o The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.
o Never invest in a business you cannot understand.
o Risk can be greatly reduced by concentrating on only a few holdings.
o Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.
o Buy companies with strong histories of profitability and with a dominant business franchise.
o You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.
o Be fearful when others are greedy and greedy only when others are fearful.
o Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.
o It is optimism that is the enemy of the rational buyer.
o As far as you are concerned, the stock market does not exist. Ignore it.
o The ability to say "no" is a tremendous advantage for an investor.
o Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.
o Lethargy, bordering on sloth should remain the cornerstone of an investment style.
o An investor should act as though he had a lifetime decision card with just twenty punches on it.
o Wild swings in share prices have more to do with the "lemming- like" behaviour of institutional investors than with the aggregate returns of the company they own.
o As a group, lemmings have a rotten image, but no individual lemming has ever received bad press.
o An investor needs to do very few things right as long as he or she avoids big mistakes.
o "Turn-arounds" seldom turn.
o Is management rational?
o Is management candid with the shareholders?
o Does management resist the institutional imperative?
o Do not take yearly results too seriously. Instead, focus on four or five-year averages.
o Focus on return on equity, not earnings per share.
o Calculate "owner earnings" to get a true reflection of value.
o Look for companies with high profit margins.
o Growth and value investing are joined at the hip.
o The advice "you never go broke taking a profit" is foolish.
o It is more important to say "no" to an opportunity, than to say "yes".
o Always invest for the long term.
o Does the business have favourable long term prospects?
o It is not necessary to do extraordinary things to get extraordinary results.
o Remember that the stock market is manic-depressive.
o Buy a business, don't rent stocks.
o Does the business have a consistent operating history?
o Wide diversification is only required when investors do not understand what they are doing.
o An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.
(extracted from various books on Buffett including "Buffett: the Making of an American Capitalist", "Buffettology", "The Warren Buffett Way" and "Of Permanent Value", "Thoughts of Chairman Buffett : Thirty Years of Unconventional Wisdom from the Sage of Omaha")
