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Berkshire’s competitive advantages. In his mind, those include the ability to stay sane when others are crazy.
you shouldn’t make important decisions when you’re tired and that difficult decisions are tiring.
he has never seen Buffett tired, that he sleeps soundly and that his lifestyle works ideally for what he does.
Munger noted that he’s a little less optimistic about the banking system long term than Warren. He still does not see why massive derivative books should be mixed up with deposits that are insured by this country.
Allocation of capital is the key to future returns in the business world.
There are essentially five things public corporations can do with a dollar earned: reinvest in the business, acquire other businesses or assets, pay down debt, pay dividends, and/or buy in shares.
Intelligent capital allocation is the essence of sound wealth-building.
The primary reasons for mortgage default are loss of job, divorce and death.
“Efficiency is required over time in capitalism.”
criteria for choosing an investment, Munger asserted that Berkshire does not have a one-size-fits-all system. Each industry is different.
it’s remarkable how durable some brands can be. Coke started in 1886. Heinz ketchup came out in 1870.
Buffett reiterated that a strong brand is really powerful, though you do have to build them and promote them.
Winding up, Buffett noted that all of his and his families’ net worth is in BRK.
the ratio of corporate profits to GDP. From 1951 to 1999, that number ranged from 4.5% to 6%. More recently, that number has been up over 10%.
stocks are worth far more when government bonds yield 1% than when they yield 5%.
how long will these low rates continue? In Japan, this has gone on for decades. Or will we get back to normal? If rates go back to a more normal level, stock prices are high. If rates stay low, then stocks look “very cheap.”
Berkshire has shifted from simply being an investment company to being an operating earnings powerhouse with a portfolio of investments.
Buffett’s formula for happiness is simple: “Do what I like with people I like.”
his favorite employer was himself.
Buffett finds it spurious to lay obesity all on Coke. The key lies in making the choice not to consume more calories than you can use.
still sees derivatives as a potential time bomb in the system.
“If you need a manager, look for someone with intelligence and energy and integrity.
If they have no integrity, I want them dumb and lazy.”
that the S&P 500 would outperform a selection of hedge funds over the decade beginning with 2008.
In sum, you can skip the fees and get the performance of American industry by owning an S&P 500 Index fund.
Buffett asserted that far more money is made on Wall Street with selling talent than with investing talent.
size is the enemy of performance.
the surest way to make money is to buy dollar bills for less than a dollar.
“A full wallet is like a full bladder. One could get the urge very quickly to pee it away.”
Beware CNBC Cyber, nuclear, biochemical, and chemical attacks,
anything that has a 99.9% chance of not happening eventually will happen.
What matters most to him are micro factors, as opposed to the macro factors that so often get all the attention. He loves to know all the details of a business.
the proper temperament of opportunism combined with patience coupled with trying to behave well.
It’s not just about being smart, but also about doing things in a good way.
Acquisitions: Quality of the Business + Quality of the People
never hire a person you don’t need, so you never have to lay anyone off.
reducing sales volume at times can be quite intelligent. Just as you may need to lose excess staff, there may be times to lose some customers.
lean staff is always better.
Reward for silliness, and you will get silly outcomes.
For one, focus on intrinsic value growth, not reported earnings. Again, it’s not what the numbers are but what they mean that matters.
praised Bogle for his lifelong championing of the idea of index funds.
“Lose money for the firm and I will be understanding. Lose one shred of reputation for the firm and I will be ruthless.”
“An ounce of prevention is worth a ton of cure.”
“A lot of people are trying to be brilliant. We’re just trying to stay rational. That’s a big advantage. Trying to be brilliant is dangerous.”
when the world is fearful, people have a hard time believing things will get better.
