Quote of the day by Warren Buffett: ‘Until you can manage your emotions, don't expect to manage money'

Berkshire Hathaway founder and Chairman, Warren Buffett is known for his wealth of investment advice over the years. A few such pointers making the rounds on social media include Buffett’s emphasis on keeping things simple, weighing the pros and cons, and holding on to stocks to see benefits instead of selling at the first spike.

Quote of the day by Warren Buffett

“Until you can manage your emotions, don’t expect to manage money.”

What does Warren Buffett’s quote mean?

The quote is part of Warren Buffett’s long held philosophy on investing. In 2018, the Oracle of Omaha told CNBC that the longer you hold a stock, the less risky it becomes, and that selling is a “dumb thing” to do when your stock price drops.

He reasoned that stock price movements are “nothing” when comparing it with businesses that earn 12% on equity and reinvest, adding that the S&P, has “for decades, earned on tangible equities a lot more”, which translates into more higher prices.

“The way people think about it (investing in equities, bonds, etc.) is, they do some very silly things. Some people should not own stocks at all because they just get too upset with price fluctuations. If you’re gonna do dumb things because your stock goes down, you shouldn’t own the stock at all,” he stated.

He added that some investors are not “emotionally or psychologically fit” for the ups and downs of owning stocks, but it was not an impossible endeavour. “I think more of them would be, if you get educated on what you’re really buying, which is part of a business and the longer you hold stocks the less risky they’d be,” he believed.

Warren Buffett on ‘seizing big opportunities’

Known for his long-term approach to stocks, sticking to fundamentals, and taking calculated but thoughtful risks, Warren Buffett in 2001 gave students at the University of Georgia’s Terry College of Business some evergreen advice on seizing opportunities and measuring risk using the “20-slot punch card” method.

“Big opportunities in life have to be seized. We don’t do very many things, but when we get the chance to do something that’s right and big, we’ve got to do it,” he said, adding that taking up such opportunities in small measures, “is just as big of a mistake almost as not doing it at all”.

He added that you would be better to think of opportunities as 20 chances on a punch card, where “every financial decision you made, you used up a punch”. He explained: “You’d get very rich, because you’d think through very hard each one.” He added that limited chances to invest mean that one would spend time thinking and weighing the pros and cons, instead of making rash and impulsive decisions.

Who is Warren Buffet, aka ‘Oracle of Omaha’

Warren Buffett, alongside friend and business partner Charlie Munger were the architects who over nearly 60 years transformed Berkshire Hathaway Inc. from a failing textile maker into an empire, worth billions. Decades of compounded returns made the pair billionaires and folk heroes to adoring investors.

Notably, in January this year, Buffett handed over the reins and CEO position to successor Greg Abel. But his “bull run” with Berkshire has been legendary — gaining more than 55,00,000% returns over 60 years (1964-2024), to building the group to $1.2 trillion, and expanding Class A shares to worth $167 billion.

Known as the ‘Oracle of Omaha’ for his uncanny prediction on stocks, Buffett gained fame and investor confidence for handpicking companies (Apple, Bank of America, Coca-Cola, etc.) that exploded and now account for 70% of Berkshire’s $263 billion stock portfolio. He termed this as “one wonderful business can offset the many mediocre decisions that are inevitable”.

Buffett’s net worth is estimated at $152 billion, making him the 10th richest person in the world, according to the Bloomberg Billionaire Index.