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One Observer Commenting On Security Analysts Over Forty Stated: "they Know Too Many Things That Are No Longer True." As Long As I Am "on Stage", Publishing A Regular Record And Assuming Responsibility For Management Of What Amounts To Virtually 100% Of The Net Worth Of Many Partners, I Will Never Be Able To Put Sustained Effort Into Any Non-bpl Activity. If I Am Going To Participate Publicly. I Can't Help Being Competitive. I Know I Don't Want To Be Totally Occupied With Out-pacing An Investment Rabbit All My Life. The Only Way To Slow Down Is To Stop.

-Warren Buffett

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One Observer Commenting On

Warren Buffett

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One Observer Commenting On Security Analysts Over Forty Stated: "they Know Too Many Things That Are No Longer True." As Long As I Am "on Stage", Publishing A Regular Record And Assuming Responsibility For Management Of What Amounts To Virtually 100% Of The Net Worth Of Many Partners, I Will Never Be Able To Put Sustained Effort Into Any Non-bpl Activity. If I Am Going To Participate Publicly. I Can't Help Being Competitive. I Know I Don't Want To Be Totally Occupied With Out-pacing An Investment Rabbit All My Life. The Only Way To Slow Down Is To Stop.

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Consciously Paying More For A Stock Than Its Calculated Value - In The Hope That It Can Soon Be Sold For A Still-higher Price - Should Be Labelled Speculation

An Investor Should Ordinarily Hold A Small Piece Of An Outstanding Business With The Same Tenacity That An Owner Would Exhibit If He Owned All Of That Business.

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 Who's Earnings Are Virtually Certain To Be Materially Higher Five, Ten And Twenty Years From Now.

We Can Afford To Lose Money - Even A Lot Of Money. But We Can't Afford To Lose Reputation - Even A Shred Of Reputation.

I Mean, You Can Explain The Fact That These Are Depressed Prices, You Know. We Think These Assets Are Going To Be Worth A Lot More. And I Think That Case Can Be Made In Certain Situations. But I Think To Just Say, You Know, We're Going To Say A Dollar Of Cash Is Worth $2 All Of A Sudden, It Isn't Worth $2. It's Worth A Dollar Today.

Only When You Combine Sound Intellect With Emotional Discipline Do You Get Rational Behavior.

I Tell College Students, When You Get To Be My Age You Will Be Successful If The People Who You Hope To Have Love You, Do Love You.

A Diamond Cannot Be Polished Without Friction, Nor A Person Perfected Without Trials. Someone Is Enjoying Shade Today Because Someone Planted A Tree A Long Time Ago.

I Happen To Have A Talent For Allocating Capital. But My Ability To Use That Talent Is Completely Dependent On The Society I Was Born Into. If I'd Been Born Into A Tribe Of Hunters, This Talent Of Mine Would Be Pretty Worthless. I Can't Run Very Fast. I'm Not Particularly Strong. I'd Probably End Up As Some Wild Animal's Dinner.

Who Would Think Of Buying Or Selling A Private Business Because Of Someone's Guess On The Stock Market? The Availability Of A Quotation For Your Business Interest (stock) Should Always Be An Asset To Be Utilized If Desired. If It Gets Silly Enough In Either Direction, You Take Advantage Of It. Its Availability Should Never Be Turned Into A Livability Whereby Its Periodic Aberrations In Turn Formulate Your Judgements.

This Country Is Going - Be Living Better Ten Years From Now Than It Is Now. It Will Be Living Better In 20 Years From Now Than Ten Years From Now. The Ingredients That Made This Country, You Know, The Miracle Of The World - I Mean We Had A Seven For One Improvement In The Average American Standard Of Living In The 20th Century.

If You're Extremely Rich, And You Have Got Children, My Theory Was, You Give Them Enough So They Can Do Anything, But Not Enough So They Can Do Nothing.

The Happiest People Do Not Necessarily Have The Best Things. They Simply Appreciate The Things They Have.

If Book Knowledge Made Great Investors, Than The Librarians Would All Be Rich.

None Of This Means, However, That A Business Or Stock Is An Intelligent Purchase Simply Because It Is Unpopular; A Contrarian Approach Is Just As Foolish As A Follow-the-crowd Strategy. What's Required Is Thinking Rather Than Polling. Unfortunately, Bertrand Russell's Observation About Life In General Applies With Unusual Force In The Financial World: "most Men Would Rather Die Than Think. Many Do."

What We Learn From History Is That People Don't Learn From History.

You're Neither Right Nor Wrong Because Other People Agree With You. You're Right Because Your Facts Are Right And Your Reasoning Is Right - That's The Only Thing That Makes You Right. And If Your Facts And Reasoning Are Right, You Don't Have To Worry About Anybody Else.

