Investing

“Approval…is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re-examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns.”

-Warren E. Buffett

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“Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.”

-Warren E. Buffett

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“Investing is often described as the process of laying out money now in the expectation of receiving more money in the future. At Berkshire we take a more demanding approach, defining investing as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power—after taxes have been paid on nominal gains—in the future. More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.”

-Warren E. Buffett

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“There are two types of mistakes: 1) doing nothing, what Warren calls ‘sucking my thumb’ and 2) buying with an eyedropper things we should be buying a lot of.”

-Charles T. Munger

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“Book value is an accounting concept, recording the accumulated financial input from both contributed capital and retained earnings. Intrinsic business value is an economic concept, estimating future cash output discounted to present value. Book value tells you what has been put in; intrinsic business value estimates what can be taken out.”

-Warren E. Buffett

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“Our policy is to concentrate holdings. We try to avoid buying a little of this or that when we are only lukewarm about the business or its price. When we are convinced as to attractiveness, we believe in buying worthwhile amounts.”

-Warren E. Buffett

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“Our view, we warn you, is non-conventional. But we would rather have earnings for which we did not get accounting credit put to good use in a 10% owned company by a management we did not personally hire, than have earnings for which we did get credit put into projects of more dubious potential by another management—even if we are that management.”

-Warren E. Buffett

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