Question: How do you determine what is the proper price to pay for the business? Buffett: It is a tough thing to decide but I don’t want to buy into any business I am not terribly sure of. So if I am terribly sure of it, it probably won’t offer incredible returns. Why should something […]
Category: Investing Approach
Buffett: The Importance of Management
Cap Cities vs. CBS I put one business in here, CBS versus Cap Cities in 1957, when my friend Tom Murphy took over Cap Cities. They had a little bankrupt UHF station in Albany. They ran it out of a home for retired nuns. And it was very appropriate because they had to pray every […]
Buffett on Diversification
The following article is an excerpt from Buffett Partnership Letters, January 20, 1966 Last year in commenting on the inability of the overwhelming majority of investment managers to achieve performance superior to that of pure chance, I ascribed it primarily to the product of: “(1) group decisions – my perhaps jaundiced view is that it […]
Buffett Wharton Speech
Notes on meeting with Warren Buffett on October 10, 2003 On living a successful life Look among your classmates/colleagues and ask yourself “If I could purchase 10% of anyone’s income, who would I choose?…..If I could short 10% of someone’s income, who would it be?” Ben Graham used this exercise quite extensively. Ask yourself the […]
Warren Buffett’s Best Advice on Successful Investing
You don’t have to be right about thousands and thousands of companies, you only have to be right about a couple. The most important thing is to decide – is to be able to define which ones you can come to an intelligent decision on and which ones are beyond your capacity to evaluate. You […]
Value & Growth: The Two Approaches Are Joined At The Hip
In the Chairman’s Letter of 1992 from Warren Buffet I found this small excerpt on his view about value, growth and using discounted cash-flow analysis. I felt like the writing must have light shed on it and be shared with others as it resinated with me, as does most of Buffett’s writings and insight. I […]
Warren Buffett: Quantitative vs Qualitative Investing
In Buffett Partnership Letter October 9, 1967, Buffett said, “The evaluation of securities and businesses for investment purposes has always involved a mixture of qualitative and quantitative factors. At the one extreme, the analyst exclusively oriented to qualitative factors would say, “Buy the right company (with the right prospects, inherent industry conditions, management, etc..) and […]
Warren Buffett Explains the Washington Post Investment
Warren Buffett is obviously an incredible investor with a track record across many decades. And although he has made countless good investments, that track record is largely due to several great investments such as Coca Cola, American Express and Washington Post. Value investing however, is not easy. Did you know that Buffett was down 25% […]
Buffett explains intrinsic value
Question: How do you calculate intrinsic value? Buffett: Intrinsic value is terribly important but very fuzzy. We try to work with businesses where we have fairly high probability of knowing what the future will hold. If you own a gas pipeline, not much is going to go wrong. Maybe a competitor enters forcing you to […]
Purchase-Price Accounting Adjustments and the “Cash Flow” Fallacy
This article is an appendix from Warren Buffett’s Letter to Berkshire Shareholders, 1986. Buffett introduced the “owner earnings” concept and explained why this metric is useful in evaluating businesses. Purchase-Price Accounting Adjustments and the “Cash Flow” Fallacy
Tests of a Good Business
By Warren Buffett A couple of fast tests about how good a business is. First question is “how long does the management have to think before they decide to raise prices?” You’re looking at marvelous business when you look in the mirror and say “mirror, mirror on the wall, how much should I charge for […]
Buffett: Invest in Businesses You Understand
Question: If you can’t talk with management, and can’t read the annual report, and didn’t know the price, but could only look at the financial statements, what metric would you look at? Buffett: Investing is laying out money now to get more money later on. Let’s leave the market price out. If you were buying […]