House Prices Just Soared Beyond - Beyond Reason In Many Places And They Got Financed In Silly Ways, And People Lied About Loans, All Kinds Of Accesses Entered Into It. But That Is What - That Is The Single Biggest Cause Of Why We're Here.

The Capital Gains Tax Is 15 Percent Now. So I Sit There In My Office And I Make A Lot Of Money By Capital Gains, And I Pay 15 Percent, And I Pay No Payroll Tax On It.

I Put Heavy Weight On Certainty. It's Not Risky To Buy Securities At A Fraction Of What They're Worth.

I'd Rather Have A $10 Million Business Making 15 Per Cent Than A $100 Million Business Making 5 Per Cent.

I Do Not Believe In Inheriting Your Position In Society Based On Which Womb You Come From... I Think A Rich Person Should Leave His Children Enough So They Can Do Anything, But Not Enough So They Can Do Nothing.

The Most Dangerous Distractions Are The Ones You Love, But That Don’t Love You Back.

Only Those Who Will Be Sellers Of Equities In The Near Future Should Be Happy At Seeing Stocks Rise. Prospective Purchasers Should Much Prefer Sinking Prices.

You Will Be Right, Over The Course Of Many Transactions, If Your Hypotheses Are Correct, Your Facts Are Correct, And Your Reasoning Is Correct. True Conservatism Is Only Possible Through Knowledge And Reason.

Managers Thinking About Accounting Issues Should Never Forget One Of Abraham Lincoln's Favorite Riddles: How Many Legs Does A Dog Have, If You Call A Tail A Leg? The Answer: Four, Because Calling A Tail A Leg Doesn't Make It A Leg.

Money Is Not Everything. Make Sure You Earn A Lot Before Speaking Such Nonsense.

It's Quite Clear That Stocks Are Cheaper Than Bonds. I Can't Imagine Anybody Having Bonds In Their Portfolio When They Can Own Equities, A Diversified Group Of Equities. But People Do Because They, The Lack Of Confidence. But That's What Makes For The Attractive Prices. If They Had Their Confidence Back, They Wouldn't Be Selling At These Prices. And Believe Me, It Will Come Back Over Time.

The Real Fortunes In This Country Have Been Made By People Who Have Been Right About The Business They Invested In, And Not Right About The Timing Of The Stock Market.

A Low-cost Index Fund Is The Most Sensible Equity Investment For The Great Majority Of Investors. My Mentor, Ben Graham, Took This Position Many Years Ago, And Everything I Have Seen Since Convinces Me Of Its Truth.

If You Were At Lehman, The Same Thing Happened. If You Were At Aig, The Shareholders Are Getting Creamed On These Things. And Those Shareholders Are Not Just A Bunch Of Big Shots In Wall Street. Those Are Pension Funds, And Those Are Investors All Over The Country. I Wouldn't Worry Too Much About That. Justice Won't Be Perfect On It.

It's Easier To Create Money Than To Spend It.

Forecasts Usually Tell Us More Of The Forecaster Than Of The Forecast

You Have To Be Able To Communicate In Life And Probably Schools Underemphasize That. If You Can't Talk To People Or Write, You're Giving Up Your Potential.

Very Successful People Say No To Almost Everything.

Investment Success

Never Risk What You Have And Need For What We Don't Have And Don't Need.

If You Can't Read The Scoreboard. You Don't Know The Score. If You Don't Know The Score, You Can't Tell The Winners From The Losers.

The [stock] Market,like The Lord, Helps Those Who Help Themselves. But, Unlike The Lord, The Market Does Not Forgive Those Who Know Not What They Do.

I Don't Think You Can Have A Better Secretary Of The Treasury Than Hank Paulson.

If At First You Do Succeed, Quit Trying On Investing.

Of One Thing Be Certain: If A Ceo Is Enthused About A Particularly Foolish Acquisition, Both His Internal Staff And His Outside Advisors Will Come Up With Whatever Projections Are Needed To Justify His Stance. Only In Fairy Tales Are Emperors Told That They Are Naked.

The Best Investment You Can Make, Is An Investment In Yourself... The More You Learn, The More You'll Earn.

Best Investment

Too Often, Executive Compensation In The U.s. Is Ridiculously Out Of Line With Performance. That Won't Change, Moreover, Because The Deck Is Stacked Against Investors When It Comes To The Ceo's Pay.

If You're An Investor, You're Looking On What The Asset Is Going To Do, If You're A Speculator, You're Commonly Focusing On What The Price Of The Object Is Going To Do, And That's Not Our Game.

A Pin Lies In Wait For Every Bubble. And When The Two Eventually Meet, A New Wave Of Investors Learns Some Very Old Lessons: First, Many In Wall Street (a Community In Which Quality Control Is Not Prized) Will Sell Investors Anything They Will Buy. Second, Speculation Is Most Dangerous When It Looks Easiest.

