The Daily Buffett

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Realistic Expectations

January 10th

A horse that can count to ten is a remarkable horse—not a remarkable mathematician.

Warren Buffett

The allure of superficial achievements and glitzy performance can be a seductive trap for investors. It's crucial to understand the core competencies of a business and not be swayed by ancillary feats that may not reflect its long-term potential. A phenomenal quarter doesn't automatically translate to consistent high performance.

Setting realistic expectations is a key tenet of investing. Understanding the nature and inherent capabilities of businesses we invest in, and aligning our expectations with this understanding, is crucial. We must appreciate entities for their true essence and not set unrealistic standards.

In the investment world, this translates to a deep understanding of the market and its conditions. This perspective, devoid of superficiality and packed with realism, is what lays the foundation for sound investment decisions. It helps investors avoid short-term excitement and focus on the steady progress of well-thought-out investments. Long-term success often comes from these unassuming, often overlooked decisions that may not generate much excitement or attention at first but yield consistent, reliable returns over time.

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