(03-07-2019, 06:49 AM)rayray Wrote:WB and CM are quite the characters. At times they come off as folksy and even overly simple. That's not the case of course. You have to read a few books, or at least listen to a lot of their interviews to begin to understand proper context. I like to try to live within some investment rules. I steal most of my rules from investors like them. I have no doubt their are some Ivy league professors that are more intelligent, but they would likely be no more successful than you or I at investing. I will always follow WB's rules but understand I can't possibly replicate WB or the last 40 years BRK. If I put 25% of my net worth in JPM or KO, they aren't going to invite me to be on the board, or give me some sweetheart insider can't lose deal on preferred shares. He is often treated like he founded the company when he enters the picture.(03-06-2019, 07:29 AM)fenders53 Wrote: WB's number # rule is don't lose money.
In the end Buffet and Munger got rich over investing in a short list of good companies. They didn't try to be an S&P 500 index fund with 100 positions, or swing trading from stock to stock. There is a lesson in that too. Buy and mostly hold forever has served them well. All you have to do is pick some above average companies and stay in the market for 70 years and it all works out.
Yea, I've always liked that rule...ever notice when he says it it always seems to follow with a chuckle--it's almost like he's joking but serious at the same time or who knows maybe he knows it's easier said then done...
WB, "Rule number one--don't lose money. Rule number two--don't forget Rule number one." LOL
Yes...it's true and he's talked about that diversification keeps you safe but a concentrated portfolio will make you wealthy.
And man...70 years!! He mentioned that at the last Berk meeting, how they were born at the right time with the right desire and skills to have done what they did. That it probably can never be duplicated.
Investing is a not a race it's a marathon.
What struck me about WB and CM is their humor, a sense of humility, and extremely I mean extremely intelligent and quick.
At the meeting, people ask questions, some people try to stump them and they don't. This one guy, he was I believe an Economics Professor from Columbia or Cornell and he asks this really complex financial question. WB laughed and said I have no idea, I don't even know what that means. Then CM responds by saying that anyone asking a complex question like that already knows the answer and doesn't deserve one because he's just trying to prove his own intelligence in front of others--NEXT QUESTION!
On a side note I was advised not to get into KHC by somebody, even though it was a "WB stock". They told me KHC was pillaged considerably some during the restructuring transformation, and only the scraps were left for me. As I dig in, that appears to be based on some truth. I did buy KHC, though it was later on and I missed half the bloodbath. Some regard WB as a corporate raider. I see him as a philanthropist at this stage of his life. I'm sure they will be writing books about him for decades after he is gone.
To me the take away lesson is a reasonable selection of stocks will pay off over the very long term, even if you make a lot of mistakes. Few of us are fortunate enough to invest for 70 years, and start right after WWII, but the point still remains valid. WB may have missed the Great Depression, but there were plenty of bad investing years he survived just fine with his strategy. But I'm still not holding my KO shares if the PE ever hits 75 again.