John Maynard Keynes Essentially Said, Don't Try And Figure Out What The Market Is Doing. Figure Out A Business You Understand, And Concentrate.

Does The Business Have A Consistent Operating History?

We Need To Throw The Resources At This That Are Necessary. But Like I Say, We Are Not Spending Money. I Mean, If We Buy These Assets Intelligently, The United States Treasury Will Make Money. I Mean, It's Borrowing Money. It's Just A Few Percent A Year.

I Certainly Do Believe Anyone Engaged In The Management Of Money Should Have A Standard Of Measurement, And That Both He And The Party Whose Money Is Managed Should Have A Clear Understanding Why It Is The Appropriate Standard, What Time Period Should Be Utilized, Etc.

I Believe The Chance Of Any Event Causing Berkshire To Experience Financial Problems Is Essentially Zero. We Will Always Be Prepared For The Thousand-year Flood; In Fact, If It Occurswe Will Be Selling Life Jackets To The Unprepared.

An Investor Needs To Do Very Few Things Right As Long As He Or She Avoids Big Mistakes.

It Is Unquestionably True That The Investment Companies Have Their Money More Conventionally Invested Than We Do. To Many People Conventionality Is Indistinguishable From Conservatism. In My View, This Represents Erroneous Thinking. Neither A Conventional Nor An Unconventional Approach, Per Se, Is Conservative.

I Find That The Standard Of Living Does Not Go Up In Proportion With The Cost Of Living. The Trick In Life Is To Do Things That Are Fun All The Time.

If You Don't Feel Comfortable Owning Something For 10 Years, Then Don't Own It For 10 Minutes.

I've Argued With The Senators And Congressmen I've Talked To. You Don't Want To Be Too Little Too Late. If You Buy Them At The Right Price, You May Be Buying Two Trillion Of Face Value.

What We Really Want To Do Is Buy Businesses That We Would Be Happy To Own Forever.

An Ipo Is Like A Negotiated Transaction - The Seller Chooses When To Come Public - And It's Unlikely To Be A Time That's Favourable To You.

Never Do Anything In Life If You Would Be Ashamed Of Seeing It Printed On The Front Page Of Your Hometown Newspaper For Your Friends And Family To See.

Family And Friends

I Think Once You Start Putting Phony Figures Into Financial Statements, You Get In A Lot Of Trouble. And We've Seen So Much Of That In The Last 20 Years.

You Don't Need To Be An Expert In Order To Achieve Satisfactory Investment Returns. But If You Aren't, You Must Recognize Your Limitations And Follow A Course Certain To Work Reasonably Well. Keep Things Simple And Don't Swing For The Fences.

A Pin Lies In Wait For Every Bubble And When The Two Eventually Meet, A New Wave Of Investors Learns Some Very Old Lessons.

Writing Checks To The Irs That Include Strings Of Zeros Does Not Bother Me ... Overall, We Feel Extraordinarily Lucky To Have Been Dealt A Hand In Life That Enables Us To Write Large Checks To The Government Rather Than One Requiring The Government To Regularly Write Checks To Us-say, Because We Are Disabled Or Unemployed.

I View Derivatives As Time Bombs, Both For The Parties That Deal In Them And The Economic System.

I Know What I Want To Do And It Makes Sense To Get Going.

... The Best Way To Own Common Stocks Is Through An Index Fund.

Active Management

We Make Investment Decisions Based On Our Evaluation Of The Most Profitable Combination Of Probabilities.

Resolution Trust Company Was Set Up To Liquidate A Bunch Of Assets That The Government Had Inherited Because The Savings And Loans Went Broke.

Investment Must Be Rational; If You Can't Understand It, Don't Do It.

One Of The Ironies Of The Stock Market Is The Emphasis On Activity. Brokers, Using Terms Such As 'marketability' And 'liquidity,' Sing The Praises Of Companies With High Share Turnover... But Investors Should Understand That What Is Good For The Croupier Is Not Good For The Customer. A Hyperactive Stock Market Is The Pick Pocket Of Enterprise.

I Never Attempt To Make Money On The Stock Market. I Buy On The Assumption That They Could Close The Market The Next Day And Not Reopen It For Five Years.

Greatest Wealth

If You Gave Me $100 Billion And Said Take Away The Soft Drink Leadership Of Coca-cola In The World, I'd Give It Back To You And Say It Can't Be Done.

It's Not Debt Per Say That Overwhelms An Individual Corporation Or Country. Rather It Is A Continuous Increase In Debt In Relation To Income That Causes Trouble.

