Legendary investor and Berkshire Hathaway founder and chairman Warren Buffett has offered a wealth of investment advice over the years. Known for taking a long-term approach to stocks, sticking to fundamentals and taking calculated but thoughtful risks, the so-called Wisdom of Omaha is a frequent move online.
In investment circles, Buffett and his longtime business partner and friend, the late Charlie Munger, are known for their no-nonsense approach to business and relatively modest lifestyles compared to their immense wealth.
Quote of the day from Warren Buffett
“If you can detach yourself from the crowd with temperament, you will become very rich. You won’t have to be very bright. You don’t need brains to do that. It takes temperament.”
What does Warren Buffett’s quote mean?
The above quote is from Buffett’s speech at the Terry Leadership Speaker Series on July 18, 2001, where he spoke to students at the Terry College of Business at the University of Georgia. Buffett shared advice on what it takes to invest and make money in the markets, noting that it’s not the decisions you make, but your mindset that matters. To put it bluntly: “You don’t have to be very bright. It doesn’t take brains. It takes temperament.”
Read also | Are you planning your will? Legal heir vs nominee: Key differences you need to know
The ace investor noted that most people feel safer with groupthink and “behave very strangely” because they are human beings, but the markets are not. “They’re excited when others are excited, and they’re greedy when others are greedy, and they’re scared when others are scared, and they’re going to keep doing it. You’re going to see things in the stock markets that you wouldn’t believe in your lifetime, and the country is going to do very well over time, but you’re going to see these huge waves,” he explained.
And he adds, “If you can, if you can remain objective throughout (market movements), if you can detach yourself from the crowd with temperament, you’ll get very rich. You don’t have to be very bright. It doesn’t take brains. It takes temperament. It takes the ability to sit there and look at something.”
Notably, this is part of Buffett’s long-term investment philosophy. In 2018, the billionaire told CNBC that the longer you hold a stock, the less risky it becomes, and that selling is a “stupid thing” when the stock price drops. He opined that stock price movements were “nothing” compared to businesses earning 12% on stocks and reinvestments, adding that the S&P “has been earning a lot more on physical stocks for decades,” which translates into higher prices.
Read also | Warren Buffett, Radhika Gupta endorse THIS investing mantra for volatile markets
“The way people think about it (investing in stocks, bonds, etc.) is that they’re doing very stupid things. Some people shouldn’t own stocks at all because they’re just too upset about price fluctuations. If you’re going to do stupid things because your stocks are going down, you shouldn’t own stocks at all,” he said.
He felt that some investors were not “emotionally or psychologically fit” for the ups and downs of stock ownership, but it was not impossible. “I think there will be more if you educate yourself on what you’re actually buying, which is part of the business, and the longer you hold the stock, the less risky it becomes,” he added.
WATCH: Warren Buffett on Why Temperament Matters in Investing
Who is Warren Buffet aka the ‘Oracle of Omaha’?
Warren Buffett, along with friend and business partner Charlie Munger, were the architects who transformed Berkshire Hathaway Inc. over nearly 60 years. from a failing textile manufacturer to an empire worth billions. Decades of compounding returns have made the pair of billionaires and folk heroes adoring investors.
Read also | Charlie Munger’s Quote of the Day: “We did better than average because…”
Notably, in January of this year, Buffett handed over the reins and the position of CEO to successor Greg Abel. But his ‘bull run’ with Berkshire is legendary – over 60 years (1964-2024), he earned over 55,00,000% returns, built the group to $1.2 trillion and expanded its Class A shares to a value of $167 billion.
Known as the ‘Oracle of Omaha’ for his mysterious stock forecasting, Buffett gained fame and investor confidence by picking companies (Apple, Bank of America, Coca-Cola, etc.) that exploded and now make up 70% of Berkshire’s $263 billion stock portfolio. He called it how “one great deal can balance out the many mediocre decisions that are inevitable”.
Buffett’s net worth is estimated at $152 billion, making him the 10th richest person in the world, according to the Bloomberg Billionaire Index.
Disclaimer: This story is for educational purposes only. The above opinions and recommendations are those of individual analysts or brokerage firms and not of Mint. We encourage investors to check with certified professionals before making any investment decision.
