( The interesting thing about reading biography - particularly this one, is that you see that every decade is a crazy decade and everyone regardless of wealth has problems.)
The market is composed of relationships
Look for book - Philip K Fisher - find his book Common Stocks and Uncommon Profits
Buffet had learned the value of gathering as much as possible of something scarce.
Look for book - Investment Companies - Wiesenberger
You should never - when facing some unbelievable tragedy, let one tragedy increase into two or three through a failure of your will - charlie munger
When things went wrong, Munger would set out toward new goals rather than let himself dwell on the negative
Know what the deal is in advance
Valuing is not the same as predicting.
His first stock deal when he was a kid taught him three lessons;
- don't overly fixate on what you paid for a stock
- don't rush unthinkingly to grab a small profit
- don't invest someone else's money unless you know it will succeed.
In the short run the market is a voting machine, popularity wins, but in the long term it is a weighing machine, and substance matters
He loves Dale Carnegie - rule number one - Don't criticize, condemn, or complain
The key to handicapping is to have more information than the other guy
Rules of the race horse;
- nobody ever goes home after the first race
- you don't have to make it back the way you lost it.
Benjamin Graham's investment method was not simply about buying stocks cheap, it was rooted in an understanding of psychology, enabling its followers to keep their emotions from influencing their decision making.
3 things Warren Buffett learned from Benjamin Graham;
1.a stock is a way to own a little bit of a company
2. always use a margin of safety
3. Mr. Market's moods are not your moods, he is your servant, not your master.
Those 3 principles are essential, commitments are sacred so should be rarely used, and grandstanding never gets anything done.
Every decision has an opportunity cost.
Charlie Munger was a lawyer, but every day saved one billable hour for himself as a client.
Be fearful when others are greedy, and be greedy when others are fearful.
The more sure money tends to be made on the obvious quantitative decisions.... but really big money tends to be made by investors who are right on the qualitative decisions.
Intensity is the price of excellence.
Do not go into a business you do not understand
Don't invest in operations with major human problems
Warren Buffett is not a simple person, but he does have simple tastes.
What Berkshire, Diversified, and Blue Chip had was a homeostatic model of grafting float into a holding company so that it could respond to changing environment and utilize the power of compounding as flow and investments double over time.
Although our form is corporate, our attitude is as a partnership. We don't play accounting games, we don't like a lot of debt, and we run our businesses for the best long term results. Profits should go to build the capacity of the organization - not the opulence of the owner. He who is earning more than he spends is building claim checks for the future.
Look for an article, "The Superstars of Graham-and-Doddsville - in Hermes, Columbia Business School publication.
They define risk as losing money - not as volatility.
Old military adage - to advance a general must expose his flanks
Both Warren Buffett and Bill Gates said that the most impotant factormto success in life is Focus.
To them intensity is the price of success and excellence - discipline and passionate perfectionism.
Warren Buffett's rules;
1. Don't lose money
2. Don't forget Rule 1
3. Don't go into debt
Buffett and Munger felt using mathematical models to invest was like driving a car on cruise control, you might think you are aware and in control and you have your head in the game, but if the road changed, it became winding, or slippery, or fuill of traffic, you would like differently.
You are not right or wrong because people agree with you. You are right because your facts and reasoning are right.
"People always ask me where they should go to work, and I always tell them to go to work for whom they admire the most. It is crazy to take little in between jobs just because they look good on a resume. That is like saving sex for your old age. Do what you love and work for who you admire the most, and you've given yourself the best chance in life you can." - Buffett
"you'd get very rich if you thought of yourself as having a card with only twenty punches in a lifetime, and every financial decision would cost a punch. You would resist temptation to dabble and you would make grand decisions, and you would make more big decisions." - Buffett
We do not attain the victory of life by selfishness. Victory is for those who give themselves to causes beyond themselves. - John Danforth
Cash combined with courage in a crisis is priceless.
Invert, always invert. - Carl Jacobi ( look at problems from various angles)
Be long term greedy, not short term greedy.
A man who tries to carry a cat by its tail will learn a lesson that can be learned in no other way. - Mark Twain
When a problem exists, whether in personal or business life, the time to act is now.
(Buffett wanted new places to invest so learned the ins and outs of the Korean stock market, including their unique accounting rules.)
The ideal business is one that earns very high revenues mon capital and that keeps using lots of capital at those high returns. That business becomes a compounding machine.
I have this complicated procedure I go through every morning, which is I look in the mirror and decide what I am going to do. And I feel at that point, everybody's had their say.
Stocks are the things to own over time. Productivity will increase and stocks will increase with it. There are only a few things you can do wrong. One is to buy or sell at the wrong time. Paying high fees is another way to get killed. The best way to avoid both of these is to buy a low-cost index fund, and buy it over time. Be greedy when others are fearful and fearful when others are greedy, but I don't think you can outsmart the market.....very few people should be active investors. - Buffett