“The first rule of investment is don’t lose, and the second rule of investment is don’t forget the first rule, and that’s all the rules there are.” Buffett goes on to explain, “If you buy things for far below their worth, and you buy a group of them, you basically don’t lose money.” These are a few nuggets of wisdom caught in the first television interview by Warren Buffett.
Among the hundreds of great quotes muttered by the famous investor Warren Buffett, maybe none have been used and repeated by admirers as many times like this one, “Price is what you pay, value is what you get.”
Now Buffett is one of the most well-known investors in the world, but there was a time when not many people had heard the name. Here’s Buffett during his first T.V. interview in 1985 when he was worth only $500 Million. Watching the conversation, I’m amazed by the consistent message Buffett sends, which he’s been repeating for the last 30 years since the interview.
I love listening to Warren for many reasons, but the consistent message of being patient in markets and investing is possibly the most important and one of the hardest things for most people. The reminder that there’s always another opportunity coming down the road – the next pitch to wait for – is one of the most valuable things to think about when a particular investment has passed you by.
Overpaying for an investment comes from the fear of missing out and ‘getting in’ when the risk is least. The risk looks and feels low because of the fact that most opinions surrounding the investment are in agreement. When the majority is in agreement and prices are rising, then the hidden risk is overpaying. This is where patience comes into play and can be such a difficult thing for most people to practice.