Last weekend I was part of a team of Fools that headed to Omaha, Nebraska for the 50th anniversary Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) annual shareholder meeting. Warren Buffett is known as a wellspring of quotable moments, and this year was no exception.
Here are nine of my favorite Buffett quotes from this year's meeting:
1. "We don't have a list of five things, and if we do, Charlie's kept them from me."
An audience member asked Buffett and Munger for a list of the five things that make them feel confident about a business they're investing in. Buffett's answer is a reminder that investing isn't a scientific endeavor where there are black-and-white answers. Trying to fit all of your investments to a rigid formula is likely to lead to frustration.
2. "If people weren't so often wrong, we wouldn't be so rich."
We don't want to root for misfortune for others (Schadenfreude, as we say in Germany). However, it's important to remember that there's the most opportunity for us as long-term, Foolish investors when other investors are acting irrationally.
3. "The whole mentality of Wall Street is ... that they think they're better off if the stock goes up in the next week or the next month."
This is something that Buffett has talked about in the past. Most investors think that it's better if the stocks they own go up ... now. Actually, as Buffett explained at the meeting, if you're a long-term investor, it's better if the stocks you own go down -- so you can buy more at better prices.
4. "I can't remember ever making an acquisition or turning down one based on macro factors."
There's not much that needs to be explained here. If you're an investor in businesses, then focus on investing in businesses and don't get sidetracked by the "big macro."
5. "If we get back to interest rates that are normal interest rates, these stock prices will look high. If these interest rates stay at these levels, stocks will look cheap."
We're in a very unusual interest rate environment, and because fixed-income investments provide a primary alternative to stocks, the future of interest rates will have a big impact on whether stocks (in retrospect) look cheap today.
That said, as Buffett would certainly tell you, trying to predict whether interest rates will come back up is another matter. Buffett also happened to mention during the meeting that interest rates had already proven him and Charlie wrong -- neither of them thought that rates would stay this low this long.
6. "Having a business school training was a handicap years ago, when they were teaching efficient markets."
Longtime Buffett fans know that he's no big fan of the efficient markets theorem. And why would he? His career has been built on proving that markets aren't always efficient.
7. "You can be sure that over the next 10 years, you'll see something that you did not think was possible."
It's human nature to think that the conditions of today will carry on into the future. One common cognitive bias -- the availability heuristic -- is the tendency to have predictions overly swayed by events that are more recent in memory -- that is, more available.
In 2005, I doubt you could've found anyone that would have predicted that Switzerland would be able to sell 10-year bonds with a negative yield. Looking ahead to 10 years from now, we'll doubtlessly find new surprises.
8. "When they get their ego involved, people do things they shouldn't do."
This quip from Buffett is applicable in many different areas. As investors, we should heed this when it comes to assessing company managers. Ego-driven managers can talk a good game, but are also prone to doing things they shouldn't because their ego gets in the way of sober judgment.
We should also heed this when it comes to ourselves. Investing is difficult enough, but when we let ego cloud our judgement it can become downright impossible.
9. "It's an easy game if you can control your emotions."
I don't know if I'd go as far as "easy," but good investing doesn't require an Einstein-sized IQ. The math is basic, and the important analysis concepts can be learned by most people.
Controlling your emotions however is very, very difficult. Which makes this final Buffett quote sort of like saying, "Scoring a goal in football is easy ... if there's no keeper."