Be fearful when others are greedy; be greedy when others are fearful.
Source: Berkshire Hathaway Letters · Wisdom
Core Idea
The core idea is to act contrarian: avoid overpaying in euphoric markets and seek bargains in fearful markets, exploiting emotional extremes to improve long-term investment returns.
Practical Application
Apply this by resisting hype, patiently saving cash during booms, then buying solid businesses at discounts during crashes, when fear makes quality companies temporarily mispriced.
Why It Matters
This quote highlights that true opportunity lies in emotional extremes, rewarding investors who detach from crowd psychology and allocate capital opposite prevailing market sentiment.