Investing

8 Warren Buffett Quotes Every 40-Year-Old Needs to Hear

Connie Diaz

Published: June 8, 2024 11:30 am

Known as the “Oracle of Omaha,” Warren Buffet is a highly respected authority on investments. He has earned this reputation due to his wise financial insights, prioritizing a long-term approach in his investment philosophy. In 2008, Forbes magazine named Warren Buffet as the richest person in the world, estimating his worth at $62 billion.

If you are in the fourth decade of your life, know that it is never too late to apply Buffet’s timeless principles on investing. Also know that it is better to start today and not wait for another year to go by.  Here are 8 quotes from Warren Buffet that every 40 year old needs to hear. 

1. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” 

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• The company you invest in must have a competitive advantage. 
• It must also demonstrate growth potential. 

Quality Trumps Trends

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Buffet’s advice emphasizes the importance of quality over quantity. Investing in organizations that have shown a consistent and predictable track record of earning is crucial. This signifies that the company has strategically positioned itself for future and sustained growth. In short, avoid buying seemingly affordable investment opportunities from companies that don’t quite have all their ducks in a row. By doing so, you are opening yourself up to unnecessary and avoidable financial risk. 

2. “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” 

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• Buying higher quality yields higher value, for a longer period of time.
• Buy higher quality stocks when they are discounted in price. 

Seek Value Investments

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Despite his immense wealth, Buffet exhibits his discerning, bargain-hunter side, stressing the importance of buying high quality goods at deeply discounted prices. This principle should equally be applied to purchasing high-quality stocks, purchasing them when they are temporarily sold at a much lower price. These temporary “undervaluations” typically occur when the economy is experiencing a downturn or market fluctuations. During these events, Buffet highly recommends not to flee in a panic, but to buy. 

3. “Stop trying to predict the direction of the stock market, the economy, or elections.” 

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• Focus on what you can control.
• Forecasting does have its limitations. 

Hone in on Long-Term Investment Strategies

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Let’s face it, the stock market is infamous for being unpredictable. Complex outside forces such as interest rates, geopolitical events, and investor sentiments can make predicting the stock market almost impossible. This is where long-term strategies come in. By evaluating a company’s overall financial health and its earning potential, Buffet believes that these strategies can mitigate the risks associated with short-term volatility. It can come in the form of taking advantage of the potential gains over time. 

4. “It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”

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• Spend time with people who are positive.
• By associating with those that have high standards, you will be encouraged to elevate your own.

Curate Positive Influences

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According to popular motivational speaker, Jim Rohn, “You are the average of the five people you spend the most time with.” What this means is that the people we associate with have a significant impact on our behavior, attitude, and overall personal development. Therefore, we are more likely to adopt good habits and behaviors (especially with savings and investing),  if we surround ourselves with people who will challenge us and encourage us to get out of our comfort zone. 

5. “Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.” 

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• Patience means inactivity. 
• Hold on to your investments for the long-haul. 

Avoid Impulsive Decisions

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Many investors erroneously try to time the market, such as buying and selling based on the outlook of the market. Furthermore, trading based on emotions or catastrophic news is a sure-fire way to pay more in transaction costs, make poor decisions, and missing out on robust opportunities to earn gains over a long period of time. By focusing on quality investments, you are more likely to benefit from compound returns as well as the natural appreciation of assets. 

6. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

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• When prices go up, be cautious.
• When prices go down, be opportunistic.

Buy Low, Sell High

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Asset bubbles and overvaluation typically occur when investors becoming overly optimistic, thereby driving up prices. The key is to wait and not invest when prices are overly inflated. Instead, Buffet recommends that investors take advantage of when investors become pessimistic and sell off their assets. This will drive prices down, increasing the opportunity to buy at undervalued prices. By making these rational decisions, investors are employing a strategy that can be far more profitable. 

7. “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” 

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• Purchase solid investments.
• Avoid speculative behavior. 

Invest For the Long Haul

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Before making an investment, Buffet recommends that you ask yourself if you believe that this investment has inherent value. As in, if the market were to shut down for a decade, would you still be satisfied with holding that investment? If so, it means that you trust the potential of this investment and you are not relying on price changes. This advice encourages you to be more selective about the investments you make, choosing those that could easily withstand any type of market disruption. 

8. “You only have to do a very few things right in your life so long as you don’t do too many things wrong.” 

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• The few good decisions you make can lead to a favorable impact on your life and investments.
• Do you what you can to avoid major errors. 

Focus On Making Smart Choices

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English poet Alexander Pope said that to err is human, however, with the plethora of resources and information at our disposal, it is important to make the best, strategic, and calculated decisions as possible. By doing this and doing it more often, it can potentially outweigh any poor decisions in the past. Buffet is a big proponent of investing in yourself, especially when it comes to knowledge, and not just in investments. It’s about practicing a good, daily habit of “going to bed a little smarter each day.” 

For those in their retirement years, Warren Buffet also offers his sage advice for when it comes to investing. Read on to find what he has to say to 60 year olds here.

Why This Matters

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As 40-year olds begin to contemplate their future and retirement, now is the time to take Buffet’s advice to begin making value-centered investments based on a company’s robust track record. People in their 40s still have time to leverage compound interest, where a return can continue to grow based on prior returns. By staying disciplined and avoid “the shining object syndrome,” 40-year olds can get themselves on track to build their wealth in the long-term.