"Start ups are not our game" Warren Buffett 2007

"I’m really concerned about what’s going on in our public markets. I think short-termism is incredibly damaging. There’s this focus on quarter-to-quarter earnings. There’s this focus on whether you’re a penny short or a penny above the estimate." David Swenson

"When Wall Street gets “innovative,” watch out!" Warren Buffett

"High penetration, in turn, makes a newspaper particularly valuable to retailers since it allows them to talk to the entire community through a single "megaphone". A low-penetration paper is a far less compelling purchase for many advertisers and will eventually suffer in both ad rates and profits" Warren Buffett 1989

"There's no rule that says newspaper's revenues can't fall below its expenses and that losses can't mushroom. Fixed costs are high in the newspaper business, and that's bad news when unit volume heads south" Warren Buffett 2006

"It’s amusing that commentators regularly hyperventilate at the prospect of the Dow crossing an even number of thousands, such as 14,000 or 15,000. If they keep reacting that way, a 5.3% annual gain for the century will mean they experience at least 1,986 seizures during the next 92 years. While anything is possible, does anyone really believe this is the most likely outcome?" Warren Buffett

"I should mention that people who expect to earn 10% annually from equities during this century – envisioning that 2% of that will come from dividends and 8% from price appreciation – are implicitly forecasting a level of about 24,000,000 on the Dow by 2100. If your adviser talks to you about doubledigit returns from equities, explain this math to him – not that it will faze him. Many helpers are apparently direct descendants of the queen in Alice in Wonderland, who said: “Why, sometimes I’ve believed as many as six impossible things before breakfast.” Beware the glib helper who fills your head with fantasies while he fills his pockets with fees." Warren Buffett

"It’s easy to identify many investment managers with great recent records. But past results, though important, do not suffice when prospective performance is being judged. How the record has been achieved is crucial, as is the manager’s understanding of – and sensitivity to – risk (which in no way should be measured by beta, the choice of too many academics). In respect to the risk criterion, we were looking for someone with a hard-to-evaluate skill: the ability to anticipate the effects of economic scenarios not previously observed." Warren Buffett

"Fund consultants like to require style boxes such as “long-short,” “macro,” “international equities.” At Berkshire our only style box is “smart.” Warren Buffett

"Good results will bring a manager more money to manage.  If inflows are allowed to go unchecked, eventually more money will bring bad performance.  Increased assets under management can shorten the list of potential investments large enough to make an impact, erode a manager's ability to be selective and agile; and encourage "style drift", under which a manager strays into strategies beyond his core competence in an effort to put money to work"  Howard Marks

“While managing money successfully “While managing money successfully

Charlie Rose: So where does intuition, instinct, hunch, play in all of this?  25:43 Ray Dalio: Oh, it's critical. And it's also by the way what the computer can't do well. In other words, it's the subconscious. As you know, man, although it's only 200,000 years old, the brain is much older. And we came programmed with many of these things in our brain, intuition and those things. And they're in our subconscious. And so by opening up one's subconscious to one's consciousness so they come up, you know, creativity comes from not working hard at it, it comes from relaxation. It bubbles up from the subconscious. 26:18Charlie Rose: That is why you believe in transcendental meditation. 26:20 Ray Dalio: Transcendental meditation has been invaluable to me because it helps to do that. But that intuition, that creativity, man is still unique at being able to do those things. So you let that bubble up, but you have to reconcile it with your logic. So when the subconscious creativity and intuition comes up and replicate it with your logic, it's fabulous. But then you take what you learned and you just don't -- you do something with it. Our converting it into algorithms and realizing that has been invaluable because the computer can process a whole lot more information, a lot quicker and a lot less emotionally so it contributes. But you don't have to do that to have an idea meritocracy. I want to be clear. Anybody in any relationship can have an idea meritocracy.

 

 "I admire Lee Kuan Yew" Ray Dalio

"From the inception of the fund in January 1998, the fund returned an annual compound growth rate in excess of 29%. In 12 years, the capital grew more than 20 folds." Li Lu

"Warren and Charlie could afford to spend tens or hundreds of millions of dollars on experts. They have never done that. They have never even spent $50,000 on an analyst or $100,000 on an analyst." Mohnish Pabrai


     "One question I always ask myself in appraising a business is
how I would like, assuming I had ample capital and skilled
personnel, to compete with it.  I’d rather wrestle grizzlies than
compete with Mrs. B and her progeny.  They buy brilliantly, they
operate at expense ratios competitors don’t even dream about, and
they then pass on to their customers much of the savings.  It’s
the ideal business - one built upon exceptional value to the
customer that in turn translates into exceptional economics for
its owners."  Warren Buffett

Book value is an accounting concept, recording the
accumulated financial input from both contributed capital and
retained earnings.  Intrinsic business value is an economic
concept, estimating future cash output discounted to present
value.  Book value tells you what has been put in; intrinsic
business value estimates what can be taken out.

     An analogy will suggest the difference.  Assume you spend
identical amounts putting each of two children through college.  
The book value (measured by financial input) of each child’s
education would be the same.  But the present value of the future
payoff (the intrinsic business value) might vary enormously - 
from zero to many times the cost of the education.  So, also, do
businesses having equal financial input end up with wide
variations in value.

