Some people just have a way with words. And when that person has a long, solid investment track record to boot, it’s worth having a listen. Warren Buffett is one of these people. In addition to talking occasionally with the press, each year he holds an annual shareholder’s meeting for his company, Berkshire Hathaway, in Omaha, Nebraska. It’s like Woodstock for investing junkies. Warren, along with his trusty and sage sidekick, Charlie Munger, holds court for hours on end. While reviewing his investment performance from the past year, he also dispenses some priceless wisdom. Below are three of my favorite “Buffet-isms.”
1. “It’s Only When The Tide Goes Out That You Learn Who’s Been Swimming Naked”
His point? When times are good, everyone looks like a brilliant investor. The rising tide lifts up everyone. Right now we are clearly in a “tide out” period. It’s when times are tough that the real winners stand out from the rest of the pack. This is the time to really hone your knowledge of personal finance so you can look great in that two-piece.
2. “Rule No. 1: Never Lose Money. Rule No. 2: Never Forget Rule No. 1″
His point? Don’t take crazy risks with your hard-earned savings. In these tough times, this advice is especially apropos. As an avid reader of LearnVest, you know that investing is something you do for the long-run and that there will be bumps along the way. Stay the course and avoid the temptation to jump into “can’t-miss-get-rich-quick” schemes.
3. “It’s Far Better To Own A Portion Of The Hope Diamond Than 100% Of A Rhinestone”
His point? Stick with quality. I’d also add that if you aren’t going to devote yourself to analyzing stocks full time, this is yet another reason to use index funds and target date retirement funds as your investment vehicles of choice. That way, you get pieces of a lot of great diamonds rather than betting the ranch on something that could turn out to be a rhinestone.
Warren’s savvy advice is not limited to investing. For a more Warren-isms, read Janet Lowe’s delightful book, Warren Buffet Speaks.