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Warren Buffett Quotes that Relate to the Psychology of Investing

August 21, 2005

I've said that psychological discipline is one of the most important topics in investing. I've put together some quotes that represent what Warren Buffett has to say on the topic. Make sure you read them carefully, and make sure you follow Buffett's advice. Can you avoid investing in overvalued, "hot" stocks? Can you avoid selling when stocks crash? Do you trade too much? Be honest with yourself.

On the idea of thinking independently:

  • "You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."

  • "As a group, lemmings have a rotten image, but no individual lemming has ever received bad press."

  • "A public-opinion poll is no substitute for thought."
On the idea that you should buy, rather than sell, when stocks are low:

  • "Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market."

  • "Be fearful when others are greedy and greedy only when others are fearful."
On being willing to say no to an investment opportunity:

  • "The ability to say 'no' is a tremendous advantage for an investor."

  • "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell."

  • "You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing."