Investment Decision Quotes

What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don't have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.

Obviously, consideration of costs is key, including opportunity costs. Of course capital isn't free. It's easy to figure out your cost of borrowing, but theorists went bonkers on the cost of equity capital. They say that if you're generating a 100% return on capital, then you shouldn't invest in something that generates an 80% return on capital. It's crazy.

I made my money by selling too soon.

Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test. The main difference is that the hypothesis that underlies an investment decision is intended to make money and not to establish a universally valid generalization.

As a producer or financier, you are going to go where you get the best bang for your buck.

The strategy we've adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it.

Actually, in my advanced, high-falutin' frontier economics, I often work with what I define as 'money metric utility,' and I ask people, 'Do you really want that? What are you willing to pay for that?'

If you know how to value businesses, it's crazy to own 50 stocks or 40 stocks or 30 stocks, probably because there aren't that many wonderful businesses understandable to a single human being in all likelihood. To forego buying more of some super-wonderful business and instead put your money into #30 or #35 on your list of attractiveness just strikes Charlie and me as madness.

If you have the opportunities of Berkshire, an investment in gold is dumb.

Because everybody else was investing in the consumer Internet, I did, too.

The great lesson in microeconomics is to discriminate between when technology is going to help you and when it's going to kill you. And most people do not get this straight in their heads. But a fellow like Buffett does. For example, when we were in the textile business, which is a terrible commodity business, we were making low-end textiles-which are a real commodity product. And one day, the people came to Warren and said, "They've invented a new loom that we think will do twice as much work as our old ones."

Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test.

It all comes down to interest rates. As an investor, all you're doing is putting up a lump-sump payment for a future cash flow.

I'm very, very bullish about our prospects, and as I tell our board, as I tell our employees, this is the time to invest. There's so much opportunity. Let's just invest in that opportunity, and really get after it.

When you see a 'Shark fight' erupt, we aggressively want to understand what we are committing our money toward.

To me, the "tape" is the final arbiter of any investment decision. I have a cardinal rule: Never fight the tape!

What I invest in, while not risky for me, may be too risky for most people.

One of my rules for investing is, I don't invest in a deal where I don't think I have an unfair advantage and where I don't think I can personally impact the outcome.

A great business at a fair price is superior to a fair business at a great price.

First of all I trust my own instinct, experience that I gained over years and feeling when the moment is right for buying shares. That is what one calls intuition.

Stocks are at an all-time high today. I don't have any money in the stock market. I don't have the stomach for the ups and downs. So about 20 years ago I put all of my money and liquid assets into videotape rewind machines.

Zuckerberg rejected $2 billion for Facebook and has successfully created a company worth nearly $200 billion.

One of the rules I've learned is that struggling to try and think your way into making an investment is usually the best way to not have a great outcome.

If there is the right opportunity for us to have a big oil play in Congo or somewhere else, we will definitely go for it.

We actually tried to invest in Twitter in April 2007, right when it launched. At the time, the company was wary of having a classic, tier-one traditional venture firm involved.