Wisdom

Acknowledging what you don't know is the dawning of wisdom.

- Charles Munger

Address the problem immediately

Some people seem to think there's no trouble just because it hasn't happened yet. If you jump out the window at the 42nd floor and you're still doing fine as you pass the 27th floor, that doesn't mean you don't have a serious problem. I would want to address the problem right now.

- Charles Munger

Look differently

Everyone tends to see the same things, read the same newspapers and get the same data feeds. The only way to arrive at a different answer from everybody else is to organize the data in different ways, or bring to the analytic process things that are not typically present.

- Bill Miller

Don't dip your toes where you don't have a clear understanding

On one point, I am clear. I will not abandon a previous approach whose logic I understand (although I find it difficult to apply) even though it may mean foregoing large, and apparently easy, profits to embrace an approach which I don't fully understand, have not practiced successfully, and which possibly could lead to substantial permanent loss of capital.

- Warren Buffett

Wall Street way

There seems to be an unwritten rule on Wall Street: If you don't understand it, then put your life savings into it. Shun the enterprise around the corner, which can at least be observed, and seek out the one that manufactures an incomprehensible product.

- Peter Lynch

Count no more than ten

Our life is frittered away by detail. An honest man has hardly need to count more than his ten fingers, or in extreme cases he may add his ten toes, and lump the rest. Simplicity, simplicity, simplicity! I say, let your affairs be two or three, and not a hundred or thousand; instead of a million count a half a dozen, and keep your accounts on your thumb-namil.

- Henry David Thoreau

Responsibilities

Questioning GAAP figures may seem impious to some. After all, what are we paying the accountants for if it is not to deliver us the "truth" about our business. But the accountants' job is to record, not to evaluate. The evaluation job falls to investors and managers.

- Warren Buffett

Why companies are valuable

What makes a company valuable, and why it will be more valuable tomorrow than it is today... earnings and assets.

- Peter Lynch

Why people are buying stocks?

Volatility is a symptom that people have no idea of the underlying value - that they have stopped playing the asset game. They're not buying because it's a company with certain attributes. They're buying because the price is rising.

- Jeremy Grantham

Retailed earnings

Since the long-term corporate outlook changes only infrequently, dividend patterns should change no more often. But over time distributable earnings that have been withheld by managers should earn their keep. If earnings have been unwisely retained, it is likely that managers, too, have been unwisely retained.

- Warren Buffett

Value business in order to value the stock

All intelligent investing is value investing – acquiring more than you are paying for. You must value the business in order to value the stock.

- Charles Munger

Risk of being a value investor

To thrive as a value investor, you have to risk being called a dummy from time to time.

- Christopher Browne

What to look for in "record" earnings

Most companies define "record" earnings as a new high in earnings per share. Since businesses customarily add from year to year to their equity base, we find nothing particularly noteworthy in a management performance combining, say, a 10% increase in equity capital and a 5% increase in earnings per share. After all, even a totally dormant savings account will produce steadily rising interest earnings each year because of compounding.

- Warren Buffett

Graham's idea will never obsolete

The idea of a margin of safety, a Graham precept, will never be obsolete. The idea of making the market your servant will never be obsolete. The idea of being objective and dispassionate will never be obsolete.

- Charlie Munger

Man's imperfect

Man's imperfect, limited-capacity brain easily drifts into working with what's easily available to it. And the brain can't use what it can't remember or when it's blocked from recognizing because it is heavily influenced by one or more psychological tendencies bearing strongly on it.

- Charlie Munger

When not to speculate

There are two times in a man's life when he should not speculate - when he can't afford it and when he can.

- Mark Twain

Take advantage if your judgement is right

Over many decades, our usual practice is that if [the stock of] something we like goes down, we buy more and more. Sometimes something happens, you realize you're wrong, and you get out. But if you develop correct confidence in your judgment, buy more and take advantage of stock prices.

- Charlie Munger

Stop loss? Buffett doesn't do it.

I have no idea whether people get friendlier or crazier. That is not my game. My game is simply to buy something worth a dollar for 50 cents. Then if they go crazy in the right direction it helps me and if they go crazy in the other direction I just buy more.

- Warren Buffett

Investment idea in simple terms

Our investments continue to be few in number and simple in concept: The truly big investment idea can usually be explained in a short paragraph. We like a business with enduring competitive advantages that is run by able and owner-oriented people. When these attributes exist, and when we can make purchases at sensible prices, it is hard to go wrong.

- Warren Buffett

Impact of too much of currency printing

Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar's destiny lies with Congress.

- Warren Buffett

Strike when the opportunities come along

You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.

- Warren Buffett

Fewer opportunities today!

If you have only a little capital and are young today, there are fewer opportunities than when I was young. Back then, we had just come out of a depression. Capitalism was a bad word. There had been abuses in the 1920s. A joke going around then was the guy who said, 'I bought stock for my old age and it worked - in six months, I feel like an old man!' It's tougher for you, but that doesn't mean you won't do well - it just may take more time. But what the heck, you may live longer.

- Charles Munger

Admission

I would like to point out that the last time I made any stock market predictions was in the year 1914, when my firm judged me qualified to write their daily market letter, based on the fact that I had one month's experience in Wall Street. Since then I have given up making predictions.

- Benjamin Graham

Those expensive words

The four most expensive words in the English language are, 'This time it's different'.

- Sir John Templeton

You don't need to leverage!

I've seen more people fail because of liquor and leverage - leverage being borrowed money. You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing.

- Warren Buffett

Wait until Mr.Market is nutty

High prices inside of a year will typically be 100% of the low price. Businesses don't change in value that much. That is simply crazy. There are extreme degrees of fluctuation, and Mr. Market will call out the prices. Wait until he is nutty in one direction or the other.

- Warren Buffett