Warren Buffett: When we look at businesses 

“When we look at businesses, we try to think of what can go wrong with them. We try to look [for] businesses that are good businesses now, and we think about what can go wrong with them. If we can think of very much that can go wrong with them, we just forget it. We are not in the business of assuming a lot of risk in businesses. That doesn’t mean we don’t do it inadvertently and make mistakes, because we do. But we don’t intentionally, or willingly, voluntarily, go into situations where we perceive really significant risk that the business is going to change in a major way.”

—Warren Buffett. 

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Warren Buffett: Models

“It just stands to reason that you copy, very much, the people that you do look up to, and particularly if you do it at an early enough age. So I think, if you can influence the…role models of a 5-year-old or an 8-year-old or a 10-year-old…it’s going to have a huge impact. And of course, everybody, virtually, starts out with their initial models being their parents. So they are the ones that are going to have a huge effect on them. And if that parent turns out to be a great model, I think it’s going to be a huge plus for the child. I think that it beats a whole lot of other things in life to have the right models around…. Even as I’ve gotten older, I’ve picked up a few more. And it influences your behavior. I’m convinced of that…. And it’s not complicated. Nothing could be more simple than to try and figure out what you find admirable and then decide…that the person you really would like to admire is yourself. And the only way you’re going to do it is take on the qualities of other people you admire.”

—Warren Buffett. 

Warren Buffett: Wild things

“We generally believe you can just see anything in markets. I mean, it’s just extraordinary what happens in markets over time. It gets sorted out eventually, but we have seen companies sell for tens of billion dollars that are worthless. And at times, we have seen things sell for…literally 20 percent or 25 percent of what they were worth. So we have seen and will continue to see everything. It’s just the nature of markets. They produce wild, wild things over time. And the trick is, occasionally, to take advantage of one of those wild things and not to get carried away when other wild things happen because the wild things create their own truth for a while.”

—Warren Buffett. 

Warren Buffett: No book value

“The very best businesses, the really wonderful businesses, require no book value…We want to buy businesses, really, that will deliver more and more cash and not need to retain cash, which is what builds up book value over time. Admittedly, the prices of marketable securities, at any given time, are not a great indication of their intrinsic value. They are far better, though, than the book value of those companies in indicating intrinsic value…. It’s a factor we ignore. We do look at what a company is able to earn on invested assets and what it can earn on incremental invested assets. But the book value, we do not give a thought to.”

—Warren Buffett. 

Warren Buffett: Currencies

“We don’t understand what currencies are going to do week-to-week or month-to-month or year-to-year. And we always try to figure on what — focus on what’s knowable and what’s important. Now, currency might be important, but we don’t think it’s knowable. Other things are unimportant, but knowable. But what really counts is what’s knowable and important.” 

—Warren Buffett. 

Warren Buffett: What the business does

“[Charlie and I] don’t consider ourselves…richer or poorer based on what the stock does. We do feel richer or poorer based on what the business does. So we look at the business as to how much we’re worth. And we do not look at the stock price, because the stock price doesn’t mean a thing to us…. We think of it as a private business, basically, for which there’s a quotation. And if it’s handy to use that quotation, either in buying more stock or something of the sort, we may do it. But it does not govern our ideas of value.”

—Warren Buffett.