     At Berkshire, at the beginning of fiscal 1965 when the
present management took over, the $19.46 per share book value
considerably overstated intrinsic business value.  All of that
book value consisted of textile assets that could not earn, on
average, anything close to an appropriate rate of return.  In the
terms of our analogy, the investment in textile assets resembled
investment in a largely-wasted education. Warren Buffett

Photo by Zinkevych/iStock / Getty Images
Photo by Zinkevych/iStock / Getty Images

Instinct

"From our empirical observations, it seems that some members of our species are immune to this call of the herd. They can go left when the rest of the tribe goes towards the right. Their attitude isn’t influenced by the behavior of the tribe. Their genetic code seems to not have the “tribal gene”. It’s difficult to evaluate what percentage of humans have this particularity but it’s a minority. And it’s probably those who eventually become creators (artists, scientists, writers, entrepreneurs, etc), as the act of creation requires the capacity to make something new and to forge a new path different from others. To create is to go where there was nothing before. Creating is the antonym of following."  Francois Rochon

 

" Testing is best suited for left-brain-dominant students. It's much easier to test for sequential thinking and problem solving, recall, etc., than for right-brain attributes. For example, how do you test for intuition or artistry? So economics has become largely quantitative. Of course, modern portfolio theory (MPT) is the ultimate in the application of mathematics to what really is a soft science. So even though MPT is an important part of the CFA program and the curriculum in most graduate business schools Buffett and I consider it almost laughable. Yet it continues as core curriculum because that's what teachers have been taught to teach, and it's hard for this battleship to change direction. In a recent New York Times edition, Bob Schiller, with whom l've had communications, wrote that behavioral economics is the new frontier. Even though it's gaining currency at Harvard, Yale, and a number of other leading schools, it's going to be difficult to institutionalize because it's so intuitive. So l would love for schools to teach right-brain thinking and applications as well, but it won't be easy to quantifiably integrate it into the curriculum. 

“I was an English major my first two years, I wanted to be an English professor.   My first semester in my junior year I took  a course in economics so I could read the newspaper because I wasn’t very good at it even though I was supposed to  be an English major.  I fell in love with the subject and crammed an economic major.  I took 18 of my last 21 course were economics courses or something absurd like that.  Then I wanted to be an economics professor.   I also have a drop-out in my genes.  I went to get my PHD at Michigan and I lasted a semester and a half and dropped out, and went to work in construction for six months” Stan Druckenmiller

"In the mid-60's, Wharton students had to have a non-business minor, and I satisfied the requirement by taking five courses in Japanese studies.  These surprised me by becoming the highlight of my college career and contributing to my investment philosophy in a major way.  Among the values prized in early Japanese culture was mujo.  Mujo was defined classically for me as recognition of "the turning of the wheel of the law", implying acceptance of the inevitability of change, or rise and fall.  This sense of accepting and 'going with' the environment and the changes that takes place there - rather than insisting that is stay the same and attempting to impose our will on it - was capture for me in a quotation from Lao-Tzu.  "To be strong you have to be like water; if there are obstacles, it flows; if there is an obstacle, it stops; if a dam is broken, then it flows further; if a vessel is square, then it has a square form; if a vessel is round, then it has a round form; because it is so soft and flexible, it is the most necessary and strongest thing""  Howard Marks

In 1951 Soros earned a Bachelor of Science in philosophy and an MSc in philosophy in 1954, both from the London School of Economics.

Einhorn graduated from Cornell University with a B.A. in Government from the College of Arts and Sciences

After leaving the Navy, Robertson moved to New York City and worked for a time as a stockbroker for Kidder, Peabody & Co. At Kidder, he eventually headed the firm's asset management division (Webster Securities) before departing to move with his family to New Zealand for a year to write a novel. On his return, in 1980 Robertson launched Tiger Management with initial investments from friends and family

In 1965, Lynch graduated from Boston College where he studied history, psychology and philosophy. He served two years in the military before attending and graduating from the Wharton School at the University of Pennsylvania with a Master of Business Administration in 1968.

In 1964, Rogers graduated with a bachelor's degree in History from Yale University. He got his first job on Wall Street, at Dominick & Dominick.

In 1966, Rogers then acquired a second BA degree in Philosophy, Politics and Economics from the University of Oxford, as a member of Balliol College. He was the coxswain in 1966 for Oxford's victory in The Boat Race.

"If I didn't do what I do in my life I would want to be a journalist. I consider myself a journalist to some extent.  I assign myself a story.  I say is the Washington Post company worth $22 a share in 1973.  I say is the BNSF railroad worth us paying $34b I assign myself a story. It's my working hypothesis that it is. But then I go looking for the facts and I try not to be selective about the facts that I use as input.  So journalism, it's fascinating, I love it.  Always observe the rule about not letting the hypothesis determine the story.  You've got to learn about accounting, your've got to learn about how a business works if you're going to do business journalism.  You can always get smarter." Warren Buffett

Leon Levy studied psychology at City College of New York

Paul Singer - BS in psychology from the University of Rochester and a JD from Harvard Law School

David Abrams graduated from University of Pennsylvania with a B.A. degree in History.

"Creativity is the power to connect the seemingly unconnected." William Plomer

 “It’s imperative to be creative because a stock currently is selling at a price that the average investor thinks is the right price, so you have to come to a decision that that price is wrong and that the price deserves to sell, the stock deserves to sell at a higher price for some reason. That reasoning is creative thinking because other people aren’t thinking that way because if other people were thinking that way, the stock would be at a higher price. Every idea is a creative idea.”  Ed Wachenheim

“Having imagination ,feel, a gut sense of what could be that isn’t now is very important, to prepare for something that the price doesn’t tell you”  John Burbank

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Photo by Ken Drysdale/iStock / Getty Images
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