3 Quotes by Warren Buffet That Teach You How Money Works
By: Nuno Fabiao
Tags: Money, Quotes, Portfolio, Investment, Warren Buffett

“Read 500 pages every day. That’s how knowledge works. It builds up like compound interest.”

All the great investors of the world have one thing in common. They read a lot. They read everything. They spend their life reading, investing and socializing with their family and friends. That’s it.

You can’t learn by sitting in front of the PC watching all the YouTubers talking about the stock market. You can entertain yourself with that stuff. Some of them are funny people. Some of them even know something about investing. Others even know a lot about investing.

Yet, everything is in the books. Things never told in public. Thoughts never shared with the audience. Those little words that make the difference are in the books. Not in a fucking screen.

So, knowledge was always the first principle Warren applied to.

If you see some documentaries about his life, you watch him reading, or socializing. But the only image I have in my mind about Buffett is of him, sitting in his office, with a journal in his hands.

Reading.

Compound interest

“Those who understand them earn them, and those who do not understand, pay them.” — Albert Einstein

Through humorous stories throughout letters he sent to his shareholders, Buffett teaches investors that the power of compound interest cannot be compared to any other factor in producing wealth through investment.

Using the compound interest regime throughout an investment program and throughout life is your best strategy, without exception.

How to apply it:

You have to be patient. And patience is something hard to achieve. When I first invested my money, I was watching the screen every 5 minutes. The numbers were there, without moving, but I was so excited about the decision I made of putting my money in an investment fund, that I thought it would be an exciting activity.

Let me be frank with you. It’s not. To be honest, it’s boring!

“The compound interest regime derives its power from its parabolic nature; the longer it lasts, the more impact it has.” — Jeremy Miller in Warren Buffet’s Ground Rules

Jeremy Miller complements it by saying: However, it does require an amount of time to reach a sufficient size to become an obvious driver within an investment program.

I guess that’s the real problem with investing. The lack of patience we generally have.

With the new tech applications on a single smartphone, you can have pure adrenaline investing every day. Buy and sell. Buy and sell.

If you read Jaime Rogozinski's book ‘WallStreetBets’, you will understand the subworld of betting in the stock market. You’d be amazed by the power of interaction between these kids. They created a culture within the subworld of investments. (On Reddit, he’s “World Caos”, a high-schooler who turned $900 into $55,000 in just 12 days.)

This culture is the anti-Buffett. It does the opposite of what Warren always taught us.

But it’s a reality. And as much as you think you will fall to Warren’s side, make sure you’re strong. Because temptation exists. Adrenaline is like a drog.

And it’s definitely more powerful than patience.