BigFatPurse - Living A Life of Abundance | Investment, Personal Finance and Success » Quotes

Warren Buffett – "Never count on making a good sale…"

Alvin — Tue, 24 Mar 2009 01:05:05 +0000

“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.” ~ Warren Buffett

Warren Buffett was greatly influenced by Benjamin Graham with his concept of margin of safety. By buying a stock at a huge discount, you are quite certain that a little price increment in the future brings profits. For value investors, the battle is fought when scouting for their targeted stocks. They need to search for stocks that are undervalued, but are still strong companies and profitable businesses. They may be affected by rumors or market’s pessimistic perceptions, but will be able to regain their valuation in time to come. By identifying these stocks and buy them with a margin of safety (difference between current price and “true” price of the stock), the battle is already won even before you sell them in the future.

Buddha – "When the student is ready, the teacher will appear"

Alvin — Fri, 06 Mar 2009 07:48:26 +0000

When I first encountered this quote, I did not find any meaning in it. I thought the teacher has to be proactive in teaching others and in the process, the student will learn. If the teacher never take action, the student never learn.

It was only recently that I gain some understanding. Most of us, if not all of us, hear what we are ready to hear. If we are not ready to receive, nothing, no matter how sound the advice is, will get into our head. It is ourselves who choose to filter out information. The fact is the teacher is always ready to teach but the student is not always ready to listen. Some received and accepted later in their life and often regretted saying to themselves, “Why didn’t I know this earlier.” It is because the student is not ready. The answer has been out there all the while but the student did not receive it because he shut it out.

Be a ready student – the answer that you seek will come to you.

Meeting with a millionaire (and a christmas gift)

Warren Buffett – "In evaluating people, you look for three qualities…"

Alvin — Thu, 12 Feb 2009 11:19:13 +0000

Full quote – “In evaluating people, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you”

When investing in a business, Buffett seriously considers the people managing the company. He understands with good leadership, the company can grow and continue to be relevant in the industry. And with good management, the business will be well run and profitable.

Integrity is an important quality that Buffett looks at. A management with integrity will run an ethical business and will not get into trouble with the law. In addition, customers will be satisfied with the products or services since the management sincerely wants to create value for the customers.

Business without integrity will eventually meet it’s downfall – Enron, Ponzi scheme businesses, Madoff, etc. Buying shares of these companies whose management are capable but lacked integrity, is as good as owning a time bomb.

Peter Lynch – "I've found that when the market's going down and you buy funds wisely, at some point you will be happy…"

Alvin — Fri, 09 Jan 2009 23:57:40 +0000

Full quote – “I’ve found that when the market’s going down and you buy funds wisely, at some point in the future you will be happy. You won’t get there by reading ‘Now is the time to buy.”

Once again, Gurus like Peter Lynch have warned the public not to react to news when investing. Likewise for analyst reports, forecasts and stock recommendations will not bring you wealth by following them. One key issue is because of information dissemination. Even in our high speed information age, there is still a time lag between the news is first known and when it comes to you. Retail investors always suffer if they react to news. They will be the last group of investors to enter the market and no one fueling the stock run with further investment, its price starts to fall.

Most people know that I must buy low and sell high. But why many do not buy when market crashes? Instead they buy just before or during the high and join the crash party? It is human psychology in play! When the market is on a bull run, there is widespread optimism shown in news, magazines, TV, etc. Majority have their greed triggered, especially when they hear that their friends have made money easily in the market. How can I lose to the rest? I will win even more money in stocks since I am ‘smarter’. By the time the market crash, the ‘smarter’ person will not have enough money to purchase good surviving companies at discounted prices.

Warren Buffett – "I always knew I was going to be rich…"

Alvin — Tue, 09 Dec 2008 00:42:28 +0000

Full quote – “I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”

There you go. I can sense the law of attraction in action. It is so important to have positive beliefs, and the act itself is the first step to realizing your goals. I believe Buffett’s subconscious mind is always thinking about being rich, being rich, being rich, all the time. Our subconscious minds control most of our behavior, and when you have such strong conviction of being rich, it is difficult not to be rich eventually.

You may say that almost everyone wants and dreams to be rich, but why most people are still poor? This is because they ‘dream’ to be rich, they do not ‘believe’ they can be rich. To believe is to have acceptance of the fact, have faith that it will happen, and thinking about it will trigger your strongest desire to take actions and achieve it.

Albert Einstein – "Imagination is more important than knowledge"

Alvin — Sun, 30 Nov 2008 10:27:51 +0000

Imagining is not dreaming. Maybe to an extent but it is more than that. Imagining is being creative. We owe all the inventions and development to imagination, without which, I bet we will still be cavemen. Knowledge is important but imagination is even more important.

Imagination deals with the future and knowledge deals with the past. Imagination creates and knowledge manages. Imagination breaks the norm and knowledge maintains the status quo. A leader needs imagination to create a vision. A manager needs knowledge to operate the organization. An organization with only managers will be obsolete eventually.

Not only it is important in business. Imagination is required to solve problems that mankind have, and move humans to a higher level of achievement and well being. How are we going to solve global warming? How are we going to eradicate poverty? We need imagination to come out with the solutions.

Einstein wouldn’t have realize the theory of relativity if he had not utilized his imagination. In any field, if you are a leader, you need to imagine, for the breakthrough.

Warren Buffett – "Be fearful when others are greedy…"

Alvin — Fri, 21 Nov 2008 16:25:26 +0000

Full quote – “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Investors being humans, are susceptible to be under the control of their own emotions. We are often driven by 2 of the most powerful emotions – fear and greed. During a bull run, investors are driven mainly by greed, taking large positions because seemingly, earning money in the stock market is easy. One after another, each investor helps propel the share price higher. The market is thus filled with greed, and you should be fearful about it, as the bubble can burst anytime.

Once the share prices can no longer sustain, the market collapses. As share prices drop, investors become fearful and start to sell their holdings, making the share price even lower. After the sell out, investors remain fearful about making investments. It is at this time that you should be greedy to pick up value stocks!

John D. Rockefeller – "The way to make money…"

Alvin — Wed, 19 Nov 2008 09:44:45 +0000

Full quote – “The way to make money is to buy when blood is running in the streets.”

Baron Rothschild has a similar quote in 1871 – “Buy when there’s blood in the streets.”

This is a famous quote and often held dearly to the hearts of value investors. It is indeed true that every calamity gives rise to opportunities. Robert Kiyosaki also mentioned that in every economy downturn, wealth will change hands.

It is quite unethical to have a phrase like this as it sounds like profitting on someone’s expense. It actually depends on how you look at it. We understand that a bull run must always precede a crash and it is normal that most investors get into the market to earn a quick buck. They are driven by greed. No one forces them into the game and it is purely voluntary. Sadly, many are unable to get out before the crash comes.

Hence, it is time to pick up the bargain stocks after most of the investors are “slaughtered”.

No related posts.

Warren Buffett – "Great investment opportunities come around…"

Alvin — Fri, 31 Oct 2008 07:52:00 +0000

The complete phrase – “Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised.”

Warren Buffett sees strength in companies through careful evaluation of their business sustainability and profitability through financial statements. Once a company qualifies as a good investment under Buffett’s selection criteria, it will be shortlisted till opportunity arises. He likes to wait for a potential stock to have a margin of safety before buying it. Opporunities come when bad news or rumours affect the potential company, where he sees as a bargain to buy a good company.