1. The most common cause of low prices is pessimism — some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer.
2. Price is what you pay. Value is what you get
3. Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1.
4. 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.
5. Success in investing doesn’t correlate with I.Q. once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.
6. The best thing that happens to us is when a great company gets into temporary trouble… We want to buy them when they’re on the operating table.
7. The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.
8. When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.
9. Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
10. You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.
11. Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.
12. In the 54 years (Charlie Munger and I) have worked together, we have never forgone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.
13. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it. In stating this opinion, we define risk, using dictionary terms, as “the possibility of loss or injury.
14. The investor of today does not profit from yesterday’s growth.
15. In my opinion, there are two key concepts that investors must master: value and cycles. For each asset you’re considering, you must have a strongly held view of its intrinsic value. When its price is below that value, it’s generally a buy. When its price is higher, it’s a sell. In a nutshell, that’s value investing.