Warren Buffett on Investment Strategies

"In the short run, the market is a voting machine, but in the long run, it is a weighing machine."

"There seems to be some perverse human characteristic that likes to make easy things difficult. The intelligent investor should concentrate on asset allocation."

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

"When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."

"Our favorite holding period is forever. We don't buy and sell stocks based on what the market is going to do, but rather what the company is going to do."

"The best way to own common stocks is through an index fund that charges minimal fees."

"Risk comes from not knowing what you're doing."

"Volatility is far from synonymous with risk. For us, risk is the possibility of loss or injury."

"If past history was all that is needed to play the game, the richest people would be librarians."

"When companies repurchase their shares at below intrinsic value, the math is elegantly simple: every share cancelled at a discount immediately accretes that discount to the remaining shareholders."

"We will issue shares only when we receive as much in business value as we give."

"We do not believe in stock splits. Our goal is to have a stock price that is rational in relation to the business value."

"If compensation isn't an expense, what is it? Stock-based compensation is the most egregious example of managers telling owners to ignore certain expense items."

"Read 500 pages a day. That's how knowledge works — it builds up like compound interest."

"A low-cost index fund is the most sensible equity investment for the great majority of investors."

"We will engage in arbitrage from time to time — sometimes on a large scale — but only when we like the odds."

"My early cigar-butt strategy of buying cheap stocks worked until the money got big. It was a mistake to continue pouring capital into a dying business."

"We have no interest in buying a business unless we think we understand it, it has durable economics, honest and capable management, and a price that makes sense."

"Arbitrage promises much greater returns than Treasury Bills and cools any temptation to relax our standards for long-term investments."

"Derivatives are dangerous. They have dramatically increased the leverage and risks in our financial system."

"Over a long period of years, I think it is likely that the Dow will produce something like 5% to 7% per year compounded."

"For investors as a whole, returns decrease as motion increases. The burden of paying Helpers may cause equity investors to earn only 80% of what they would earn if they just sat still."

"Bonds are not the place to be. The after-tax return on bonds is negative for many investors when inflation is factored in."

"Gold gets dug out of the ground in Africa. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility."

"We believe that a policy of portfolio concentration may well decrease risk if it raises the intensity with which an investor thinks about a business."

"An investor who has a lousy business bought for a cheap price will have a lousy investment. The IPO market is no different."

"We like convertible preferreds because they combine the downside protection of fixed income with upside potential of equities."

"Junk bonds are not suitable investments for the general public because too often these securities live up to their name."

"Many private equity buyers are simply buying with borrowed money and hoping to flip. That's not our approach."

"The best investment you can make is in your own abilities. Real estate can be fine, but you need to understand what you're buying."