Who is Warren Buffett
Known as the “Oracle of Omaha,” Warren Buffett is one of the most successful investors of all time. Buffett chairs Berkshire Hathaway.
He also stood out for his long-term investment philosophy, often summarised by his preference for buying “wonderful companies at fair prices” and holding them indefinitely.
Buffett’s influence went well beyond returns. He championed the idea that immense wealth comes with a responsibility to give back, something he practised through his philanthropy and the Giving Pledge.
When was this quote said by Warren Buffett?
Warren Buffett wrote this famous line in his 1989 annual letter to Berkshire Hathaway shareholders.
He was reflecting on his past habit of buying cheap, struggling companies, which he called “cigar butt” investing. He realised that unless you flip them quickly, the long-term returns on mediocre businesses are usually terrible.
What does this quote mean?
This quote captures Warren Buffett’s definitive shift from standard bargain hunting to high-quality value investing. In practice, it means that the long-term compounding power of an excellent business far outweighs the temporary financial advantage of buying a mediocre company at a steep discount.
By paying a reasonable, justified price for an outstanding business, an investor secures an asset that naturally multiplies wealth over time, making initial pricing metrics far less critical than the underlying quality of the enterprise.
