it. Its availability should never be turned into a liability whereby its periodic aberrations, in turn, formulate your judgments.”

“The evaluation of securities and businesses for investment purposes has always involved a mixture of qualitative and quantitative factors.”

“I have observed many cases of habit patterns in all activities of life, particularly business, continuing (and becoming accentuated as years pass) long after they ceased making sense.”

“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’re got a very good business. And if you have to have a prayer session before raising the price by a tenth of a cent, then you’ve got a terrible business.”

“The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.”

“The business schools reward complex behavior more than simple behavior, but simple behavior is more effective.”

“I want to be in businesses so good that even a dummy can make money.”

“You need a temperament that neither derives great pleasure from being with the crowd or against the crowd because this is not a business where you take polls, it’s a business where you think.”

“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.”

“I am a better investor because I am a businessman, and a better businessman because I am an investor.”

“When a manager with a reputation for brilliance tackles a business with a reputation for bad economics, the reputation of the business remains intact.”

“Almost all of the big, great ideas in business are very simple.”

“You’re not buying a stock, you’re buying part ownership in a business. You will do well if the business does well. And if you didn’t pay a totally silly price.”

“In business, you don’t have to do extraordinary things to get extraordinary results. You have to have a sound approach, but you don’t have to be brilliant.”

“When you find a really good business run by first-class people, chances are a price that looks high isn’t high. The combination is rare enough, it’s worth a pretty good price.”

“If you just buy businesses that your idiot nephew can run, you’re going to do all right.”

“The best kind of business to be in is something where you sell something that costs a penny and sells for a dollar and is habit forming.”

“I’m in the insurance business, and anything that can happen will happen.”

“If you really know businesses, you probably shouldn’t own more than six of them. If you can identify six wonderful businesses, that is all the diversification you need and you’re going to make a lot of money.”

“I am certainly not going to predict what general business or the stock market are going to do in the next year or two since I don’t have the faintest idea.”