Of The Billionaires I Have Known, Money Just Brings Out The Basic Traits In Them. If They Were Jerks Before They Had Money, They Are Simply Jerks With A Billion Dollars.

There Are All Kinds Of Businesses That Charlie And I Don't Understand, But That Doesn't Cause Us To Stay Up At Night. It Just Means We Go On To The Next One, And That's What The Individual Investor Should Do.

The Idea That You Try To Time Purchases Based On What You Think Business Is Going To Do In The Next Year Or Two, I Think That's The Greatest Mistake That Investors Make Because It's Always Uncertain. People Say It's A Time Of Uncertainty. It Was Uncertain On September 10th, 2001, People Just Didn't Know It. It's Uncertain Every Single Day. So Take Uncertainty As Part Of Being Involved In Investment At All. But Uncertainty Can Be Your Friend. I Mean, When People Are Scared, They Pay Less For Things. We Try To Price. We Don't Try To Time At All.

The Only Way To Get Love Is To Be Lovable. It's Very Irritating If You Have A Lot Of Money. You'd Like To Think You Could Write A Check: "i'll Buy A Million Dollars' Worth Of Love." But It Doesn't Work That Way. The More You Give Love Away, The More You Get.

It's Much Easier To Stay Out Of Trouble Now Than To Get Out Of Trouble Later.

And People Really Behaved In A Fraudulent Way Or Something, We'll Go Back And Find The Culprits Later On. But That Really Isn't The Problem We Have. I Mean That's Where It Came From, Though. We Leveraged Up And If You Have A 20 Percent Fall In Value Of A $20 Trillion Asset, That's $4 Trillion. And When $4 Trillion Lands - Losses Land In The Wrong Part Of This Economy, It Can Gum Up The Whole Place.

Take The Job You Would Take If You Were Independently Wealthy. You're Going To Do Well At It.

Money Will Always Flow Toward Opportunity, And There Is An Abundance Of That In America.

Anyone Who Believes A Growth Rate In Excess Of 15% Per Annum Over The Long Term Is Attainable Should Pursue A Career In Sales, But Avoid One In Mathematics.

I Mean The Truth Is, I've Never Had It So Good In Terms Of Taxes. I Am Paying The Lowest Tax Rate That I've Ever Paid In My Life.

If You Expect To Continue To Purchase Stocks Throughout Your Life, You Should Welcome Price Declines As A Way To Add Stocks More Cheaply To Your Portfolio.

We Will Prosper Or Suffer In Controlled Investments In Relation To The Operating Performances Of Our Businesses - We Will Not Attempt To Profit By Playing Various Games In The Securities Markets.

We Need A Tax System That Essentially Takes Very Good Care Of The People Who Just Really Aren't As Well Adapted To The Market System But Are Nevertheless Doing Useful Things In The Society.

For Example: (1) As If Governed By Newton's First Law Of Motion, An Institution Will Resist Any Change In Its Current Direction; (2) Just As Work Expands To Fill Available Time, Corporate Projects Or Acquisitions Will Materialize To Soak Up Available Funds; (3) Any Business Craving Of The Leader, However Foolish, Will Be Quickly Supported By Detailed Rate-of-return And Strategic Studies Prepared By His Troops; And (4) The Behavior Of Peer Companies, Whether They Are Expanding, Acquiring, Setting Executive Compensation Or Whatever, Will Be Mindlessly Imitated.

Buy Into A Company Because You Want To Own It, Not Because You Want The Stock To Go Up.

Investing Money

Goldman Sachs Saying They Might Be Interested In Such An Investment. I'm Familiar With The Company. I've Known The Management, The Current Management, Jack Welch Before Jeff Immelt. I've Known Him For Decades.

You Can't Make A Good Deal With A Bad Person.

Fear Is The Foe Of The Faddist, But The Friend Of The Fundamentalist.

Working With People Who Cause Your Stomach To Churn Seems Much Like Marrying For Money - Probably A Bad Idea Under Any Circumstances, But Absolute Madness If You Are Already Rich.

We Have Provided Capital Here With A Couple Of Institutions Recently. The Federal Government Did That In The '30s For The Rfc And I Think There Could Well Be A Proper Role For Government In That.

I Think You'll Have Plenty Of Scrutiny As How The Money's Invested. I Mean, Just Like The Rfc. When The Rfc Operated, People Knew Which Institutions They Were Buying Preferred Stock In. And It Worked Very Well.

We've Used Up A Lot Of Bullets. And We Talk About Stimulus. But The Truth Is, We're Running A Federal Deficit That's 9 Percent Of Gdp. That Is Stimulative As All Get Out. It's More Stimulative Than Any Policy We've Followed Since World War Ii.

If I Knew Where I Was Going To Want To Live The Next Five Or 10 Years I Would Buy A Home And I'd Finance It With A 30-year Mortgage... It's A Terrific Deal.

