Warren Buffett

Quotes are word for word from the source.

• Consistency

  “Experience, however, indicates that the best business returns are usually achieved by companies that are doing something quite similar today to what they were doing five or ten years ago.”

  Our noteCompanies that maintain a consistent business model over time usually generate the highest returns.

• Cost Control

  “We neither understand the adding of unneeded people or activities because profits are booming, nor the cutting of essential people or activities because profitability is shrinking.”

  Our noteA business should maintain rational staffing and expenses regardless of short-term profit fluctuations.

• Customer Focus

  “Our goal is to do what makes sense for Berkshire's customers and employees at all times, and never to add the unneeded.”

  Our noteFocus only on what truly benefits customers and employees while strictly avoiding unnecessary additions.

• Business Analysis

  “When investing, we view ourselves as business analysts - not as market analysts, not as macroeconomic analysts, and not even as security analysts.”

  Our noteThe essence of investing is analyzing the underlying business rather than predicting market movements.

• Circle of Competence

  “Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market, you don't belong in the game.”

  Our noteYou must understand and value a business better than the market to succeed in investing.

• Long-Term Investing

  “We are quite content to hold any security indefinitely, so long as the prospective return on equity capital of the underlying business is satisfactory”

  Our noteHolding a security indefinitely is the best strategy if the underlying business consistently generates high returns on equity.

• Business Quality

  “Our goal is to find an outstanding business at a sensible price, not a mediocre business at a bargain price.”

  Our noteIt is far better to buy an outstanding business at a fair price than a mediocre one at a bargain.

• Capital Allocation

  “Charlie and I have found that making silk purses out of silk is the best that we can do; with sow's ears, we fail.”

  Our noteYou can only achieve great results by starting with high-quality businesses rather than trying to fix poor ones.

• Delegation

  “if one controlled a company run as well as SAFECO, the proper policy also would be to sit back and let management do its job.”

  Our noteThe best policy for a well run company is to step back and let the excellent management do their job.

• Cost Control

  “the manager of a tightly-run operation usually continues to find additional methods to curtail costs, even when his costs are already well below those of his competitors.”

  Our noteExcellent managers continuously seek ways to cut costs and improve efficiency even when they already lead the industry.

• Value Investing

  “Small portions of exceptionally good businesses are usually available in the securities markets at reasonable prices.”

  Our noteThe stock market offers opportunities to buy fractional ownership of outstanding businesses at fair prices.

• Inflation Protection

  “because of the unrelenting destruction of currency values, our corporate efforts will continue to do a much better job of filling your wallet than of filling your stomach.”

  Our noteCorporate efforts must focus on increasing real wealth for shareholders to combat the constant erosion of purchasing power caused by inflation.

• Business Valuation

  “managers and investors alike must understand that accounting numbers are the beginning, not the end, of business valuation.”

  Our noteAccounting figures should be viewed as the starting point rather than the final answer in business valuation.

• Weak Accounting

  “In insurance, as elsewhere, the reaction of weak managements to weak operations is often weak accounting.”

  Our noteWeak management teams often resort to questionable accounting practices to hide poor operational performance.

• Portfolio Concentration

  “Over time our policy of concentration should produce superior results, though these will be tempered by our large size.”

  Our noteA concentrated investment strategy yields superior results over time although massive capital size can eventually dampen returns.

• Business Quality

  “A base business can not be transformed into a golden business by tricks of accounting or capital structure.”

  Our noteFinancial engineering and accounting tricks cannot turn a fundamentally poor business into a great one.

• Performance Measurement

  “At too many companies, the boss shoots the arrow of managerial performance and then hastily paints the bullseye around the spot where it lands.”

  Our noteMany executives retroactively adjust their goals to match whatever results they happen to achieve.

• Prudence and Contrarianism

  “the less the prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.”

  Our noteWe must exercise greater caution and discipline when others in the market act recklessly.

• Market Patience

  “the stock market serves as a relocation center at which money is moved from the active to the patient.”

  Our noteWealth in the stock market naturally transfers from impatient traders to patient investors.

• Investment Criteria

  “We continually search for large businesses with understandable, enduring and mouth-watering economics that are run by able and shareholder-oriented managements.”

  Our noteThe best investments are large understandable businesses with durable economics and shareholder-friendly management.

• Volatility and Returns

  “Charlie and I, however, are quite willing to accept relatively volatile results in exchange for better long-term earnings than we would otherwise have had.”

  Our noteShort-term volatility is a highly acceptable price to pay for superior long-term financial returns.

• Delegation

  “Our job is merely to identify talented managers and provide an environment in which they can do their stuff.”

  Our noteThe best management approach is to find talented leaders and give them the autonomy to do their best work.

• Economic Earnings

  “Clearly, investors must always keep their guard up and use accounting numbers as a beginning, not an end, in their attempts to calculate true "economic earnings" accruing to them.”

  Our noteInvestors must look beyond accounting numbers to calculate the true economic earnings of a business.

• Delegation

  “When Charlie and I assign responsibility, we truly hand over the baton - and we give it to Lou just as we do to our operating managers.”

  Our noteWhen assigning responsibility you must fully trust and delegate authority to the right person.

• Customer Service

  “For your convenience, therefore, shareholder prices will be available from Monday, April 25 through Saturday, May 7.”

  Our noteExtended periods for special pricing are provided to ensure convenience for shareholders.

• Capital Allocation

  “When a management proudly acquires another company for stock, the shareholders of the acquirer are concurrently selling part of their interest in everything they own.”

  Our noteAcquiring companies using stock dilutes the ownership interest of existing shareholders.

• Industry Fundamentals

  “When an industry's underlying economics are crumbling, talented management may slow the rate of decline.”

  Our noteEven talented management can only slow the decline when an industry fundamental economics are deteriorating.

• Capital Efficiency

  “It's far better to have an ever-increasing stream of earnings with virtually no major capital requirements.”

  Our noteThe ideal business model generates steadily increasing earnings without requiring major capital investments.

• Management Structure

  “Their decisions flow from a here-today, here-forever mindset. I think our rare and hard-to-replicate managerial structure gives Berkshire a real advantage.”

  Our noteA management structure focused on permanence rather than short term gains provides a powerful competitive advantage.

• Business Quality

  “But if a business requires a superstar to produce great results, the business itself cannot be deemed great.”

  Our noteA business that relies entirely on a superstar to succeed is not a truly great business model.