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Kindle Notes & Highlights
“Pragmatism! Do what suits your temperament. Do what works better with experience. Do what works and keep doing it. That’s the fundamental algorithm of life – REPEAT WHAT WORKS.”
Look not what at the numbers are but what the numbers mean.
growing intrinsic value is much greater than what the accounting reports.
investors should focus on gains in operating earnings, gains in book value and gains in intrinsic value.
“You can always tell a man to go to hell tomorrow if it’s such a good idea.”
the best inflation hedge is a company with a wonderful product that requires little capital to grow.
Buffett added that being an investor has made him a better businessman and that being a businessman has made him a better investor.
they didn’t always know this inflation-business element, which shows how continuous learning is so important.
The FDIC has been a well-designed mutual insurance company.
any currency investment is a bet on how government will behave.
Investments in assets that produce something.
Buffett concluded that he will bet on good businesses to outperform gold.
Adam Smith, “A great civilization has a good deal of ruin in it.”
Buffett shared his usual advice that the average investor would do fine to simply buy shares of an index fund over time.
reduced expectations are the best defense for the investor.
it was a huge mistake not to learn more from the subprime mortgage debacle.
past panics and the depression started on Wall Street with great waves of speculation and bad behavior.
If society needs to save you, you should have very painful penalties.
Costco has a store in Korea that will do $400 million in revenue – something that one would think cannot exist in retail, yet there it is.
Costco has the right ethics, diligence and management to continue its winning ways – quite rare.
he emphasized that he doesn’t mess around with short-term money.
how critical it was when panic hit in 2008 that Berkshire has the money to do deals. It was not in a money market fund or commercial paper.
Munger noted that we’re here to go to sleep each day smarter than when we woke up.
Buffett’s big point was to develop yourself. Find your passion, and improve your skills.
Munger observed that it is dangerous to go low on fiscal virtue, paraphrasing St. Augustine, “Everyone wants fiscal virtue but not quite yet.”
follow the Roman example where two-thirds of the Punic Wars were paid off before the war was over.
The U.S. Fed and Treasury had the power to do whatever it took. In contrast, 17 countries in Europe surrendered their sovereignty with respect to currency.
The two basic risks he analyzes are excessive leverage and insurance risk.
Buffett assured shareholders that no one at Berkshire makes him nervous.
Buffett’s tactic is to assume the worst and price from there.
Buffett’s key to motivating Berkshire’s managers is giving them room to paint their own paintings.
Buffett asserted that The Intelligent Investor chapters 8 (Mr. Market) and 20 (Margin of Safety) give you all you need to know. Build into your system that stocks get mispriced.
“Energy independence is stupid. We want to conserve it and use the other fellow’s resources.” Buffett joked, “This is Charlie’s version of saving up sex for old age.”
“If you think about business and buy businesses for less than they’re worth, you’re going to make money.”
Buffett claimed that in 53 years, he and Charlie had never had a discussion about buying a business that included a talk about macro affairs. “If it’s a good business at a good price, we buy it. There is always going to be bad news out there.”
“We look to buy value. We don’t look to headlines.”
Buffett suggested that investors stay away from businesses they don’t understand well.
You want to be able to have a decent idea of what the business will look like in 5-10 years – then wait for a crazy price.
Munger said to avoid issues with a large commission attached. Instead, look at things other smart people are buying.
Don’t dwell too much on mistakes. Learn from other people’s mistakes.
Read the stories of financial follies.
Risk on Wall Street may be measured with Gaussian curves,
you can’t afford to go along with the crowd in investment or insurance or a lot of things.”
Buffett stressed that he and Charlie don’t pay any attention to macro forecasts.
“To ignore what you know to listen to someone else who doesn’t know, doesn’t make sense.”
Buffett declared that he thinks the dollar will be the world’s reserve currency for some decades to come.
While China and the U.S. will be the world’s economic super powers, he thinks it extremely unlikely that any currency will supplant the U.S. dollar.
it’s a lot easier to buy things sometimes than to sell them.
“Interest rates are to asset prices sort of like gravity is to the apple.”
“Interest rates power everything in the economic universe.”