If You Cannot Control Your Emotions, You Cannot Control Your Money.

I Insist On A Lot Of Time Being Spent, Almost Every Day, To Just Sit And Think. That Is Very Uncommon In American Business.

Would Your Reply Possibly Be This? Well, It All Depends On What My Tax Rate Will Be On The Gain You're Saying We're Going To Make. If The Taxes Are Too High, I Would Rather Leave The Money In My Savings Account, Earning A Quarter Of 1 Percent. Only In Grover Norquist's Imagination Does Such A Response Exist.

When The Brothel Burns Down, Even The Pretty Girls Have To Run Out.

Investing In A Market Where People Believe In Efficiency Is Like Playing Bridge With Someone Who Has Been Told It Doesn't Do Any Good To Look At The Cards.

It's Class Warfare, My Class Is Winning, But They Shouldn't Be.

If The World Couldn't See Your Results, Would You Rather Be Thought Of As The World's Greatest Investor But In Reality Have The World's Worst Record? Or Be Thought Of As The World's Worst Investor When You Were Actually The Best?

We Continue To Make More Money When Snoring Than When Active.

If You've Got A Good Enough Business, If You Have A Monopoly Newspaper, If You Have A Network Television Station - I'm Talking Of The Past - You Know, Your Idiot Nephew Could Run It. And If You've Got A Really Good Business, It Doesn't Make Any Difference.

In Investing, Just As In Baseball, To Put Runs On The Scoreboard, One Must Watch The Playing Field, Not The Scoreboard.

Either They're Trying To Con You Or They're Trying To Con Themselves.

It Is Obvious That The Performance Of A Stock Last Year Or Last Month Is No Reason, Per Se, To Either Own It Or To Not Own It Now. It Is Obvious That An Inability To "get Even" In A Security That Has Declined Is Of No Importance. It Is Obvious That The Inner Warm Glow That Results From Having Held A Winner Last Year Is Of No Importance In Making A Decision As To Whether It Belongs In An Optimum Portfolio This Year.

Invest In As Much Of Yourself As You Can, You Are Your Own Biggest Asset By Far.

Every Company That Has An Economist Working For Him Has One Employee Too Many.

Investors, Of Course, Can, By Their Own Behavior Make Stock Ownership Highly Risky. And Many Do. Active Trading, Attempts To "time" Market Movements, Inadequate Diversification, The Payment Of High And Unnecessary Fees To Managers And Advisors, And The Use Of Borrowed Money Can Destroy The Decent Returns That A Life-long Owner Of Equities Would Otherwise Enjoy. Indeed, Borrowed Money Has No Place In The Investor's Tool Kit.

If You Want A Government That's Going To Do The Things We Ask Our Government To Do, You've Got To Get It From Somebody.

We Simply Attempt To Be Fearful When Others Are Greedy And To Be Greedy Only When Others Are Fearful.

In The Insurance Business, There Is No Statute Of Limitation On Stupidity.

When Asked How He Became So Successful In Investing, Buffett Answered: 'we Read Hundreds And Hundreds Of Annual Reports Every Year.

Generally, We Have Translated Greater Output In The Few Hours Of Work Per Week Over The Last Century. And That's A Good Trend Of The Future. But We Do Have To Have A System That, As Output Of Goods And Services Keeps Increasing Per Capita, That It Takes Care Of The People Who Are Willing To Work And Really Are Not Getting By Very Well With A Family On A 40-hour Week.

If You Lose Money For The Firm, I Will Be Forgiving. If You Lose Reputation, I Will Be Ruthless.

I Think I Could Make You Fifty Percent A Year On One Million Dollars. No, I Know I Could. I Guarantee That.

Guarantees That

Generally Speaking, Investing In Yourself Is The Best Thing You Can Do. Anything That Improves Your Own Talents; Nobody Can Tax It Or Take It Away From You. They Can Run Up Huge Deficits And The Dollar Can Become Worth Far Less. You Can Have All Kinds Of Things Happen. But If You’ve Got Talent Yourself, And You’ve Maximized Your Talent, You’ve Got A Tremendous Asset That Can Return Ten-fold.

We've Got More Productive Capacity Now Than We Ever Have.

The Best Business Returns Are Usually Achieved By Companies That Are Doing Something Quite Similar Today To What They Were Doing Five Or Ten Years Ago.

I Think The Fdic Was One Of The Great Inventions Of The American.

Great Inventions

Investors Have To Remember: Corporate Profits Are Going Up, But Stocks Are Going Up Faster. How Can That Continue Indefinitely? Investors Can Only Earn What Companies Themselves Can Earn; The Government Or The Markets Themselves Don't Kick Anything In. How Can You Get Anything More Out Of A Farm Than What It Grows?

