Warren Buffett's Ground Rules Quotes

“We will not go into businesses where technology which is way over my head is crucial to the investment decision. I know about as much about semi-conductors or integrated circuits as I do of the mating habits of the chrzaszcz. (That’s a Polish May bug, students—if you have trouble pronouncing it, rhyme it with thrzaszcz.) Furthermore,”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Stan Druckenmiller, reflecting on his unbelievable success as an investor, said that the only way to make superior returns is to concentrate heavily. He thinks “diversification and all the stuff they’re teaching at business school today is probably the most misguided concept everywhere. And if you look at great investors that are as different as Warren Buffett, Carl Icahn, Ken Langone, they tend to be very, very concentrated bets. They see something, they bet it, and they bet the ranch on it… . [T]he mistake I’d say 98 percent of the money managers and individuals make is they feel like they got to be playing in a bunch of stuff.”4”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“You will not be right simply because a large number of people momentarily agree with you. You will not be right simply because important people agree with you. In many quarters the simultaneous occurrence of the two above factors is enough to make a course of action meet the test of conservatism. You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct. True conservatism is only possible through knowledge and reason. I”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Operationally, a business can be improved in only three ways: (1) increase the level of sales; (2) reduce costs as a percent of sales; (3) reduce assets as a percentage of sales. The other factors, (4) increase leverage or (5) lower the tax rate, are the financial drivers of business value. These are the only ways a business can make itself more valuable. Buffett”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“The results of these [investment] companies in some ways resemble the activity of a duck sitting on a pond. When the water (the market) rises, the duck rises; when it falls, back goes the duck. … I think the duck can only take the credit (or blame) for his own activities. The rise and fall of the lake is hardly something for him to quack about. The water level has been of great importance to BPL’s performance … however, we have also occasionally flapped our wings.”5 While”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“You can never let the market quote turn from an asset to a liability. Graham”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Take for example a $100,000 account earning 10% a year. The total return will be about 7% higher when the gains are reinvested rather than harvested after a 5-year period. Not that impressive. However, after 10 years, the account that reinvests its gains (let’s call this account the Compounder) will produce 30% more than one that doesn’t reinvest. Then the “pulse quickening”3 results start to get going by year 15. Now the Compounder is doing roughly 70% better. Compounding is exponential, it builds momentum as it goes; after 20 years, the advantage widens to 125%. There is nothing more powerful. Spending away your gains will diminish your total return significantly; as investors, we allow our gains to pile up upon themselves as the primary driver of our wealth creation. We do it patiently”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Some of you may view your investment policies on a shorter term basis. For your convenience, we include our usual table indicating the gains from compounding $100,000 at various rates: This table indicates the financial advantages of: 1. A long life (in the erudite vocabulary of the financial sophisticate this is referred to as the Methuselah Technique) 2. A high compound rate 3. A combination of both (especially recommended by this author) To be observed are the enormous benefits produced by relatively small gains in the annual earnings rate. This explains our attitude which while hopeful of achieving a striking margin of superiority over average investment results, nevertheless, regards every percentage point of investment return above average as having real meaning.”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Just because something is conventional doesn't mean it's conservative or correct”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“We don’t buy and sell stocks based upon what other people think the stock market is going to do (I never have an opinion) but rather upon what we think the company is going to do.”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“In the short term, the market is like a voting machine, but in the long term, it’s more like a weighing machine.”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Interestingly enough, although I consider myself to be primarily in the quantitative school (and as I write this no one has come back from recess—I may be the only one left in the class), the really sensational ideas I have had over the years have been heavily weighted toward the qualitative side where I have had a “high-probability insight.” This is what causes the cash register to really sing. However, it is an infrequent occurrence, as insights usually are, and, of course, no insight is required on the quantitative side—the figures should hit you over the head with a baseball bat. So the really big money tends to be made by investors who are right on qualitative decisions but, at least in my opinion, the more sure money tends to be made on the obvious quantitative decisions. Such”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“When the game is no longer being played your way, it is only human to say the new approach is all wrong, bound to lead to trouble, etc. I have been scornful of such behavior by others in the past. I have also seen the penalties incurred by those who evaluate conditions as they were—not as they are. Essentially I am out of step with present conditions. On one point, however, I am clear. I will not abandon a previous approach whose logic I understand (although I find it difficult to apply) even though it may mean foregoing large and apparently easy profits to embrace an approach which I don’t fully understand, have not practiced successfully and which, possibly, could lead to substantial permanent loss of capital. The”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“The final, and most important, consideration concerns personal motivation. When I started the partnership I set the motor that regulated the treadmill at “ten points better than the DOW.” I was younger, poorer and probably more competitive. Even without the three previously discussed external factors making for poorer performance, I would still feel that changed personal conditions make it advisable to reduce the speed of the