Gems from Warren Buffett: Wit and Wisdom from 34 Years of Letters to Shareholders

by Mark Gavagan

“Over the years, Charlie and I have observed many accounting-based frauds of staggering size. Few of the perpetrators have been punished; many have not even been censured. It has been far safer to steal large sums with a pen than small sums with a gun.” -1988 letter

On accounting frauds and their perpetrators

‘A horse that can count to ten is a remarkable horse - not a remarkable mathematician.’

‘When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.’

Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

On synergy: “… a term widely used in business to explain an acquisition that otherwise makes no sense.” -1985 letter

“Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.”

‘No problem is so big that it can’t be run away from.’ ” -1984 letter

“The most important thing to do when you find yourself in a hole is to stop digging.” -1990 letter

“As one investor said in 2009 (regarding the effects of the Financial Crisis): ‘This is worse than divorce. I’ve lost half my net worth – and I still have my wife.’ ” -2010 letter