How to Build Wealth Like Warren Buffett 23
Notables and Quotables
English philosopher James Allen said, “Circumstances define you and you
attract not what you want but rather what you are.”
R e g a rding the diff e rence between being rich and being wealthy, Stephen Swid
w rote, “Being rich is having money. Being wealthy is having time.”
Proverbs states, “He that maketh haste to be rich shall not be innocent.”
There are no ethical shortcuts to accumulating wealth like Warren Buffett has.
There are no specific, latest, or hot stock picks. Quoting from Money magazine
in 1987, “There is no reason in the world you should expect some broker to be
able to tell you whether you can make money on index futures or options or
some stock in two months. If he knew how to do that, he wouldn’t be talking to
investors. He’d have retired long ago.”
A lady stood up at Berkshire’s annual meeting and said, “Mr. Buffett I only have
one b share.” And he interrupted her and said, “That’s okay lady, between you
and me we own half the company, what is your question?”
Warren writes, “Sometimes traditional wisdom can be long on tradition and
short on wisdom.” His principles are long on wisdom and short on tradition.
Think independently and get no satisfaction with following the crowd. In fact, to
build Buffett wealth you must operate differently from everyone else. As Warren
is most often quoted, “Be fearful when others are greedy and greedy when oth-
ers are fearful.”
Ralph Waldo Emerson said, “Man was born to be rich, or grow rich by use of his
faculties, by the union of thought with nature. Property is an intellectual pro-
duction. The game requires coolness, right reasoning, promptness, and patience
in the players.”
Active investors need to read, research, and understand before you act. You need
to be an intelligent investor not an emotional one. Professor Graham said, “In
the short run the stock market is a voting machine, but in the long run it is a
weighing machine.” Meaning short-term stock movements are determined by
popularity or lack of it, but in the long run it’s all about the earning or weight of
the business you own.
One of Warren Buffett’s famous quotes is, “Price is what you pay, value is what
you get.”
When he was asked how he learned so much about stocks, Warren said that he
“went to the library and started with the A’s and read every public company’s
annual report.” Ask yourself how often you follow financial news and whether or
not you enjoy being an active investor or if you prefer to be a passive investor.
How do you define risk? Many think that you can reduce risk by diversifying
and buying two of everything. Warren calls this the “Noah’s ark investor.” If you
buy two of everything you soon end up with a zoo for a portfolio. Risk as
defined by Warren is “not knowing what you are doing.” According to Peter
Lynch, most people diversify, or “diworsify,” out of ignorance. If you know how
to value businesses and buy them at attractive prices then you want to buy more
of what you own, not more of something else less attractive.
Fisher wrote, “Sustained success requires skill and consistent application of
sound principles.”
Warren’s management style can be summarized in four words, “Hire well man-
age little.”
“Warren Buffett is a value investor and a values manager.” — Robert Miles
How to Build Wealth Like Warren Buffett 25
Famous economist John Maynard Keynes stated, “One’s knowledge and experi-
ence are definitely limited and there are seldom more than two or three enter-
prises at any given time in which I personally feel myself entitled to put
full confidence.”
Charlie Munger said, “In the United States, a person or institution with almost
all wealth invested, long term, in just three fine domestic corporations
is securely rich.”
“Your goal as an investor should simply be to purchase, at a rational price, a
part interest in an easily understandable business whose earnings are virtually
certain to be materially higher five, ten and twenty years from now,” wrote
Warren Buffett in his 1996 letter to investors.
Fisher said, “Taking small profits in good investments, and letting losses grow in
bad ones is a sign of abominable investment judgment. A profit should never be
taken just for the satisfaction of taking it. Contrary to standard dogma, there are
a relatively small number of truly outstanding businesses.”
Warren Buffett states, “With each investment you make, you should have the
courage and the conviction to place at least ten percent of your net worth in
that stock.”
“There are two mistakes one can make along the road to truth — not going all
the way and not starting.” — Buddha
“Never do anything in business that you wouldn’t want published on the front
page of your local newspaper. It takes 20 years to build a reputation and five
minutes to destroy it. If you think about that, you might do things differently.”
— Warren Buffett
“A man of genius makes no mistakes. His errors are volitional and are the por-
tals of discovery.” — James Joyce
Pearl Bailey once said, “I have been poor and I have been rich. I prefer rich.”
“The higher you go up, the more mistakes you are allowed. Right at the top, if
you make enough of them, it’s considered to be your style,” said famed dancer
Fred Astaire.
Albert Einstein stated, “Anyone who has never made a mistake has never tried
anything new.”
“An investor needs to do very few things right as long as he or she avoids big
mistakes,” wrote Warren Buffett.
In his 1997 letter, Warren Buffett wrote about discipline, “Under these circum-
stances [unreasonable stock valuations], we try to exert a Ted Williams kind of
discipline. In his book The Science of Hitting, Ted explains that he carved the
strike zone into 77 cells, each the size of a baseball. Swinging only at balls in his
‘best’ cell, he knew, would allow him to bat 400; reaching for balls in his ‘worst’
spot, the low outside corner of the strike zone, would reduce him to 230. In
other words, waiting for the fat pitch would mean a trip to the Hall of Fame;
swinging indiscriminately would mean a ticket to the minors.”
“Only two times in a man’s life when he should not speculate: when he can’t
afford it, and when he can,” wrote Mark Twain.
James Allen said, “Circumstance does not make the man, it reveals him to him-
self. Men do not attract that which we want, but that which they are.”
“Character is power,” said John Howe. “It makes friends, draws patronage and
support, and opens the way to wealth, honor, and happiness.”
“Men of genius are admired, men of wealth are envied, men of power are feared;
but only men of character are trusted.” — Author unknown
How to Build Wealth Like Warren Buffett 27
Mahatma Gandhi stated, “There are seven sins in the world: pleasure without
conscience, knowledge without character, worship without sacrifice, science
without humanity, politics without principle, commerce without morality, and
wealth without work.”
“To live content with small means,” observed William Henry Channing, “to seek
elegance rather than luxury, and refinement rather than fashion; to be worthy,
not respectable, and wealthy, not rich; to study hard, think quietly, talk gently,
act frankly; to listen to stars and birds, to babes and sages, with open heart; to
bear all cheerfully, do all bravely, await occasions, hurry never. In a word, to let
the spiritual, unbidden, and unconscious grow up through the common. This is
to be my symphony.”
Robert Miles highly recommends that you read Warren Buffett’s letters to share-
holders online at www.berkshirehathaway.com.
