Legendary investor and Berkshire Hathaway founder-chairman Warren Buffett has offered a wealth of investment advice over the years. Known for his long-term approach to stocks, sticking to fundamentals, and taking calculated but thoughtful risks, the so-called ‘Oracle of Omaha’s’ wisdom often makes the rounds online.
In the investment circles, Buffett and his long-time business partner and friend, the late Charlie Munger, are known for their no-nonsense approach to doing business and relatively frugal lifestyles when compared to their immense wealth.
Quote of the Day by Warren Buffett
“If you can detach yourself temperamentally from the crowd, you’ll get very rich. You won’t have to be very bright. It doesn’t take brains. 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 18 July 2001, where he was addressing students at the Terry College of Business at the University of Georgia. Sharing advice on what it takes to invest and make money in the markets, Buffett noted that it is not the decisions you make, but your mindset that matters most. Put bluntly: “You won’t have to be very bright. It doesn’t take brains. It takes temperament.”
The ace investor noted that most people feel safer with groupthink and “behave very peculiarly” because they are human beings, but the markets do not. “They get excited when others get excited, and they get greedy when others get greedy, and fearful when others get fearful, and they’ll continue to do so. You will see things you don’t believe in your lifetime in the securities markets and the country will do very well over time, but you will see these huge waves,” he explained.
Adding: “If you can if you can stay objective throughout that (market movements), if you can detach yourself temperamentally from the crowd, you’ll get very rich. You won’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 held philosophy on investing. In 2018, the billionaire told CNBC that the longer you hold a stock, the less risky it becomes, and that selling is a “dumb thing” to do when your stock price drops. He reasoned that stock price movements are “nothing” when comparing it with businesses that earn 12% on equity and reinvest, adding that the S&P, has “for decades, earned on tangible equities a lot more”, which translates into more higher prices.
“The way people think about it (investing in equities, bonds, etc.) is, they do some very silly things. Some people should not own stocks at all because they just get too upset with price fluctuations. If you’re gonna do dumb things because your stock goes down, you shouldn’t own the stock at all,” he stated.
He felt that some investors are not “emotionally or psychologically fit” for the ups and downs of owning stocks, but it was not an impossible endeavour. “I think more of them would be, if you get educated on what you’re really buying, which is part of a business and the longer you hold stocks the less risky they’d be,” he added.
WATCH: Warren Buffett on why temperament is important for investing
Who is Warren Buffet, aka ‘Oracle of Omaha’?
Warren Buffett, alongside friend and business partner Charlie Munger were the architects who over nearly 60 years transformed Berkshire Hathaway Inc. from a failing textile maker into an empire, worth billions. Decades of compounded returns made the pair billionaires and folk heroes to adoring investors.
Notably, in January this year, Buffett handed over the reins and CEO position to successor Greg Abel. But his “bull run” with Berkshire has been legendary — gaining more than 55,00,000% returns over 60 years (1964-2024), to building the group to $1.2 trillion, and expanding Class A shares to worth $167 billion.
Known as the ‘Oracle of Omaha’ for his uncanny prediction on stocks, Buffett gained fame and investor confidence for handpicking companies (Apple, Bank of America, Coca-Cola, etc.) that exploded and now account for 70% of Berkshire’s $263 billion stock portfolio. He termed this as “one wonderful business can offset 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 views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
