Buffet's Newest Missive

[Dividend Watcher]

Marketwatch alerted me to an article about Buffett's 2014 letter to shareholders. The article is here but if it should disappear, thought I'd copy the gist of the good reading.

He started the article with 2 purchases he made many years ago; a farm in Nebraska and an office building in NYC next to NYU. Both were distressed properties from a busted bubble.

• You don't need to be an expert in order to achieve satisfactory investment returns. But if you aren't, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don't swing for the fences. When promised quick profits, respond with a quick "no."
  
  
• Focus on the future productivity of the asset you are considering. If you don't feel comfortable making a rough estimate of the asset's future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn't necessary; you only need to understand the actions you undertake.
  
  
• If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it.
  
  
• With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field -- not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.
  
  
• Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle's scathing comment: "You don't know how easy this game is until you get into that broadcasting booth.")
  

Excellent food for thought, IMO.

[Kerim]

I read that also -- always good to read Buffett's stuff. Helps to keep one focused and grounded.

[Markrichard]

I specially liked the second point he made on this as I too believe it's necessary to evaluate every asset on it's future productive and demand basis. products or services do not comes under core product or services and whose demand always changes with time are not good to consider I guess.