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Author Topic: Exploiting the Wisdom of People Who've Been There (for autodidact)  (Read 20104 times)

Offline jmces

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"You do not need to be a genius. You need to have emotional stability, inner peace and be able to think for yourself, [since] you’re subjected to all sorts of stimuli. It’s not a complicated game; you don’t need to understand math. It’s simple, but not easy."

- Waren Buffett



"Emotional makeup is more important than technical skill." - Warren Buffett

inner peace :D

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"You do not need to be a genius. You need to have emotional stability, inner peace and be able to think for yourself, [since] you’re subjected to all sorts of stimuli. It’s not a complicated game; you don’t need to understand math. It’s simple, but not easy."

- Waren Buffett



"Emotional makeup is more important than technical skill." - Warren Buffett

emotional stability is a must and this is what i need sa trading life ko!  :watchuthink:

Whatsoever ye ask in prayer, believing, ye shall receive.

Offline Wills

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BRK Annual Meeting yr. 2003


What's the temperament of successful investors?

Munger: I think there's something to be said for developing the disposition to own stocks WITHOUT fretting.

Buffett: I think it's almost impossible to do well investing over time without this(temperament). If you focus on the price, you're assuming that the market knows more than you do. That may be the truth, but in that case you shouldn't own it. The stock market is there to SERVE you, not to INSTRUCT you.



« Last Edit: Oct 18, 2013, 09:00 AM by Wills »
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

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Offline jmces

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Offline Wills

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BRK Annual Meeting yr. 2004

On temperament

Munger: We read a lot. I don’t know anyone who’s wise who doesn’t read a lot. But that’s not enough: You have to have a temperament to grab ideas and do sensible things. Most people don’t grab the right ideas or don’t know what to do with them.

Buffett: The key is to have a “money mind,” which is not IQ, and then you have to have the RIGHT temperament. If you CAN'T CONTROL yourself, you’re going to have DISASTERS. Charlie and I have seen it. The whole world in the late 1990s went a little mad in terms of investments. How could that happen? Don’t people learn? What we learn from history is that people don’t learn from history.

["Grade yourself on your temperament. Temperament is the ability to not be swayed by the market. See what you are supposed to see." - comment from the person who took this note]
« Last Edit: Oct 18, 2013, 09:11 AM by Wills »
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

Offline Wills

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BRK Annual Meeting yr. 2006


Could you explain more about the circle of competence?

Buffett: We are best at evaluating businesses where we can come to a judgment that they will look a lot like they do now in five years. The businesses will change, but the fundamentals won’t. Iscar will be better – maybe a lot bigger – in five years, but the fundamentals will be the same. [In contrast,] look at how much telecom has changed.

Charlie says we have three boxes: In, Out and Too Hard. You don’t have to do everything well. At the Olympics, if you run the 100 meters well, you don’t have to do the shot put.

Tom Watson [the founder of IBM] said, “I’m no genius. I’m smart in spots and I stay around those spots.” We have a lot of managers who are the same. You don’t want to compete with Pete Liegl [the CEO of Forest River, Inc.] because he’ll kill you in the RV business. But he doesn’t try to tell us how to run the insurance business.

I was virtually there at the birth of Intel. I was on the board of Grinnell College with Bob Noyce [one of the founders of Intel] and Grinnell invested $300,000 into it at inception. [I easily could have as well, but] I had no idea then and still don’t now what Intel will look like in five years. Even people in the industry don’t. Some businesses are very, very hard to predict.

Munger: A foreign correspondent, after talking to me for a while, once said: “You don’t seem smart enough to be so good at what you’re doing. Do you have an explanation?” [Laughter]

Buffett: Was he referring to me or you? [Laughter]

Munger: I said, “We know the edge of our competency better than most.” That’s a very worthwhile thing. It’s not a competency if you don’t know the edge of it.


[BRK Annual Meeting yr. 2007 - What makes the difference is whether the people running them know their strengths and weaknesses and play when it is to their advantage and DO NOTHING when it is not.]

--------------------------------

Don't invest on business that you can't predict.
« Last Edit: Oct 22, 2013, 11:31 AM by Wills »
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

Offline wilch23

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But we don't predict, we only speculate! Hehe

Offline Wills

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Well, you guys speculate the numbers and VIs don't predict the numbers! LOL
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

Offline Wills

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One of the best!

