Sunday, June 25, 2017

Quotes From Warrent Buffett

Some quotes of Warren Buffett that I liked a lot: (reproduced without permission - as usual.)

Long ago Mark Twain said "A man who tries to carry a cat home by its tail will learn a lesson that can be learned in no other way."

As we view GEICO's current opportunities, Tony and I feel like two hungry mosquitoes in a nudist camp. Juicy targets are everywhere.

In apparel, Fruit of the Loom increased unit sales by 10 million dozen, or 14%, with shipments of intimate apparel for women and girls growing by 31%. Charlie, who is far more knowledgeable than I am on this subject, assures me that women are not wearing more underwear. With this expert input, I can only conclude that our share in the women's category must be growing rapidly.

It's only when the tide goes out that you learn who's been swimming naked.

The most important thing to do when you find yourself in a hole is to stop digging.

Almost by definition, a really good business generates far more money (at least after its initial years) than it can use internally. The company could, of course, distribute the money to shareholders by way of dividends or share repurchases. But often the CEO asks a strategic planning staff, consultants or investment bankers whether an acquisition or two might make sense.  That's like asking your interior decorator whether you need a 50,000 dollar rug.

Part of the appeal of Black-Scholes to auditors and regulators is that it produces a precise number. Charlie and I cant supply one of those. We believe the true liability of our contracts to be far lower than that calculated by Black-Scholes, but we can't come with an exact figure - anymore than we can come up with a precise value for GEICO, BNSF, or for Berkshire Hathaway itself. Our inability to pinpoint a number doesn't bother us: we would rather be approximately right than precisely wrong.
 (Is he NF as in MBTI?)

Our comments about investment bankers may seem harsh. But Charlie and I - in our hopelessly old-fashioned way - believe that they should perform a gate keeping role, guarding investors against the promoter's propensity to indulge in excess. Promoters, after all, have throughout time exercised the same judgment and restraint in accepting money that alcoholics have exercised in accepting liquor. At a minimum, therefore, the banker's conduct should rise to that of a responsible bartender who, when necessary, refuses the profit from the next drink to avoid sending a drunk out on the highway. In recent years, unfortunately, many leading investment firms have found bartender morality to be an intolerably restricting standard.  Lately, those who have traveled the high road on Wall Street have not encountered heavy traffic.

My conclusion from my own experiences and from much observation of other businesses is that a good management record (measured by economic returns) is far more a function of what business boat you got into than it is of how effectively you row (though intelligence and effort hero considerably, of course, in any business, good or bad). Some years ago I wrote: "when a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains in tact". Nothing has since changed my point of view on that matter. 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.
One thing that we have learned - the hard way - after many years in business: surprises in insurance are far from symmetrical. you are lucky if you get one that is pleasant for every ten that go the other way. To often, however, insurers text to looming loss problems with opp optimism. They behave like the fellow in a switchblade fight who, after his opponent has taken a mighty swipe at his throat, exclaimed, "You never touched me." His adversary's reply: "Just wait till you shake your head".
According the name "investors" to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic.

In the long run, of course, trouble awaits managements that paper over operating problems with accounting maneuvers. Eventually, managements of this kind achieve the same result as the seriously ill patient who tells his doctor: "I cant afford the operation, but would you accept a small payment to touch up the x-rays?

I've reluctantly discarded the notion of my continuing to manage the portfolio after my death - abandoning my hope to give new meaning to the term "thinking outside the box".

Some more quotes (apparently off color): http://www.independent.co.uk/news/business/news/warren-buffett-sex-explain-investment-finance-women-yes-billionaire-berkshire-hathaway-misogyny-a7605171.html 

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