What does "Don't lose money" mean?

km4hr · 10-12-2008, 08:10 AM

I've read that Warren Buffet's number one investment rule is "Don't lose money". What does he mean by that? Hasn't Birkshire Hathaway lost money in this bear market? The only way I can think of not to lose money is to put it in the bank or a money market fund, etc. Warren obviously doesn't do that. Please explain.

Meadbh · 10-12-2008, 08:28 AM

He buys low and doesn't sell low.

km4hr · 10-12-2008, 08:43 AM

Quote:

Originally Posted by Meadbh

He buys low and doesn't sell low.

Does this mean that one must never sell a stock that's worth less than he paid? If so, it's as cynical as the old "buy low, sell high" rule. In fact, it means the same thing.

Meadbh · 10-12-2008, 08:45 AM

Exactly.

oldman · 10-12-2008, 08:46 AM

don't be forced to sell when you have a paper loss!

haha · 10-12-2008, 10:57 AM

Really, I believe that his emphasis is on very careful investigation of the securities that you buy and the prices that you are prepared to pay. He doesn't think that the prices quotes will never go below where he buys, only that he is quite unlikely to suffer permanent impariment.

Like in 2000. It didn't matter that one was a stalwart prepared to never sell, too many companies just disappeared. That's permanent impairment!

ha

tpcooper · 10-12-2008, 11:40 AM

I've always taken that to be sort of a tongue in cheek rule, not something with deep meaning. Kind of like when a coach says the key to winning is to score more points than the other team.

Orchidflower · 10-12-2008, 11:58 AM

It's so simple that we look for some complex answer that just isn't there.

DblDoc · 10-12-2008, 02:50 PM

Quote:

Originally Posted by tpcooper

I've always taken that to be sort of a tongue in cheek rule, not something with deep meaning. Kind of like when a coach says the key to winning is to score more points than the other team.

I think Warren's philosophy is more the don't make mistakes (let the other team score) then a score as many points as we can to win tactic.

DD

10-12-2008, 08:10 AM	#1
km4hr Dryer sheet aficionado Join Date: Sep 2004 Posts: 31	What does "Don't lose money" mean? I've read that Warren Buffet's number one investment rule is "Don't lose money". What does he mean by that? Hasn't Birkshire Hathaway lost money in this bear market? The only way I can think of not to lose money is to put it in the bank or a money market fund, etc. Warren obviously doesn't do that. Please explain.

10-12-2008, 10:57 AM	#6
haha Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Apr 2003 Location: Seattle Posts: 8,814	Really, I believe that his emphasis is on very careful investigation of the securities that you buy and the prices that you are prepared to pay. He doesn't think that the prices quotes will never go below where he buys, only that he is quite unlikely to suffer permanent impariment. Like in 2000. It didn't matter that one was a stalwart prepared to never sell, too many companies just disappeared. That's permanent impairment! ha __________________ "Show 'em just enough to win the turkey."- Former KY Governor Bert Combs

10-12-2008, 11:58 AM	#8
Orchidflower Thinks s/he gets paid by the post Join Date: Mar 2007 Location: Il-Ia. border Posts: 1,027	It's so simple that we look for some complex answer that just isn't there. __________________ "Our greatest glory is not in never falling, but in rising every time we fall." -- Confucius

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10-12-2008, 08:28 AM	#2
Meadbh Thinks s/he gets paid by the post Join Date: Jul 2006 Posts: 1,645	He buys low and doesn't sell low.

10-12-2008, 08:45 AM	#4
Meadbh Thinks s/he gets paid by the post Join Date: Jul 2006 Posts: 1,645	Exactly.

10-12-2008, 08:46 AM	#5
oldman Dryer sheet wannabe Join Date: Nov 2007 Posts: 20	don't be forced to sell when you have a paper loss!

10-12-2008, 11:40 AM	#7
tpcooper Dryer sheet wannabe Join Date: Jul 2007 Location: Nashville Posts: 22	I've always taken that to be sort of a tongue in cheek rule, not something with deep meaning. Kind of like when a coach says the key to winning is to score more points than the other team.

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