If you are new to the stock markets, Warren Buffet is one of the first names you are likely to hear – and rightly so, after his performance and success in the stock market for several years (or we can say long-term success). He is the chairman and CEO of Berkshire Hathaway and one of the most widely followed stock market investors across the globe, and in India as well. Investors have always looked upto him because of his proven performance and long-term ability to repeatedly outperform the broader stock market.
A living example of how ‘time in the market’ always wins over ‘timing the market,’ Mr Buffet is popular for sharing his wisdom with us. Let us have a quick glance at some of the most popular Warren Buffet quotes and what they imply.
1.”Whether we are talking about socks or stocks, I like buying quality merchandise, when it is marked down.”
Every investor wishes to earn good returns (value) from the stocks in which he/she has invested money. Of course, quality comes at a price and so do quality stocks. But, you need to be ready to buy them when their price is down (the cost of your capital is low). This will allow you to get more value (return on equity) in the long run. The next time you witness a market correction, be cash-ready to invest in some quality stocks at cheap prices.
Only those who can understand this will be able to buy stocks like Maruti Suzuki, MRF, Eicher Motors, etc. whose value has increased manifold over the last decade.
2. “You do things when opportunities come along.”
You would do well to understand this quote from Warren Buffet. Many investors have the habit of investing in stocks when they have money in hand. But, it shouldn’t be that way. Instead, you should buy quality stocks when the market presents such an opportunity for you. For example, volatile markets are when you are likely to get some high-quality stocks at a cheaper value.
You don’t just go about buying stocks when the markets are at a high – you may end up buying stocks at much higher value. This would only mean that the end returns would be less as compared to what you could have earned by investing in the same stock at lower values, i.e. when the opportunities come along.
3.”Be fearful when others are greedy and greedy when others are fearful.”
A real long-term investor gets ample of opportunities to buy stocks. He simply needs to develop the right mindset to buy at the right time. Flashback to 2008 when the markets were volatile and everyone was circumspect or afraid to buy more stocks. That was the real time when true value investors invested good money in quality stocks and started reaping the benefits when the markets entered a bull phase post-2013. For example, a person who would have purchased Maruti Suzuki stock around 2008 when it was available at a price around INR 1000 would have minted big money in 2018 when the same stock price shot above INR 8000.
The same situation was quite different towards the end of 2007. Markets were crazy and yet many investors were buying a lot of stocks at such all-time high levels. The clever ones avoided buying towards the end of 2007. Instead, they waited for the right opportunity which came along in the next couple of years.
Warren Buffett’s quotes on investing have inspired amateur and experienced investors across the world. These three quotes from his book of wisdom are the most relevant for long-term investors and are bound to leave a lasting impression. Happy investing!