The dumbest reason in the world to buy a stock is because it's going up. The second dumbest is to sell it because it's going down. The price tells you nothing about the value, and the crowd's opinion of price tells you even less.

The worst investments I've seen are not the ones made in bad businesses. They are the ones made in good businesses at bad prices, by people who confused the quality of the asset with the quality of the investment.

The stock promoter says 'this is the next big thing' and the analyst says 'the fundamentals support a higher valuation' — but neither of them is asking the only question that matters: what's already in the price?

You don't get rewarded for taking risk; you get rewarded for buying cheap assets. And if the assets you bought got pushed up in price simply because they were risky, then there's no real margin of safety in owning them.

Leverage buyouts taught me that the real risk isn't paying too much — it's being wrong about the durability of the cash flow. A business that earns steadily through recessions is worth almost any price; one that merely looks cheap in a boom is a trap dressed as an opportunity.

Forgetting that your returns depend on the returns of the businesses you own—not on what you paid for them—is the source of more investment error than almost any other mistake I can think of. You must always ask: what will this business earn over time? Everything else is noise.

The ability to destroy value is not confined to bad businesses. A great business bought at too high a price, or managed by people who can't resist the temptation to allocate capital to adjacencies, will also destroy value. The label 'great business' is not a perpetual warranty.

The chain of logical steps from 'this is a good company' to 'this is a good investment at any price' is one of the most dangerous in finance. Quality is not the same as value, and confusing the two has ruined more intelligent people than stupidity ever has.

The stock promoter sells sizzle, but the great investor buys the business nobody is talking about yet. Most of the time the exciting story and the good investment are mutually exclusive — the more compelling the narrative, the more the price has already discounted the future.

The stock market is filled with individuals who know the price of everything, but the value of nothing. A great company is not a great investment if you pay too much for it — and a mediocre company can be a fine investment if you buy it cheaply enough.

The investor of today does not profit from yesterday's growth. It is the always-uncertain future growth upon which the investor must capitalize, and it is those who will profit who must pay the delicate task of correctly appraising such uncertain future.

The best thing a public company can do with excess cash is repurchase stock when it trades below intrinsic value, but the worst thing is to repurchase stock when it trades above intrinsic value. Most companies do the latter.

The best thing a public company can do is repurchase stock when it's trading below intrinsic value—but the worst thing is to repurchase stock when it's trading above it, which happens far too often because of executive compensation incentives.

The best thing a public company can do with cash is buy back stock when it trades below intrinsic value. Everything else is just noise.