Warren Buffett has uttered lots of words of wisdom, but they're more than just sound bytes. If you actually apply his investing method, or at least use it to inform your own, you could supercharge your investments.
Just look at his track record. Since Buffett took over Berkshire Hathaway (BRK.A 0.24%)(BRK.B 0.38%) in 1965, it has returned an average annualized rate of 19.9% versus 10.4% for the S&P 500, or a total of 5,502,284% versus 39,054%.
There are so many Buffett gems, but here is a curated list of actionable quotes that could help you achieve investing success.
Image source: The Motley Fool.
1. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
Buffett credits Charlie Munger with transforming his own investment approach by giving him this advice. Prior to meeting Charlie, Buffett was a big follower of Ben Graham and his master work, The Intelligent Investor. Graham was a big proponent of value investing, or buying undervalued stocks and selling them when their values rose to market levels. Charlie said that this only works at small scale, but it wouldn't make sense at Berkshire Hathaway's size.
Buffett didn't fully give this up; he has said that only eight or nine of his moves have accounted for the vast majority of gains, and these are likely some of the deals he jumped on when they were at a severe discount. But for the most part, this transformed his investing style and allowed him to deploy capital over many years to make money for his shareholders.
Even the small-scale individual investor will have much greater success with this approach because it's geared toward long-term, hands-off investing, while focusing on less-than-stellar companies comes with greater risk to the novice.
2. "Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag."
Here, Buffett gives you his bare-bones approach to great investing, with the four most important features to look for in a great stock. Some investors make the mistake of investing in whatever is hyped up at the moment, even if they don't understand exactly what it does. Buffett wasn't afraid to admit that he didn't understand a company, and then chose to stay away.
If a company, or its financial statements, is too hard to understand, that should ring some alarm bells. Favorable long-term economics and trustworthy management give you confidence that the company will be around and kicking for a long time, giving your investment the chance to grow, and the sensible price tag is important. But again, it doesn't mean it has to be dirt cheap.
3. "When investing, pessimism is your friend, euphoria the enemy."
Buffett's more common version of this is all about buying when there's fear and staying back when there's greed, but this provides more insight into how that works.
If you're a long-term investor, the best thing for you is to see prices drop, because they more often don't. Pessimism is a feeling, not a reality. Pessimism brings prices down to the sensible levels that make them worth buying, whereas euphoria brings them to unsustainable levels.
It works in your favor to buy when there's pessimism. That pertains to individual stocks as well. Buffett usually finds some kind of opportunity even when the market is euphoric.
4. "We are just the opposite of those who hurry to sell and book profits when companies perform well, but who tenaciously hang on to businesses that disappoint. Peter Lynch aptly likens such behavior to cutting the flowers and watering the weeds. "
Buffett's contrarian approach means not booking a profit even when there's high appreciation, so long as the stock still has potential. And instead of holding on to losing stocks in the hope that they rebound, he recommends cutting them loose and to make back your money with better stocks. This was actually the second part of his more famous quote about his favorite holding period being "forever," and it puts it into context.
6. "I know people have emotions, but you got to check them at the door when you invest."
Buffett just said this at Berkshire Hathaway's 2025 annual meeting, but it's a timeless classic. He spent some time talking about today's market, calling market volatility "nothing." This is just a small blip on Buffett's radar and nothing to get worried about, and "nothing" presents great opportunities.
When investors start to panic-sell, especially in markets that are only slightly down like today, they're bound to lose money. Holding your emotions in check allows you to ride out the waves when there's uncertainty and stay in long enough to amass wealth.
