On Diversification

"The strategy we've adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it."

[Warren Buffett in Berkshire Hathaway's 1993 Annual Report]

The most common cause of low prices

"The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer."

[Warren Buffett in Berkshire Hathaway's 1990 Annual Report]

Investment vs speculation

"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands. "

[Warren Buffett in Berkshire Hathaway's 2000 Annual Report

Warren Buffett try to price, rather than time, purchases

"We try to price, rather than time, purchases. In our view, it is folly to forego buying shares in an outstanding business whose long-term future is predictable, because of short-term worries about an economy or a stock market that we know to be unpredictable. Why scrap an informed decision because of an uninformed guess?"

[Warren Buffett in Berkshire Hathaway's 1994 Annual Report]

Berkshire's goal to attract owners

"Our goal is to attract long-term owners who, at the time of purchase, have no timetable or price target for sale but plan instead to stay with us indefinitely."

[Berkshire Hathaway's 1988 Annual Report]

New ideas

"The difficulty lies not in the new ideas but in escaping from the old ones."

[Warren Buffett quoting John Maynard Keynes in Berkshire Hathaway's 1983 Annual Report]

The market like the Lord

"The market, like the Lord, helps those who help themselves. But unlike the Lord, the market does not forgive those who know not what they do."

[Berkshire Hathaway's 1982 Annual Report]

Increased capital base will act as an anchor

"An increased capital base will act as an anchor on our relative performance - seems incontestable. The only open question is whether we can drag the anchor along at some tolerable, though slowed, pace. "

[Berkshire Hathaway's 1992 Annual Report]

Acquisitions as frog-kissing

"In the past, I've observed that many acquisition-hungry managers were apparently mesmerized by their childhood reading of the story about the frog-kissing princess. Remembering her success, they pay dearly for the right to kiss corporate toads, expecting wondrous transfigurations. Initially, disappointing results only deepen their desire to round up new toads.
("Fanaticism," said Santyana, "consists of redoubling your effort when you've forgotten your aim.") Ultimately, even the most optimistic manager must face reality. Standing knee-deep in
unresponsive toads, he then announces an enormous "restructuring" charge. In this corporate equivalent of a Head Start program, the CEO receives the education but the stockholders pay the tuition.

In my early days as a manager I, too, dated a few toads. They were cheap dates - I've never been much of a sport - but my results matched those of acquirers who courted higher-priced
toads. I kissed and they croaked. After several failures of this type, I finally remembered
some useful advice I once got from a golf pro (who, like all pros who have had anything to do with my game, wishes to remain anonymous). Said the pro: "Practice doesn't make perfect; practice makes permanent." And thereafter I revised my strategy and tried to buy good businesses at fair prices rather than fair businesses at good prices."

[Berkshire Hathaway's 1992 Annual Report]

Trade actively

"We believe that according the name 'investor' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic."

(Berkshire Hathaway 1991 Annual Report)

Exceptional Gain

"Our gain in net worth during the year was $613.6 million or 48.2%. It is fitting that the visit of Halley's Comet coincided with this percentage gain; neither will be seen again in my lifetime."

(Berkshire Hathaway's 1985 Annual Report)