- Being different from any other business people
- "I only have about 4000 days left on this earth and I am trying to put various activities in proper proportion"
1, Invest... don't speculate (look at the asset itself to produce a return; not the price of the farm etc.)
The check list: "We have to deal with things that we are capable of understanding. Business with some intrinsic characteristics gives it a competitive advantage. And of course, we are vastly prefer a management of place with alot of integrity and talent. Finally, no matter how wonderful it is, it is not worth a infinite price, so we have to have a price that make sense."
"analysis the fundamental earning power of the asset, from that earning power to justify the price you pay" - They spent a billion dollar buying coca cola. we were very aggressively at buying coca cola and they did not sell. (Others such as American Express and Walt Disney)
2, You don't have to diversify (Stick with what you know)
"He bet on me at a time when alot of people wouldn't, So I am greatful of him" - It is Mutual
"He spent nearly 80 years building up a mental file about everything he knows about companies and businesses. He works at it all the time"
"He completed his tax return when he was 13. He was already thinking big"
Mr Market said: "The market there is to serve you and not to instruct you. Imaging Mr. Market is the man you do business with, you can buy or sell from him anytime of the year. But he have unpredictable moods, sometimes his prices are too high or too low" - That gives you a chance to make money
"In the stock market, you got this wonderful opportunity to deal with this crazy Psychotic partner called Mr.Market. He does with thousands of companies and everyday he gives you a offer and money is wrong, you take advantage of him"
"But you don't pay attention to him because he is right or wrong, you pay attention to him because he is there to serve you but not to instruct you"
"It is much easier to sell Coca Cola with everybody smiling" - We have enough trouble there making things out of silk.^^
3, Don't just buy shares, be a business owner.
He created a company that owns dozens of other companies. He is a manager as well as an investor.
4, Allocate capital efficiently
Taking a profit of one business and invest in another.
Q: "He make some money, he think he can invest it better than you can. He takes it all off you, how is that manager?"
A: "Not a problem. If he's got better use for it, that is fine."
Warren Buffett convinces his managers:"You know what, I can use that capital more efficiently and effectively than you can. By putting this business over here by the way you don't run" - That is an amazing power of persuasion.
"He is a master psychologist, I don't know anyone better. He makes us feel that we can do no wrong. Whatever we do, it is going to be the right decision. So you are so empowered. You think I am going to let him down after seeing all this, forget it." - I think we all feel exactly the same way
Financial Rocket fuel: Insurance
Customers have to pay their premiers upfront. It generate massive cash float that Warren and his partner charlie can take away and invest.
"Get into a business that provided float, had special interaction. So we thought we were playing to our strength" - Different from Wall St. Warren could then invest big way without wasting money.
Buffett doesn't like borrowing such as Hedge Fund.
5, Don't get into debt
"More smart people have gone broke through average to any other activity" - Smart person can't go broke, it doesn't make sense
"Warren is very good at working out what works for him and he stays with it"
6, Think Independently (In marriage, food or investing)
"You have to think about yourself. When you get up in the morning, I look into the mirror and ask: How do you feel about this? If the mirror says yes, that is good enough"
"We make our own appraisals, and then when the market has a different appraisal, we back our own instead of the market's appraisal"
It is the unfashionable stock that has the best deals. Buffett is everything wall street isn't.
In the early 90s, Soloman Brothers Sunday Morning, buffett put his reputation on the line and begged treasury official:"It was the moment important day in my life and I meant it. And I think he felt I was over dramatising, but he also felt I believed in it." - And then he changed the order on Sunday and it kept us alive.
"Even in the high intense situation, he was a gentleman at all times"
"Society has done awful alot for the people who are rich. If you get a chance to be a rich person, you really ought to have a taxation system and our personal value system where you believe that alot of that will go back to the people got their own choice in life"
"If you look at Berkshire, you think about Furniture companies. But you look at where the massive profits, tax generation is coming from, it is really from the insurance business, derivatives and investments he is making on Wall Street"
- This is actual what's happening behind the curtain which is not what you see
"He have to be resourceful"
7, Always be ready to break your own rules
8, What you do when you made it, give it away
"Charities can get things after naming things for people" - "Why waste building on me, they are not my money anyway"
"Buffett is not just a donor, but a role model."
"Having fun with what you do, do it with some humour" - I am always strive to do nearly as good as warren does."
"If we are more successful than other people, is because we always realise that the school of life is always open. If you were not learning more, you were falling behind."
-- That just happen the way we like spending our days. Go inside is something have worked in the investment process, but we lucky people.
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