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Words of Wisdom From Warren Buffett

Should you buy gold? Invest in stocks, or bonds? Leave your kids an inheritance? America's most successful investor has the answers

Warren Buffett (Michael Prince/Forbes Collection/Corbis Outline)

Says Warren Buffett: "You should invest in businesses so good that even a fool can run them, because someday a fool will." — Michael Prince/Forbes Collection/Corbis Outline

En español | If you'd invested $1,000 in Berkshire Hathaway when Warren Buffett assumed control of the company in 1965, you would be a multimillionaire today, and you could be reading this in an oceanfront penthouse.

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Buffett, 82, is the billionaire investor from Nebraska whose stock-picking savvy and Wall Street wisdom have earned him a reputation as the "Oracle of Omaha."

At charity auctions, people have paid more than $3 million just to have lunch with this former newspaper delivery boy, who boasts a net worth of about $55 billion and is now ranked as either the third or fourth wealthiest person in the world.

But you can get Buffett's best advice for free, right here.

On Success and Happiness

They say success is getting what you want, and happiness is wanting what you get. I always worry about people who say, "I'm going to do this for 10 years; I really don't like it very well. And then I'll do this ..." That's a little like saving up sex for your old age. Not a very good idea.

On How Much to Leave to the Kids

The perfect amount is enough money so they would feel they could do anything, but not so much that they could do nothing. Dynastic fortune turns me off. The idea that you hand over huge positions in society simply because someone came from the right womb, I just think it's almost un-American.

On How Much to Give to Charity

Ninety-nine percent of what I have will go back to society through philanthropy, because I've been treated extraordinarily well by society. I've worked in an economy that rewards someone who saves lives on a battlefield with a medal, rewards a great teacher with thank-you notes, but rewards those who can make money in securities with sums reaching into the billions. I agree with Andrew Carnegie: Huge fortunes that flow in large part from society should in large part be returned to society.

On Thinking Independently

You're neither right nor wrong because people agree with you. You're right because your facts and your reasoning are right.

On Investing

The first rule of investing is not to lose money. The second rule is not to forget the first rule.

On Picking Stocks for the Long Term

You should invest in businesses so good that even a fool can run them, because someday a fool will.

On Bonds

Bonds should come with a warning label. Most currency-based investments, such as money market funds and mortgages, are among the most dangerous of assets. Their beta [price volatility] may be zero, but their risk is huge. The dollar has fallen 86 percent in value since 1965, when I took over Berkshire Hathaway. It takes $7 today to buy what $1 did at that time. For taxpaying investors like you and me, over the past 47 years, the continuous rolling [over] of U.S. Treasury bills has produced … no real income after taxes and inflation.

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Video Extra

THE 2013 BILLIONAIRES LIST: Forbes magazine has uncovered a record 1,426 billionaires, 200 more than in 2012, worth a total of $5.4 trillion. The average net worth of a Forbes billionaire: $3.8 billion.

 

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