THE TAO OF WARREN BUFFETT

WARREN BUFFETT’S WORDS OF WISDOM

125 QUOTATIONS AND INTERPRETATIONS TO HELP GUIDE YOU TO BILLIONAIRE WEALTH AND ENLIGHTENED BUSINESS MANAGEMENT

MARY BUFFETT & DAVID CLARK

SCRIBNER an imprint of Simon & Schuster

Here are 10 rules to launch you on the road to billionairehood.

“Rule No. 1: Never lose money.

Rule No. 2: Never forget rule No. 1.”

The great secret to getting rich is getting your money to compound for you, and the larger sum you start

with, all the better.

No. 1

“You should invest in a business that even a fool

can run, because someday a fool will.”

There are businesses with great underlying economics

and businesses with poor underlying economics.

No. 20

“There is a huge difference between the business that grows and requires lots of capital to do so and the business that grows and doesn’t require capital.”

This is the big secret in Warren’s buy-and-hold-forever strategy. If you buy and hold a business that requires lots of capital to grow, your stock is never going to grow in value.

No. 30

“With enough inside information and a

million dollars, you can go broke in

a year.”

Face it, by the time inside information gets to you,

everyone else has heard it and traded on it.

No. 37

“If calculus or algebra were required to be a great investor. I’d have

to go back to delivering newspapers.”

According to Warren, the math skills you need to be

a great investor are addition, subtraction,

multiplication, division, and the ability to rapidly

calculate percentages and probability.

No. 42

“The smarter the journalists are, the better

off society is.” We get our information for processing

investment ideas from the media, which means we are wholly dependent on journalists for

accuracy and proper analysis of what is going on. Do you want dumb people keeping us

informed, or do you want intelligent people doing the job?

No. 44

No. 49

“It’s only when the tide goes out that you learn who’s been swimming naked.”

Creative accounting has let more than a few of Wall Street’s darlings rise to the top. But if the real money doesn’t show up at some point, the enthusiasm and illusion fall away, and all that is left is an empty bank account and a bankruptcy filing.

“If you hit a hole in one on every hole, you wouldn’t play golf for very long.”

A job with challenges keeps things interesting, creates high self-esteem, promotes creativity, and

attracts the highest-quality people.

No. 54

“Never ask a barber if you need

a haircut.” Ask an adviser if there is a problem and he will find a

problem—even if there isn’t one.

No. 57

“When you combine ignorance and borrowed money, the consequences can

get interesting.”

Ignorance will blind you from folly—the borrowed money will allow you to blindly follow your ignorance till you reach the point of folly.

Folly is where you lose the money, which you owe the bank.

No. 79

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