The stock market is a wonderfully efficient mechanism for transferring wealth from the impatient to the patient.
Interpretation
The stock market rewards those who are patient while penalizing those who act hastily.
Warren Buffett's quote highlights the principle that investing in the stock market requires patience and long-term thinking. It suggests that individuals who rush into buying and selling based on short-term fluctuations are likely to lose their money, while those who take a more measured and patient approach stand to benefit from the movement of wealth in the market.
In practice
During a financial seminar, to emphasize the importance of long-term investments.
I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot - and it's a lot - it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.
If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or be thought of as the world's worst investor when you were actually the best?
Cash never makes us happy, but it's better to have the money burning a hole in Berkshire's pocket than resting comfortably in someone else's.
I think you should read everything you can. In my case, by the age of 10, I'd read every book in the Omaha public library about investing, some twice. _x000D_ You need to fill your mind with various competing thoughts and decide which make sense.
The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
One’s objective should be to get it right, get it quick, get it out and get it over. Your problem won’t improve with age.
I think a very good system in a world with a lot of passive investors is one in which there are at least a few entrepreneurial investors, prepared to say what they think, prepared to propose a change in management, change in strategy, change in cost structure, capital structure.
The miracle of compounding returns has been overwhelmed by the tyranny of compounding costs.
Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.
Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer.
Don’t ever average losers. Decrease your trading volume when you are trading poorly; increase your volume when you are trading well. Never trade in situations where you don’t have control. For example, I don’t risk significant amounts of money in front of key reports, since that is gambling, not trading.
The only thing useful banks have invented in 20 years is the ATM.
Subscribe for the occasional hand-picked quote. No noise.