True success does not come from copying what everyone else is doing. You Can’t Beat the Herd by Following the Herd.
- A public-opinion poll is no substitute for thought.
- We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
When buying a dividend stock, the quality of the company is the number one consideration. Given enough time, a quality company will always rise above lesser competition. When your holding period is forever, it is inevitable that a superior stock will eventually out-perform second tier players. Buffett has used the quality + time formula for decades.
- Time is the friend of the wonderful company, the enemy of the mediocre.
- Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
- Chains of habit are too light to be felt until they are too heavy to be broken.
- If a business does well, the stock eventually follows.
- Our favorite holding period is forever.
With the internet, everyone has access to massive amounts of financial data on public companies. Never confuse data with information - the former takes up space while the latter is useful. Your stock evaluation process should include quantitative and qualitative analysis. While it is important to understand how a company has performed using a quantitative analysis, it is more important to determine how the company will perform in the future using a qualitative analysis. This is much more difficult since no internet site provides an instant glimpse into the future.
- If past history was all there was to the game, the richest people would be librarians.
- In the business world, the rearview mirror is always clearer than the windshield.
Have a plan for managing risk. Buffett has spent a lifetime perfecting his process and abilities. Though he shuns diversification, we would be wise not to do so until our abilities are on par with his.
- You only have to do a very few things right in your life so long as you don't do too many things wrong.
- Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
- Wide diversification is only required when investors do not understand what they are doing.
- Risk comes from not knowing what you're doing.
Life is much more than just making money. The above rings true in so many aspects of our lives. Success is measured in many different ways.
- It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
- It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction.
Over time we make all things overly difficult and complex. Sometimes it is good to step back, focus on the basics and avoid the needless mistakes.
- There seems to be some perverse human characteristic that likes to make easy things difficult.
- Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
- I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
- Price is what you pay. Value is what you get.
Life is a journey. Find something you love and enjoy the trip! We can all learn something from like-minded individuals who have been successful in their field. Still wanting more Buffett quotes?
- I always knew I was going to be rich. I don't think I ever doubted it for a minute
- We enjoy the process far more than the proceeds.
Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.
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- Increasing Dividend Yield Part VI: Time
- Increasing Dividend Yield Part V: MLPs