You Should Invest Like A Catholic Marries: For Life.

Whatever You Like To Do, Make It A Hobby And Whatever The World Likes To Do, Make It A Business.

Truly Conservative Actions Arise From Intelligent Hypotheses, Correct Facts And Sound Reasoning.

I Mean, If Pearl Harbor Came Along, You Could Have Said The Planning Was Wrong By The Military Ahead Of Time Or Maybe The Battleships Shouldn't Have All Been In The Harbor And All That Kind Of Thing.

During Inflation, Goodwill Is The Gift That Keeps On Giving.

Mental Toughness

Things You Like To Do Should Be A Hobby Of Yours, But Things The World Does Should Be A Business Of Yours.

Investors Should Remember That Excitement And Expenses Are Their Enemies.

Investing Money

Investment Success

The Fundamental Basis Of Above-average Performance In The Long Run Is Sustainable Competitive Advantage.

In The End We Must Have People To Match Our Principles, Not The Reverse.

The (stock) Market Is There Only As A Reference Point To See If Anybody Is Offering To Do Anything Foolish. When We Invest In Stocks, We Invest In Businesses.

The Single Most Important Decision In Evaluating A Business Is Pricing Power.

Returns Decrease As Motion Increases.

All But A Few Of The Organizations Do Not Specifically Promise To Deliver Superior Investment Performance Although It Is Perhaps Not Unreasonable For The Public To Draw Such An Inference From Their Advertised Emphasis On Professional Management.

I Don't Think It Would Be Crazy To Have A Model Or An Entity Model On The Reconstruction Finance Corp.

I Did Not Think I Would See The Day When, You Know, An Aig Would Not Be Able To Have Its Checks Clear.

More Investment Sins Are Probably Committed By Otherwise Quite Intelligent People Because Of "tax Considerations" Than From Any Other Cause. One Of My Friends-a Noted West Coast Philosopher-maintains That A Majority Of Life's Errors Are Caused By Forgetting What One Is Really Trying To Do. This Is Certainly The Case When An Emotionally Supercharged Element Like Taxes Enters The Picture (i Have Another Friend-a Noted East Coast Philosopher Who Says It Isn't The Lack Of Representation He Minds-it's The Taxation).

Knowing What To Leave Out Is Just As Important As Knowing What To Focus On.

Accounting Consequences Do Not Influence Our Operating Or Capital-allocation Decisions. When Acquisition Costs Are Similar, We Much Prefer To Purchase $2 Of Earnings That Is Not Reportable By Us Under Standard Accounting Principles Than To Purchase $1 Of Earnings That Is Reportable.

The Greatest Enemies Of The Equity Investor Are Expenses And Emotions.

You Get What I Call The Natural Progression, The Three Is. The Innovators, The Imitators, And The Idiots.

Diversification Is Protection Against Ignorance. It Makes Little Sense If You Know What You Are Doing.

A Lot Of Great Fortunes In The World Have Been Made By Owning A Single Wonderful Business. If You Understand The Business, You Don't Need To Own Very Many Of Them.

You've Got The Right - You've Got A Wonderful Person With Sheila Bair, Most Of The Viewers Have Never Heard Of Sheila Bair. [she] Has Taken Eight Percent Of The Deposits In The United States And Seamlessly Moved Those Over To Sound Institutions Which In Turn Have Gotten More Capital, Ended Up, It's Been A Magnificent Job.she'll Never Get A Golden Parachute Or Any Severance Pay Or Anything. She's Done A Great Job. We've Got Some Great Public Servants. We Have I Think The Right People In There To Get The Job Done, And Then They Need More Tools.

If You Can Tell Me Who Your Heroes Are, I Can Tell You How You're Going To Turn Out In Life.

In Earlier Years, A Lesser Effort Produced Literally Dozens Of Comparable Opportunities. It Is Difficult To Be Objective About The Causes For Such Diminution Of One's Own Productivity. Three Factors That Seem Apparent Are: (1) A Somewhat Changed Market Environment; (2) Our Increased Size; And (3) Substantially More Competition.

You Know, People Talk About This Being An Uncertain Time. You Know, All Time Is Uncertain. I Mean, It Was Uncertain Back In - In 2007, We Just Didn't Know It Was Uncertain. It Was - Uncertain On September 10th, 2001. It Was Uncertain On October 18th, 1987, You Just Didn't Know It.

Uncertain Times

Our Future Rates Of Gain Will Fall Far Short Of Those Achieved In The Past. Berkshire's Capital Base Is Now Simply Too Large To Allow Us To Earn Truly Outsized Returns. If You Believe Otherwise, You Should Consider A Career In Sales But Avoid One In Mathematics.