BRK Annual Meeting yr. 2009


What two industries are the first you should learn when developing your circle of competence?

Look for simple businesses. If I gave you $10M to invest right now and you only had three weeks to spend it and you could only spend it in Omaha, you’d look for simple, understandable, strong businesses. You look at the Nebraska Furniture Mart (NFM). You wouldn’t look at the third best fast food chain. You might look at McDonald’s, because it is number one and will probably always been number one. They have share of mind. What about Oracle? Too hard. GM? Too hard. You can’t predict the future for these two companies. Too many variables.

Investment knowledge is cumulative, and things you learn will make you better in the future. Stick to things you understand. Mrs. B at NFM wouldn’t get paid in Berkshire stock. Why? She doesn’t know stocks, but she knows furniture down cold. How do you beat Bobby Fisher? Play him in anything except chess. Even young people have a circle of competence even if they don’t have their thoughts perfectly organized.

Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

Offline Wills

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Student Visit 2007



Is there a moral connection to who you invest in?

Charlie and I went to Memphis to look at a chewing tobacco company. In the end, we decided we didn’t want to own it. We would buy stock in a tobacco company, but we didn’t want to own it.

A good example is Charlie’s favorite company, Costco. They are the #3 distributor in the US of cigarettes, but you wouldn’t avoid buying it because of that. You’ll drive yourself crazy trying to keep track of these things. Our philosophy is that it’s impossible to grade marketable securities, but we’ll buy the stocks without any problems, but we just won’t be in certain businesses.

My view is that energy production should move to nuclear. It’s clean, cheap and safe. Coal emissions are bad for the environment; however it’s still a good company. It’s impossible to grade marketable securities on moral activity. Berkshire Hathaway has and will buy what trades, but will not buy companies that engage in certain behaviors. PetroChina owns 40% of the oil in the Sudan that is government owned. If they did not own it, someone else would. Also, you have to keep in mind, if PetroChina did not buy it its possible the Sudanese would own 100% of the oil rights and that’s not so good either.

I find it funny that people find time to protest PetroChina for ownership of the Sudanese oil, but with the $300 billion or so of imported goods from China, these same people don’t protest Chinese goods. They protest investment in Chinese companies though.
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

Offline wilch23

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I don't know whether to laugh or cry, I presume it's Buffet talking here.
« Last Edit: Oct 23, 2013, 04:21 PM by wilch23 »

Offline chinito77

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Nice articles sir wills for posting what buffet said here. :cool2:

:yoohoo:

Ikaw na bagong idol ko  :watchuthink:

Offline Wills

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^salamat na-appreciate mo ang thread na ito.

Ikaw ang Idol ko na entrepreneur dahil matapang na bata ka!
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

Offline Wills

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The question is have I bought a company when the numbers tells me not to and how much is qualitative and how much is quantitative... The best buys had been when the numbers almost tells you not to, I mean… because then you feel so strong about the product and not just the fact you're getting a used cigar butt cheap.

- Warren Buffett
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

Offline Wills

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Emory's Goizueta Business School and McCombs School of Business at UT Austin yr. 2008



Who do you think will be one of the next greatest investors and are you partial to favoring someone with a similar investment style as yours?


Buffett: We just finished looking for someone. The Board has 3 candidates to replace me as CEO and 4 candidates to replace me as investor. They are all doing fine where they are, but they would be willing to come over to Berkshire for less pay.

In 1969, I wound up my partnership and I had to help people find someone to manage their money. I recommended Bill Ruane of Sequoia Fund, Sandy Gottesman, who is currently on the board at Berkshire, and Walter Schloss, who I wrote about in “The Superinvestors of Graham and Dodds-ville”. There’s no way they could miss.

But I don’t know many of the newer investors, they’re not my contemporaries. It’s not enough to just look at track records. They aren’t predictive and there will always be a few people that do well. I know guys who can make 50% a year with $5 million, but not with $1 billion. The problem with guys that do well is they attract so much money that it neutralizes their advantage. It’s hard to identify them, and even harder to make a deal to keep them from attracting other capital. It’s like betting on a 12 year old horse that won at 3 years old. It’s also important to AVOID MANAGERS WHO USE LEVERAGE. It’s the reason that investors with 160 IQs FLAME OUT.
Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
In stocks if you're right about WHAT you won't have to worry about WHEN very much.

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