Market you don't belong in the game.- In my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets.
Rather an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace.- The market may ignore business success for a while, but eventually will confirm it.
Even Great Operations in unprofitable industries yield peanuts:- "A horse that can count to ten is a remarkable horse-not a remarkable mathematician." Likewise, a textile company that allocates capital brilliantly within its industry is a remarkable textile company-but not a remarkable business.- Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.- When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.7.
Focus on Value Investing:- The value of any stock, bond or business today is determined by the cash inflows and outflows-discounted at an appropriate interest rate-that can be expected to occur during the remaining life of the asset.- The investment shown by the discounted-flows-of-cash calculation to be the cheapest is the one that the investor should purchase-irrespective of whether the business grows or doesn't, displays volatility or smoothness in its earnings, or carries a high price or low in relation to its current earnings and book value.- In our view, though, investment students need only two well-taught courses-How to Value a Business, and How to Think About Market Prices.- Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.- It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.- In analysis of operating results-that is, in evaluating the underlying economics of a business unit-amortization charges should be ignored.
I don't have much domain knowledge in Finance and thought how I will be able to understand the jargon. A Company is the sum of its management:- Directors therefore must be chosen for their business savvy, their interest, and their owner-orientation - Owner like attitude of the directors- The outside board members should establish standards for the CEO's performance and should also periodically meet, without his being present, to evaluate- Too often, directors are selected simply because they are prominent or add diversity to the board.
One read later I can say that I already understand some of the things a little bit better. You might consider them spoilers but there are no spoilers in non-fiction. That practice is a mistake.- An owner on the board should be the most effective in insuring first-class management.- Better managers make better company –One of the point buffet emphasized was to attract and keep outstanding managers to run our various operations.The two aforementioned biographies indicate that throughout his life, Buffett thoroughly enjoyed each and every opportunity to increase others' understanding of sound business principles that include but are by no means limited to investments. There are some books of 200 pages that take me more time to read than books of 400 pages.I read and then re-read every line to ensure that I don't miss one single insight. I recommend any investor, analyst and particularly accounting professionals to read it.I started with this book with a sort of apprehension.I don't have much domain knowledge in Finance and thought how I will be able to understand the jargon.The definitive work concerning Warren Buffett and intelligent investment philosophy, this is a collection of Buffett's letters to the shareholders of Berkshire Hathaway written over the past few decades that together furnish an enormously valuable informal education.The letters distill in plain words all the basic principles of sound business practices.Thereafter, you need only monitor whether these qualities are being preserved.- Our reaction to a fermenting industry (a new initiative which we don’t understand fully) is much like our attitude toward space exploration: We applaud the endeavor but prefer to skip the ride.- You can, of course, pay too much for even the best of businesses.- You only have to be able to evaluate companies within your circle of competence.The size of that circle is not very important; knowing its boundaries, however, is vital.- Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.- If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes.You should demand that in a private company; you should expect no less in a public company.A once-a-year report of stewardship should not be turned over to a staff specialist or public relations consultant who is unlikely to be in a position to talk frankly on a manager-to-owner basis." Those who share my own keen interest in Warren Buffett's leadership and management principles will learn a great deal from a careful reading of these essays.