If Some Institution Wants To Sell You A Billion Dollars Worth Of Mortgages, They Might Have To Sell 100 Million In The Market, And Then You'll Buy The Other 900 Million On The Same Terms. Now, The Very Fact That This Has Been Authorized Or Will Be Authorized, I Hope, Will Firm Up The Market To Some Degree. And That's Fine. But You Don't Want To Have Artificial Prices Being Paid.

When 40 Billion Of Treasury Bills Are Sold Like, Seven Day Treasury Bills, At A Yield Of 1/20th Of One Percent, That Means The Whole Country Is Basically At The Point Virtually, Or A Lot Of The Country Is At The Point Of Putting The Money Under The Mattress.

In That, We Agreed With Andrew Carnegie, Who Said That Huge Fortunes That Flow In Large Part From Society Should In Large Part Be Returned To Society. In My Case, The Ability To Allocate Capital Would Have Had Little Utility Unless I Lived In A Rich, Populous Country In Which Enormous Quantities Of Marketable Securities Were Traded And Were Sometimes Ridiculously Mispriced. And Fortunately For Me, That Describes The U.s. In The Second Half Of The Last Century.

Enormous Quantities

In The 20th Century, The United States Endured Two World Wars And Other Traumatic And Expensive Military Conflicts; The Depression; A Dozen Or So Recessions And Financial Panics; Oil Shocks; A Flu Epidemic; And The Resignation Of A Disgraced President. Yet The Dow Rose From 66 To 11,497.

Today People Who Hold Cash Equivalents Feel Comfortable. They Shouldn't. They Have Opted For A Terrible Long-term Asset, One That Pays Virtually Nothing And Is Certain To Depreciate In Value.

We Have Usually Made Our Best Purchases When Apprehensions About Some Macro Event Were At A Peak. Fear Is The Foe Of The Faddist, But The Friend Of The Fundamentalist.

Activity Is The Enemy Of Investment Returns.

You Should Be Unconcerned About Short-term Price Action When You Own The Securities Directly, Just As You Were Unconcerned When You Owned Them Indirectly Through Bpl. I Think About Them As Businesses, Not "stocks", And If The Business Does All Right Over The Long Term, So Will The Stock.

Personally, I Really Hope I Can Treat Everyone Equally. I Think I Have Done A Pretty Good Job So Far But I Know I Can Do It Better.

If I Were The Treasury Secretary Or Head Of The Fed, You Know, I Would Try To Scare The Hell The Out Of The Private Sector And Say, You Better Save This Because You're Going Down With The Ship.

We Like To Buy Businesses, But We Don't Like To Sell Them.

In The Long Run Managements Stressing Accounting Appearance Over Economic Substance Usually Achieve Little Of Either.

The Smarter The Journalists Are, The Better Off Society Is. For To A Degree, People Read The Press To Inform Themselves - And The Better The Teacher, The Better The Student Body.

Although We Deal With Probabilities And Expectations, The Actual Results Can Deviate Substantially From Such Expectations, Particularly On A Short-term Basis.

... But The Important Thing Is That When You Do Find One Where You Really Do Know What You Are Doing, You Must Buy In Quantity.... Charlie And I Have Made A Dozen Or So Very Big Decisions Relative To Net Worth, Although Not As Big As They Should Have Been. And In Each Of Those, We've Known That We Were Almost Certain To Be Right Going In.

I Measure Success By How Many People Love Me. And The Best Way To Be Loved Is To Be Lo Veable.

Measure Of Success

We Are Trading Away A Little Bit Of Our Country All The Time For This Access Consumption That We Have Over What We've Produced. That Is Not Good. I Think It's Terrible Over Time. But Our Country's Productive Grows Enough So We Actually Can Do That, And We'll Still Be Better Off. We Just Don't Be As Well Off As If We Hadn't Done It.

The Reaction Of Weak Management To Weak Operations Is Often Weak Accounting.

I Want To Be Able To Explain My Mistakes. This Means I Do Only The Things I Completely Understand.

With A Wonderful Business, You Can Figure Out What Will Happen; You Can't Figure Out When It Will Happen. You Don't Want To Focus On When, You Want To Focus On What. If You're Right About What, You Don't Have To Worry About When

So Smile When You Read A Headline That Says "investors Lose As Market Falls." Edit It In Your Mind To "disinvestors Lose As Market Falls-but Investors Gain." Though Writers Often Forget This Truism, There Is A Buyer For Every Seller And What Hurts One Necessarily Helps The Other. (as They Say In Golf Matches: "every Putt Makes Someone Happy.")

Emotional Makeup Is More Important Than Technical Skill

In A Difficult Business, No Sooner Is One Problem Solved Than Another Surfaces - Never Is There Just One Cockroach In The Kitchen.

