Staff Reporter
Warren Buffett is known for his wisdom in investing, and his insights are more than just catchy phrases. By applying his principles, you could significantly enhance your investment strategy and build wealth.
Since Buffett took the reins at Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965, the company has achieved an impressive average annual return of 19.9%, compared to 10.4% for the S&P 500. That translates to a staggering total return of 5,502,284% versus 39,054%.
Here are five key quotes from Buffett that can guide you toward investing success:
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
This advice from Charlie Munger reshaped Buffett’s investment approach. Initially influenced by Ben Graham and his value investing philosophy, Buffett learned from Munger that this strategy works best at a smaller scale. While he still acknowledges the value of buying on discounts, this shift allowed him to invest in quality companies over time, benefiting shareholders. Individual investors can also find more success by focusing on solid companies rather than chasing fleeting trends.
“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.”
Buffett outlines his straightforward criteria for investing. Many investors fall into the trap of buying popular stocks without understanding them. If a company’s operations or finances are unclear, that’s a red flag. Favorable economics and trustworthy leadership are essential for long-term growth, and while a sensible price matters, it doesn’t have to be rock-bottom.
“When investing, pessimism is your friend, euphoria the enemy.”
This advice emphasizes buying during market downturns. For long-term investors, price drops can create opportunities, while euphoria often leads to inflated prices. Pessimism can bring stocks down to more reasonable levels, allowing you to invest wisely. Buffett often finds chances even in euphoric markets.
“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.”
Buffett advocates for a contrarian approach: hold onto stocks with potential rather than cashing out too soon. If a stock isn’t performing, he suggests letting it go to reinvest in more promising opportunities. His well-known preference for a “forever” holding period is about maintaining faith in quality investments.
“I know people have emotions, but you got to check them at the door when you invest.”
Buffett recently reiterated this at Berkshire Hathaway’s 2025 annual meeting, emphasizing the importance of staying calm amid market volatility. Panicking during minor downturns can lead to losses. By keeping emotions in check, you can weather uncertainty and build wealth over time.
Applying these insights from Warren Buffett could reshape your investment strategy and help you achieve long-term success.
