Wonderful castles, surrounded by deep, dangerous moats, where the leader inside is an honest and decent person. Preferably, the castle gets its strength from the genius inside ; the moat is permanent and acts as a powerful deterrent to those considering an attack ; and inside, the leader makes gold but doesn’t keep it all for himself. Roughly translated, we like great companies with dominant positions, whose franchise is hard to duplicate and has tremendous staying power or some permanence to it.
All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.
Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.
We have long felt that the only value of stock forecasters is to make fortune-tellers look good. Even now, Charlie (Munger) and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-up who behave in the market like children.
For some reason, people take their cues from price action rather than from values. What doesn’t work is when you start doing things that you don’t understand or because they worked last week for somebody else. The dumbest reason in the world to buy a stock is because it’s going up.
The intelligent investor is still the best book on investing. It has the only 3 ideas your really need :
1. The Mr. Market analogy
2. A stock is a piece of a business
3. Margin of safety
We’re not looking at the aspects of the stock, we’re looking at the aspects of the business.
To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing, or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not prevailing view at most business schools whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses – How to Value a Business, and How to Think About Market Prices.