Excerpts from Warren Buffett’s letters to Berkshire Hathaway shareholders that are germane to today’s markets.
The Noah principle: predicting rain doesn’t count, building arks does. (1981)
A short quiz: if you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices?
These questions, of course, answer themselves. But now for the final exam: if you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.
In effect, they rejoice because prices have risen for the hamburgers they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices. (1997)
We try to price, rather than time, purchases. In our view, it is folly to forego buying shares in an outstanding business whose
long-term future is predictable, because of short-term worries about an economy or a stock market that we know to be unpredictable. Why scrap an informed decision because of an uninformed guess? (1994)
Far more often, a fickle stock market serves up opportunities for us to buy. (2019)
Long ago, Ben Graham taught me that "price is what you pay; value is what you get". Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down. (2009)
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