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12 Warren Buffett Quotes on Bubble Psychology

These words of wisdom from the master are more prescient than ever.

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  1. Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.
  2. The propensity to gamble is increased by a large prize versus a small entry fee, no matter how poor the true odds may be.
  3. Derivatives are like sex. It’s not who we’re sleeping with, it’s who they’re sleeping with that’s the problem.
  4. Wall Street makes its money on activity. You make your money on inactivity.
  5. I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.
  6. The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.
  7. We know that the less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs.
  8. For some reason, people take their cues from price action rather than from values. What doesn’t work is when you start doing things that you don’t understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it’s going up.
  9. The stock market is a device for transferring money from the impatient to the patient.
  10. Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.
  11. Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.
  12. The market is there only as a reference point to see if anybody is offering to do anything foolish. When we invest in stocks, we invest in businesses.