The Oracle of Omaha
He is 88 years old, the 3rd richest man in the world, and when he speaks people stop what they are doing and listen. He is the Chairman and largest shareholder of Berkshire Hathaway and has made many people rich; he is known of the oracle of Omaha. Even tho he didn’t invent value investing, that was Benjamin Graham in the 1920’s, it has been tru to him and he is right much more often than he is wrong. Simply, he looks at fundamentals and when he sees a company whose stock is undervalued, and coupled with good management) he buys it and waits. As you can see by the 20 year chart, if you bought one share of Berkshire Hathaway in 2000 for $50,000, it is now worth $300,000. The reason for the large stock price is that he does not believe in splits. This way, Buffett believes he will attract investors with a similar mindset. One of the things I love about him is his style and euphemisms. Below are some of my favorite quotes and an explanation, and I believe he has hit the bulls eye on all of them.
When you invest you are in it for the long run. Buffet doesn't day trade, he trades in value. When you are saving for the future, it is a marathon, not a sprint.
Savings come first. It is not what's left over at the end of the month after spending. Do NOT live beyond your means and if you're not saving and increasing credit card debt you are living beyond your means. Start saving early in life and continue with a 401K, if offered by your work, or your own IRA.
The idea is to buy low and sell hi. When the country is in a recession and good value stocks are low, that is the time to buy. Don't be greedy. The stock market is like sex (another Buffett quote) it's best right before it ends. It's impossible to pick tops and bottoms in the market, but if a long term support line is broken, that's generally the time to sell.
Plan ahead and plan your retirement (the best time is right after college). With a modest income, it is easy to amass $1 million in 20-30 years. Don't live beyond your means.
Have confidence in yourself and have a plan. If you think you won't succeed, you never will.
Don't leap before you look. When it comes to investing, DO your homework. Power and success come from knowledge.
When JP Morgan was asked what he values most in a transaction with an individual, he stated "Character". Evidently this is mirrored by Buffett. Keep your dealings above board, and once you lose your integrity, it's almost impossible to find it.
Always save for a rainy day and always have a plan B. Throughout my adult life, I have always had 2 jobs and I have always saved money. If you are not saving, you're walking off a cliff.
John Tommasi is a retired Senior Lecturer of Economics & Finance from Bentley University and the University of New Hampshire.