If Aig Had Tried To Unwind Their Derivatives Books. I Don't Know. It Would Have Hit Every Institution In The World.

The Major Asset In This Category Is Gold, Currently A Huge Favorite Of Investors Who Fear Almost All Other Assets, Especially Paper Money (of Whose Value, As Noted, They Are Right To Be Fearful). Gold, However, Has Two Significant Shortcomings, Being Neither Of Much Use Nor Procreative. True, Gold Has Some Industrial And Decorative Utility, But The Demand For These Purposes Is Both Limited And Incapable Of Soaking Up New Production. Meanwhile, If You Own One Ounce Of Gold For An Eternity, You Will Still Own One Ounce At Its End.

If You Expect To Be A Net Saver During The Next 5 Years, Should You Hope For A Higher Or Lower Stock Market During That Period? Many Investors Get This One Wrong. Even Though They Are Going To Be Net Buyers Of Stocks For Many Years To Come, They Are Elated When Stock Prices Rise And Depressed When They Fall. This Reaction Makes No Sense. Only Those Who Will Be Sellers Of Equities In The Near Future Should Be Happy At Seeing Stocks Rise. Prospective Purchasers Should Much Prefer Sinking Prices.

Chains Of Habit Are Too Light To Be Felt Until They Are Too Heavy To Be Broken.

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.

Never Invest In A Business You Can't Understand

We've Seen What Can Be Accomplished When We Use 50% Of Our Human Capacity. If You Visualize What 100% Can Do, You'll Join Me As An Unbridled Optimist About America's Future.

Most People Get Interested In Stocks When Everyone Else Is. The Time To Get Interested Is When No One Else Is. You Can't Buy What Is Popular And Do Well.

Investing Your Time

The .350 Hitter Expects, And Also Deserves, A Big Payoff For His Performance - Even If He Plays For A Cellar-dwelling Team. And A .150 Hitter Should Get No Reward - Even If He Plays For A Pennant Winner.

If You Have A Great Manager, You Want To Pay Him Very Well.

I'm The Luckiest Guy In The World In Terms Of What I Do For A Living. No One Can Tell Me To Do Things I Don't Believe In Or Things I Think Are Stupid.

Paradoxically, When 'dumb' Money Acknowledges Its Limitations, It Ceases To Be Dumb.

At This Point, When Treasury Bills, Seven Day Treasury Bills At 1/20th Of One Percent, It's Not Because People Want To Earn 1/20th Of One Percent, It's Because They Trust The Fact The Treasury Will Give It Back To Them Next Week.

You Don't Need To Have Extraordinary Effort To Achieve Extraordinary Results. You Just Need To Do The Ordinary, Everyday Things Exceptionally Well.

Everyday Things

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 Models. Beware Of Geeks Bearing Formulas.

There's Always A Mismatch. I Mean, You Know, As The Economy Evolves, It Reallocates Resources. Now, The Real Problem, In My View, Is - This Has Been - The Prosperity Has Been Unbelievable For The Extremely Rich People. If You Go To 1982, When Forbes Put On Their First 400 List, Those People Had $93 Billion. They Now They Have $2.4 Trillion, 25 For One. That Is - This Has Been A Prosperity That's Been Disproportionately Rewarding To The People On Top.

The Big Question About How People Behave Is Whether They've Got An Inner Scorecard Or An Outer Scorecard. It Helps If You Can Be Satisfied With An Inner Scorecard.

Risk Comes From Not Knowing What You're Doing.

I Am A Better Investor Because I Am A Businessman, And A Better Businessman Because I Am No Investor.

Games Are Won By Players Who Focus On The Playing Field -- Not By Those Whose Eyes Are Glued To The Scoreboard.

On His Giving Pledge Philanthropy: The Way I Got The Message Out Was To Get A Copy Of Forbes, Look Down That 400 List And Start Making Phone Calls! Bill And Melinda [gates] Did The Same Thing. So Keep Publishing The List So I Can Milk It.

Investment Decision Should Be Made On The Basis Of The Most Probable Compounding Of After-tax Net Worth With Minimum Risk.

Interest Rates Are To Asset Prices What Gravity Is To The Apple. When There Are Low Interest Rates, There Is A Very Low Gravitational Pull On Asset Prices.

I Think That Actually People In My Situation Should Be Paying More Tax.

Remember That The Stock Market Is Manic-depressive.

If I Taught A Class, On My Final Exam I Would Take An Internet Company And Ask, 'how Much Is This Company Worth?' Anyone Who Would Answer, I Would Flunk.

My Wealth Has Come From A Combination Of Living In America, Some Lucky Genes, And Compound Interest.

If, When Making A Stock Investment, You're Not Considering Holding It At Least Ten Years, Don't Waste More Than Ten Minutes Considering It.

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