Buffet Letter 2014 – My notes : "You see a cockroach in your kitchen; as the days go by, you meet his relatives"

On relationship with Munger and More importantly the respect:
In 56 years, however, we’ve never had an argument. When we differ, Charlie usually ends the conversation by saying: “Warren, think it over and you’ll agree with me because you’re smart and I’m right.”
On Buying Good business: 
Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.

Most of the time – the quick buck buck is made on people on buying momentum or crappy stocks based on tips, news or noise. But what people forget is lot of money is eventually lost in these bad companies.  Notes to Self – BUY ONLY GOOD COMPANIES. 
On Acquisition with Stock : 
The intrinsic value of the shares you give in an acquisition must not be greater than the intrinsic value of the business you receive.
Money flows from the gullible to the fraudster. And with stocks, unlike chain letters, the sums hijacked can be staggering. At both BPL and Berkshire, we have never invested in companies that are hell-bent on issuing shares. That behavior is one of the surest indicators of a promotion-minded management, weak accounting, a stock that is overpriced and – all too often – outright dishonesty
Many promoters believe Equity is free and prefer Acquisition with Stock rather than Cash. Beware of such companies either they stock is not worth much or the mgmt has little respect for their own stock. Either ways a bad decision.   
On Business Synergies : 
Whatever their line, never forget that 2+2 will always equal 4. And when someone tells you how old-fashioned that math is — zip up your wallet, take a vacation and come back in a few years to buy stocks at cheap prices.
Charlie Munger  on Limiting your Investments to a few quality :
In particular, Buffett’s decision to limit his activities to a few kinds and to maximize his attention to them, and to keep doing so for 50 years, was a lollapalooza. Buffett succeeded for the same reason Roger Federer became good at tennis.
Buffett was, in effect, using the winning method of the famous basketball coach, John Wooden, who won most regularly after he had learned to assign virtually all playing time to his seven best players. That way, opponents always faced his best players, instead of his second best. And, with the extra playing time, the best players improved more than was normal.
Other Quotes – which i liked: 
If horses had controlled investment decisions, there would have been no auto industry.
But Charlie told me long ago to never underestimate the man who overestimates himself.
In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives. 
That lesson has not customarily been taught in business schools, where volatility is almost universally used as a proxy for risk. Though this pedagogic assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray.
Market forecasters will fill your ear but will never fill your wallet.


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