To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses - How to Value a Business, and How to Think About Market Prices.
Interpretation
True investment success is more about understanding businesses and market prices than complex theories.
Warren Buffett emphasizes that successful investing does not require a deep understanding of complicated financial theories or metrics. Instead, he argues that the essential skills for investors are learning how to value a business accurately and thinking critically about market prices. This perspective challenges the traditional focus of finance education and suggests that practical knowledge is more valuable than theoretical expertise.
In practice
Use this quote in a finance class to highlight the importance of fundamental understanding over complex theories.
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 want people to remember that greatness is not a sports term. It's a life term.
All I would tell people is to hold onto what was individual about themselves, not to allow their ambition for success to cause them to try to imitate the success of others. You've got to find it on your own terms.
When I was 12 years old, I was just horrible. My parents were ashamed to watch my matches. I would play on a court at the local club and they would watch from the balcony. They would scream, 'Be quiet' to me and I would scream back, 'Go and have a drink. Leave me alone.' Then we would drive home in a very quiet car. No one speaking to each other.
Singleness of purpose is one of the chief essentials for success in life, no matter what may be one's aim.
Maximum growth and high ideals are not incompatible. They’re inseparable.
The two most important words I ever wrote were on that first Wal-Mart sign, ‘Satisfaction Guaranteed’. They're still up there, and they have made all the difference.
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