Quote of the Day by Warren Buffett: ‘You don't get paid for activity, only for…’

Berkshire Hathaway founder and chairman, Warren Buffett has offered a wealth of investment advice over the years. Known for his long-term approach to stocks, sticking to fundamentals, and taking calculated but thoughtful risks, the so-called ‘Oracle of Omaha’s’ wisdom often makes the rounds online.

In the investment circles, Buffett and his long-time business partner and friend, the late Charlie Munger, are known for their no-nonsense approach to doing business and relatively frugal lifestyles when compared to their immense wealth.

Quote of the Day by Warren Buffett

“When we see something that makes sense, we’re willing to act very fast, very big, but we’re not willing to act on anything that doesn’t check out in our view. You don’t get paid for activity. You only get paid for being right.”

What does Warren Buffett’s quote mean?

Answering questions at Berkshire Hathaway’s annual general meeting in 1998, Buffett said that he and Munger were “not willing to act on anything that does not check out in our view”. He added that investor confidence in Berkshire comes from belief in Buffett and Munger’s ability to make the best choices. He stated: “You don’t get paid for activity. You only get paid for being right.”

Adding to this, at the same Q&A session, Munger added that an “occasional dull stretch” i.e. a period without active investments, is “no great tragedy”.

The outlook is in line with Buffett’s oft repeated investment philosophy that patience pays off. When asked about “missing” the tech stocks wave, Buffett told Bloomberg in 2011 that he does not regret it. The ace investor added: “I don’t have to right about hundreds of things. I don’t have to be right on dozens of things. I can just be right on a few things as long as I know the game in that arena.”

Over the years he has repeatedly suggested investing in companies which have an “economic moat” around them or companies with a strong competitive advantage and growth prospects in the long run; and holding on to the stocks. Addressing students at the University of Georgia’s Terry College of Business in 2001, the billionaire shared a guiding metric to use when making investment decisions — view opportunities as marks each on a 20-slot punch card, where “every financial decision you made, you used up a punch”.

His opinion is that treating investment opportunities as only one punch card with only 20 punches during your lifetime would ensure, “you think a long time before every investment decision – and you would make good ones, and you’d make big ones. And you probably wouldn’t even use all 20 punches in your lifetime. But you wouldn’t need to.”

Who is Warren Buffet — the ‘Oracle of Omaha’?

Buffett and 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.