Buffett
https://www.ruleoneinvesting.com/blog/how-to-invest/warren-buffett-quotes-on-investing-success/
https://www.visualcapitalist.com/warren-buffetts-biggest-wins-and-fails/
http://mastersinvest.com/newblog/2017/9/26/when-do-you-sell-a-great-company
https://www.quora.com/Why-does-Warren-Buffett-not-trim-his-stocks-but-sell-the-stock-100-percent
9/6/22
Warren Buffett's cash pile has reached its lowest level since 2019
The Oracle of Omaha has bought a total of 16 companies this year
Like him, I believe it is a good time to buy—if you have the correct strategy
Last night, I spent about ten minutes reviewing the 2005 annual Berkshire Hathaway (NYSE: BRKa ) (NYSE: BRKb ) meeting, in which Warren Buffett and his partner Charlie Munger shared their views on the U.S. economy ahead of the Global Financial Crisis.
It wasn't until more than two years later that the markets collapsed. Yet, several investors were already asking about inflation, recession, the possible collapse of markets, yield curve inversion, and a thousand possible scenarios.
Now, I think Buffett's answer, which lasted only 30 seconds, is worth more than any investment textbook or supposed expert we may have to deal with; here is a very concise excerpt of what he said:
"We are not good at predicting the market, but we generally knew that there were several very good deals in the 1970s and that the markets went crazy in the late 1990s. But we never waste time thinking or talking about how the stock market will go from here on out because we don't know."
As Munger added:
"I've seen many people miss opportunities because they focus on a single economic variable or a single problem the country faces and forget about the good things. But if you buy a great business at an attractive price, it's crazy to say: 'I'll buy it tomorrow because maybe it will be cheaper if the world goes to hell.' We have never operated that way; we have never decided not to buy a business we liked because of the market view."
There will always be reasons to sell, but more generally, if you are an investor—and therefore a buyer with a medium- to long-term horizon—, you buy when prices fall.
That is exactly what Buffett is doing right now. The chart below shows the sharp drop in Berkshire Hathaway's cash holdings and short-term investments since the beginning of the year. It was mainly used for the purchase of 16 stocks:
Buffett and Munger favour dividend-paying corporations, but they also respect share buybacks. They believe share buybacks can repurchase undervalued shares and return capital to shareholders more tax efficiently:
“The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices. Just as surely, when a company overpays for repurchases, the continuing shareholders lose. At such times, gains flow only to the selling shareholders and to the friendly, but expensive, investment banker who recommended the foolish purchases.”
Please note particularly that we own publicly-traded stocks based on our expectations about their long-term business performance, not because we view them as vehicles for adroit purchases and sales. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers.
One advantage of our publicly-traded segment is that – episodically – it becomes easy to buy pieces of wonderful businesses at wonderful prices. It’s crucial to understand that stocks often trade at truly foolish prices, both high and low. “Efficient” markets exist only in textbooks.
A very minor gain in per-share intrinsic value took place in 2022 through Berkshire share repurchases as well as similar moves at Apple and American Express, both significant investees of ours. At Berkshire, we directly increased your interest in our unique collection of businesses by repurchasing 1.2% of the company’s outstanding shares. At Apple and Amex, repurchases increased Berkshire’s ownership a bit without any cost to us.
Charlie and I plead ignorance and firmly believe that near-term economic and market forecasts are worse than useless. Our job is to manage Berkshire’s operations and finances in a manner that will achieve an acceptable result over time and that will preserve the company’s unmatched staying power when financial panics or severe worldwide recessions occur.
And finally, the great wisdom points by Charlie Munger:
The world is full of foolish gamblers, and they will not do as well as the patient investor.
All I want to know is where I’m going to die, so I’ll never go there. And a related thought: Early on, write your desired obituary – and then behave accordingly.
If you don’t care whether you are rational or not, you won’t work on it. Then you will stay irrational and get lousy results.
Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage.
You can learn a lot from dead people. Read of the deceased you admire and detest.
Don’t bail away in a sinking boat if you can swim to one that is seaworthy.
A great company keeps working after you are not; a mediocre company won’t do that.
Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time.
Ben Graham said, “Day to day, the stock market is a voting machine; in the long term it’s a weighing machine.” If you keep making something more valuable, then some wise person is going to notice it and start buying.
There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice.
You don’t, however, need to own a lot of things in order to get rich.
You have to keep learning if you want to become a great investor. When the world changes, you must change.
Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy. We were slow to recognize the change, but better late than never.
Finally, I will add two short sentences by Charlie that have been his decision-clinchers for decades: “Warren, think more about it. You’re smart and I’m right.”
