Money Mantras From Warren Buffett

Billionaire investor Warren Buffett credits his father with being his greatest teacher. Buffett says his father, investor and four-term Republican congressman Howard Homan Buffett, set him on the path to his investment success. The best advice his father ever gave him: “It takes 20 years to build a reputation and 20 minutes to lose it.” Recalling that statement at crucial moments in life will change the way you do things, according to Buffett.

It wasn’t just this pithy piece of advice from his father that influenced Buffett’s investment approach and helped him on his way to becoming one of the world’s wealthiest people. Delving into books lying around his father’s office also contributed to his investment understanding and a lifelong love of reading that he credits with helping him develop his ideas.

As Australians gather to celebrate their father, poppa, or dear old Dad on September 4, we look at some of the wisdom the now 92-year-old Warren Buffett has passed on to the next generation of investors. Some of the Oracle of Omaha’s favourite sayings highlight the common sense principles that have underpinned his investment success. You can hardly argue with gems like: “Never invest in a business you cannot understand” or “Rule No.1 Is never lose money. Rule No.2 is never forget Rule No.1.”

Here are seven more of his favourite money mantras. They may just act as a handy reminder of how to remain rational about our investments in these times of economic uncertainty.

1) Be ready to embrace opportunity

“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

2) Buy for the long-term

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

3) Avoid debt

“When major declines occur, they offer extraordinary opportunities to those who are not handicapped by debt. No one can tell you when these things will happen. The light can at any time go from green to red without pausing at yellow.”

4) Focus on value

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

5) Cultivate the right temperament

“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

6) Look for companies with competitive advantage

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.”

7) Learn to love market volatility

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”