The Year of the Snake brings a time for reflection and wisdom, much like the famed investor Warren Buffett.
In 2025, the Oracle of Omaha will celebrate his 95th birthday, a testament to his enduring legacy.
Buffett’s journey, marked by a remarkable 19.8% annual growth in Berkshire Hathaway‘s (NYSE: BRK.A) per-share market value between 1965 and 2023, is a testament to the power of long-term investing.
Like the snake shedding its skin and emerging renewed, Buffett has consistently adapted and thrived in ever-changing markets.
What truly sets Buffett apart is his ability to distil complex investment concepts into easily understandable principles — something that we, at The Smart Investor, hold dear to our hearts.
As we enter the new year, here are 10 of the greatest quotes from Buffett:
1. In predicting the future, uncertainty is almost always a certainty (from Buffett’s 1994 letter to shareholders)
“We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and businessmen.
Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one-day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%.”
We’re entering the era of Trump 2.0.
Many are excited by the prospect, but others may prefer the comfort of receiving dividend income every month.
That’s what the Smart Dividend Portfolio had in mind when we launched the portfolio in January 2020.
As of 31 December 20224, the portfolio has delivered a net asset value return of 41% as of 31 December 2024. In contrast, Singapore’s Straits Times Index (SGX: ^STI) was up 19.1% since our first stock buy.
2. On predicting where the stock market will end up next month or next year (written in October 2008, during the depths of the Global Financial Crisis)
“Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now.”
Forecasts are popular at the start of the year.
However, many estimates often fall short, either by being too pessimistic or optimistic.
Here’s the simple truth: if an investor of Buffett’s stature readily admits that he doesn’t know, then it’s best that you shouldn’t attempt either.
3. Instead of forecasting where the economy is headed, spend more time studying companies.
“To my memory, I can’t recall us ever making or turning down an acquisition
based on a macro factor. We focus on what’s likely to be the average profit, the moat.
Any company that has an economist has one employee too many.”
Last year, market watchers forecasted five interest rate cuts, starting from March 2024, amounting to a 1.5 percentage reduction overall.
In reality, there were only three interest rate cuts, totalling one percentage point. The first cut also occurred six months later than expected, in September 2024.
In essence, all three predictions on the number, size and timing were wrong.
And yet, the S&P 500 turned in one of its better performances for the year, delivering a return of over 23%.
4. Remember, you’re buying a business, not a stock symbol
“Nobody buys a farm to make a lot of money next week or next month. They buy
it to make money over the long term. They don’t get a quote every day. That’s a better way to look at stocks.”
When stocks go up, you feel like a genius.
However, it shouldn’t distract you from focusing on what’s important, the business behind the stock. That applies whether stock prices are up or down.
Consistency is under-rated.
5. Be smart by keeping it simple
“I don’t look to jump over 7-foot bars, I look for 1-foot bars I can step over.”
Investors don’t need to seek out the most complex businesses to achieve significant gains. Simple, understandable companies like Sheng Siong (SGX: OV8), a supermarket operator, can deliver impressive returns.
6. The one thing that a business should have is …
“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.
And if you have to have a prayer session before raising the price by a tenth of a cent, then you’ve got a terrible business.”
It’s no secret that inflation has surged in recent years.
This factor makes pricing power more crucial than ever for businesses. Without the ability to raise prices, struggling companies may face significant challenges in maintaining profitability.
7. Take your time to pick the best companies
In baseball, failing to swing at three pitches results in a strikeout.
Warren Buffett famously used this analogy to highlight a key difference between baseball and investing, saying:
“The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch.”
Understand the business before you commit your money. Not every stock that falls is worth your attention or your money.
8. Keep learning
In 2000, he addressed a group of MBA students on how to become a great investor:
“Read 500 pages like this every day.
That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”
If the recent pandemic has taught us anything, there are always more things to learn about businesses and industries as they evolve in the post-pandemic era.
9. Patience is under-rated
During a conversation with Amazon (NASDAQ: AMZN) founder and Chairman Jeff Bezos, the Oracle of Omaha was asked a simple question:
‘Your investment style is so simple, why isn’t anyone copying you?’
Buffett’s insightful response:
‘No one wants to get rich slowly.’
This highlights a crucial aspect of successful investing: patience.
Back in 2022, amid a challenging year in the stock market, many investors were tempted to give up.
We are glad we didn’t.
Patience is paramount. The true test for investors lies in his or her ability to weather market fluctuations and allow their long-term investments to compound.
10. As always, think beyond 2025 and for the long term …
“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
From all of us at The Smart Investor, we wish you good luck for Chinese Year New 2025, and we hope you will live a long and bountiful life as Buffett has.
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Disclosure: Chin Hui Leong owns shares of Amazon, Sheng Siong, and Berkshire Hathaway.
