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Kindle Notes & Highlights
by
David Clark
“Knowing what you don’t know is more useful than being brilliant.”
“People are trying to be smart—all I am trying to do is not to be idiotic, but it’s harder than most people think.”
“Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much-loved hand—you must learn to handle mistakes and new facts that change the odds.”
“Where you have complexity, by nature you can have fraud and mistakes. . . . This will always be true of financial companies,
Charlie’s rule for financial firms is really simple: what looks good on the outside may be seriously rotten on the inside.
Charlie’s lesson here is that a combination of supersmart people and large amounts of leverage often ends in disaster.
So there is no economic advantage for hedge funds to be conservative with your money.
“All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”
And when Charlie says wait, he means wait as long as it takes, which can mean years.
sea of misery that never ceases.”
you have to understand the odds and have the discipline to bet only when the odds are in your favor.”
“If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That’s hard. But, if you can buy a few great companies, then you can sit on your ass. That’s a good thing.”
Charlie and Warren’s theory is that a company with a durable competitive advantage has business economics that will expand the underlying value of the business over time, and the more time passes, the more the company’s value will expand.
Charlie isn’t interested in complex mathematical models and trading strategies that Wall Street PhDs use to exploit the short-term fluctuations of the stock market.
he is interested in a simple investment strategy that allows him to post superior results over the long term, the foundation of which is trying not to do anything stupid.
“If people weren’t wrong so often, we wouldn’t be so rich.”
“There isn’t a single formula. You need to know a lot about business and human nature and the numbers. . . . It is unreasonable to expect that there is a magic system that will do it for you.”
One is actually better off reading a hundred business biographies than a hundred books on investing.
History has repeatedly shown us that government regulation is the only thing that stops banking professionals from leveraging up and gambling with not only other people’s money but our nation’s economic well-being as well.
If people believe that their house and investments are going up in value, they will be more willing to spend more, which is good for the economy.
He used the wealth effect to justify pumping trillions of dollars into the economy via lower interest rates and the printing of money to finance the government’s deficit spending.
carry trade is the borrowing of large amounts of money at one rate and using it to buy an asset that earns a higher rate of return.
The one thing that all of Berkshire’s businesses have in common is that they are managed by people who are willing to go to great lengths to keep costs low.
“A great business at a fair price is superior to a fair business at a great price.”
“When we bought See’s Candy, we didn’t know the power of a good brand. Over time, we just discovered that we could raise prices 10% a year and no one cared. Learning that changed Berkshire. It was really important.”
Charlie learned that with certain products one can raise prices and demand doesn’t drop.
“The difference between a good business and a bad business is that good businesses throw up one easy decision after another. The bad businesses throw up painful decisions time after time.”
“Averaged out, betting on the quality of a business is better than betting on the quality of management . . .
All of us who have held hourly jobs know that if workers are paid by the hour they will work more slowly than if they are paid them by the job.
Charlie has learned that leverage and envy are a lethal combination.
Charlie and Warren have always avoided using large amounts of leverage/debt with Berkshire. They have also tried to avoid investing in companies that have high debt-to-equity ratios.
“At Berkshire there has never been a master plan.
We want people taking into account new information.”
Prussian military thinker Carl von Clausewitz, who wrote that battle “is a continuous interaction of opposites” in which “my opponent . . . dictates to me as much as I dictate to him.” He also wrote that “No war plan outlasts the first encounter with the enemy.”
But if you really want a lot of wisdom, it’s better to concentrate decisions and process in one person.
“The best way to get a good spouse is to deserve a good spouse.”
“Three rules for a career: (1) Don’t sell anything you wouldn’t buy yourself; (2) Don’t work for anyone you don’t respect and admire; and (3) Work only with people you enjoy.”
Great salespeople believe in their products. That is one of the secrets of their success.
Charlie believes that we can learn from our failures only if we accept responsibility for them and examine exactly why we failed.
“Extreme specialization is the way to succeed. Most people are way better off specializing than trying to understand the world.”
It’s said that Charlie reads up to six hundred pages a day—which includes three newspapers a day and a weekly diet of several books.
“Any year that passes in which you don’t destroy one of your best loved ideas is a wasted year.”
“I have never succeeded very much in anything in which I was not very interested. If you can’t somehow find yourself very interested in something, I don’t think you’ll succeed very much, even if you’re fairly smart.”
Both Charlie and Warren are copious readers of personal and business biographies.
“All human beings work better when they get what psychologists call reinforcement.
‘It’s not greed that drives the world, but envy.’”
“I don’t think it’s terribly constructive to spend your time worrying about things you can’t fix.
“I think people who multitask pay a huge price.”
Omaha construction titan Peter Kiewit, who once said that he wanted to hire people who were smart, hardworking, and honest. But out of the three, honesty was the most important,
“Dean Kendall of the University of Michigan music school once told me a story: ‘When I was a little boy, I was put in charge of a little retail operation that included candy. My father saw me take a piece of candy and eat it. I said, “Don’t worry. I intend to replace it.” My father said, “That sort of thinking will ruin your mind. It will be much better for you if you take all you want and call yourself a thief every time you do it.”’ ”
