To The Moon

Key Takeaway

1. Intelligence And integrity Are The Foundation
2. Invest In Quality Businesses, Not "Cigar Butts"
3. Invest In Businesses You Understand
4. Look For The Opportunity And Take Action In Right Time
5. Don't Sell Because Of Price Fluctuations
6. Invest When They Are Cheaper Than Their Real Value

1. Intelligence And integrity Are The Foundation

When we hire people, we look for intelligence we look for in for initiative or energy, and we look for integrity. Because if you're gonna get somebody without integrity, you want them lazy and dumb.

2. Invest In Quality Businesses, Not "Cigar Butts"

I've been taught by Graham to buy things on a quantitative basis. Look around for things that are cheap. And that I was taught that in 1949, or 50 made a big impression on me. So I went around looking for what I call us cigar butt of stocks. And the cigar butt approach to buying stocks is that you walk down the street and you're looking around for cigar butts and you'll find this obviously this terrible looking soggy, ugly looking cigar.

Well that's what I did for years. It's a mistake. It's so much easier just to buy wonderful businesses. So now I would rather buy a wonderful business at a fair price than a fair business at a wonderful price.

3. Invest In Businesses You Understand

I have an old-fashioned belief that I can only expect to make money and things that I understand and when I say understand, I don't mean to understand, you know what the product does or anything like that. I mean, understand what the economics of the business are likely to look at. look like 10 years from now or 20 years from now.

The biggest mistakes I've made by far were mistakes of omission. It's the things I knew enough to do. They were within my circle of competence. And I was sucking my thumb. They don't show up anyplace. I probably cost Berkshire at least $5 billion, for example by sucking my thumb 20 years ago or close to buy Fannie Mae. 

4. Look For The Opportunity And Take Action In Right Time

There's big opportunities in life have to be seized. We don't do very many things but when we get the chance to do something that's right and big, we've got to do it. I mean, it really gotta you gotta grab them when they come that because they you're not going to get 500 great opportunities. And every financial decision you made you used up a punch. You get very rich because you'd think through very hard each one I mean.

5. Don't Sell Because Of Price Fluctuations

We're not going to sell no matter how much anybody offers. I mean, if somebody offers is three times what something is worth, See's Candy, the Buffalo News or Shives whatever, maybe we're not gonna sell it. I may be wrong and having that approach I know I'm not wrong if I owned 100% of Berkshire because that's the way I want to live my life. I've got all the money I could possibly need.

To do that simply because somebody waves a big check at me would be like selling one of my children. I won't do that. And I want to tell my partners I won't do it so that they're not disappointed me. More and more was certain stocks we've got that approach.

We're not going to sell simply because it looks too high.

6. Invest When They Are Cheaper Than Their Real Value

Intrinsic value is what is the number that if you were all knowing about the future, and could predict all the cash that the business would give you between now and judgment day, discounted at the proper discount rate. That number is what the intrinsic value of business there in other words, the only reason for making an investment in laying out money now is to get more money later on.