treadmill. I have observed many cases of habit patterns in all activities of life, particularly business, continuing (and becoming accentuated as years pass) long after they ceased making sense. Bertrand Russell has related the story of two Lithuanian girls who lived at his manor subsequent to World War I. Regularly each evening after the house was dark, they would sneak out and steal vegetables from the neighbors for hoarding in their rooms; this despite the fact that food was bountiful at the Russell table. Lord Russell explained to the girls that while such behavior may have made a great deal of sense in Lithuania during the war, it was somewhat out of place in the English countryside. He received assenting nods and continued stealing. He finally contented himself with the observation that their behavior, strange as it might seem to the neighbors, was really not so different from that of the elder Rockefeller. Elementary”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“We live in an investment world, populated not by those who must be logically persuaded to believe, but by the hopeful, credulous and greedy, grasping for an excuse to believe. Finally,”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“I would rather sustain the penalties resulting from over-conservatism than face the consequences of error, perhaps with permanent capital loss, resulting from the adoption of a “New Era” philosophy where trees really do grow to the sky.”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“When it comes to investing, it’s critical not to “force it.” Markets will cycle. There will be times when you too feel “out of step” with the market, just as Buffett did in the late 1960s. You’ll find that during the late bull market mania of the Go-Go years, his standards remained firmly set, while the pressure to perform caused the standards of many of even the best around him to crumble. It’s hard not to cave your principles in at the top of the cycle when your value approach has apparently stopped working and everyone around you seems to be making money easily (that’s why so many people do it). However, it’s more often than not a “buy high, sell low” strategy. Buffett set his plan, established his standards, and then entered the fray, maintaining the courage of his convictions, come what may.”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“We live in an investment world, populated not by those who must be logically persuaded to believe, but by the hopeful, credulous and greedy, grasping for an excuse to believe.9”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Looking back, and continuing to think this problem through, I feel that if anything, I should have concentrated slightly more than I have in the past.” Stan”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“To many people conventionality is indistinguishable from conservatism. In my view, this represents erroneous thinking. Neither a conventional nor an unconventional approach, per se, is conservative. Truly conservative actions arise from intelligent hypotheses, correct facts and sound reasoning. These qualities may lead to conventional acts, but there have been many times when they have led to unorthodoxy. In some corner of the world they are probably still holding regular meetings of the Flat Earth Society. We derive no comfort because important people, vocal people, or great numbers of people agree with us. Nor do we derive comfort if they don’t. A public opinion poll is no substitute for thought. When we really sit back with a smile on our face is when we run into a situation we can understand, where the facts are ascertainable and clear, and the course of action obvious. In that case—whether conventional or unconventional—whether others agree or disagree—we feel we are progressing in a conservative manner. The”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“We have never suffered a realized loss of more than 0.5% of 1% of total net assets, and our ratio of total dollars of realized gains to total realized losses is something like 100 to 1.”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“There is nothing at all conservative, in my opinion, about speculating as to just how high a multiplier a greedy and capricious public will put on earnings. You”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“When a new idea comes along, only buy it when it’s more attractive than buying more of what you already own. Buffett”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“If you can identify six wonderful businesses, that is all the diversification you need. And you will make a lot of money. And I can guarantee that going into a seventh one instead of putting more money into your first one is gotta be a terrible mistake. Very few people have gotten rich on their seventh best idea. But a lot of people have gotten rich with their best idea. So I would say for anyone working with normal capital who really knows the businesses they have gone into, six is plenty, and I [would] probably have half of [it in] what I like best.3 There”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“It doesn’t work that way … we have to work extremely hard to find just a very few attractive investment situations.” The”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“You could say that good results come primarily from a properly calibrated balance of hubris and humility—hubris enough to think you can have insights that are superior to the collective wisdom of the market, humility enough to know the limits of your abilities and to be willing to change course when errors are recognized. You”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“One sidelight for the fundamentalists in our group: B.P.L. owns 71.7% of Dempster acquired at a cost of $1,262,577.27. On June 30, 1963 Dempster had a small safe deposit box at the Omaha National Bank containing securities worth $2,028,415.25. Our 71.7% share of $2,028,415.25 amounts to $1,454,373.70. Thus, everything above ground (and part of it underground) is profit. My security analyst friends may find this a rather primitive method of accounting, but I must confess that I find a bit more substance in this fingers and toes method than in any prayerful reliance that someone will pay me 35 times next year’s earnings.”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results. The better sales will be the frosting on the cake.” Never”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“Praise by name, criticize by category. Buffett”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success

“The willingness and ability to see investment capital as completely fungible, whether it is capital tied up in the assets of a businesses or capital that’s invested in securities, is an exceedingly rare trait. With”
― Jeremy C. Miller, Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor – The Value Investing Framework for Discipline and Success