Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.
Those who can count
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 (bearing in mind that there are really only three kinds of people in the world : those who can count and those who can’t).
Better than 90% of people
If you invested in a very low-cost index fund – where you don’t put the money in at one time, but average in over 10 years – you’ll do better than 90% of people who start investing at the same time.
Cash never makes us happy
Cash never makes us happy. It’s better to have money burning a hole in Berkshire’s pocket than resting comfortably in someone else’s.
I can’t be involved in 50 to 75 things. That’s a Noah’s Ark way of investing – you end up with a zoo that way. I like to put meaningful amounts of money in a few things.
It’s far better to own a portion of the Hope diamond than 100 percent of a rhinestone.
Too much of a good thing can be wonderful
Berkshire’s ownership interest in all four companies is likely to increase in the future. Mae West had it right : “Too much of a good thing can be wonderful.”
We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it. In stating this opinion, we define risk, using dictionary terms, as “the possibility of loss or injury”.
Ten per cent of your net worth
With each investment you make, you should have the courage and the conviction to place at least ten per cent of your net worth in that stock.
If you have a harem of 40 women, you never get to know any of them very well.