Luck

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

“Tradition, sentiment, vague generalizations, unsubstantiated rumors, can never be made the basis of sound investment or intelligent speculation. Now and then large profits are realized on no better foundation — merely proving that sometimes luck laughs at logic.”

“If we assume that a very considerable amount of Wall Street activity must inevitably have elements of chance in it, then the sound idea would be to measure these chances as accurately as you can, and play the game in the direction of having the odds on your side.”

“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.”

“A surprise is an event the market assigns a one-in-three chance or less of occurring”

“Warren and I are chicken about buying stocks on margin. There’s always a slight chance of catastrophe when you own securities pledged to others. The ideal is to borrow in a way no temporary thing can disturb you.”

“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.”

“Buffett’s returns appear to be neither luck nor magic.”

“Gambling is a tax on ignorance. People often gamble because they think they can win, they’re lucky, they have hunches, that sort of thing, whereas in fact, they’re going to be remorselessly ground down over time.”

“Firmly believing that stock speculation is an unbeatable game, I have come to the conclusion that while no bear operator ever made a large fortune in the stock market and kept it, unless he trusteed it, the greatest losses are sustained by the bulls, not because they are bulls, but because there are more of them — more optimists than pessimists.”

“Fortunes are made and lost by thousands of men in the stock market; they are made and kept by a few dozen.”

“Fortunes are made during panics, not booms.”

“There is no great secret in fortune making. All you have to do is to buy cheap and sell dear, act with thrift and shrewdness and then be persistent.”

“On Wall Street, you have all sorts of people who tell you on October 8, 2013, the Dow Jones will be at 18,225. You’re lucky if they don’t give you the decimals. Of course this is nonsense, nobody knows.”

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

“Patterns of price movement are not random. However, they’re close enough to random so that getting some excess, some edge out of it, is not easy and not so obvious.”

“Laws have been passed to outlaw some of the more egregious behavior which contributed to the big bull market of the twenties. Nothing has been done about the seminal lunacy which possesses people who see a chance of becoming rich.”

“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.”

“It appears that capital gains are one of the few remaining ways in which an enterprising American can build or augment a fortune.”

“You can only know so many companies. If you’re managing 50 or 100 positions, the chances that you can add value are much, much lower.”

“The more decisions you make, the higher the chances are that you will make a poor decision.”

“We must accept the role of luck to properly assess skill.”

“Risk means the chance of being wrong — not always in an adverse direction, but always in a direction different from what we expected.”

“Past corporate successes are only frail guides to future good fortune.”

“Real life is not a random draw but a connected sequence of events in which each event is the consequence of the preceding event.”

“If you’re lucky enough to have one golden egg in your portfolio, it may not matter if you have a couple of rotten ones in there with it.”

“Cyclicals are very forgiving. They always give you a second chance.”

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

“Investors who find an overly narrow niche to inhabit, prosper for a time but then usually stagnate. Those who move on when the world changes at least have the chance to adapt successfully.”

“The laws of probabilities tell us that almost anyone can achieve phenomenal success over any given measurement period. It is the task of those evaluating a money manager to ascertain how much of past success is due to luck and how much to skill.”

“Risk is how much can you lose and what are the chances of losing it.”

“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.”