It's not supposed to be easy. Anyone who finds it easy is stupid.
Since we have emphasized that analysis will lead to a positive conclusion only in the exceptional case, it follows that many securities must be examined before one is found that has real possibilities for the analyst. By what practical means does he proceed to make his discoveries? Mainly by hard and systematic work.
Fund consultants like to require style boxes such as "long-short," "macro," "international equities." At Berkshire our only style box is "smart."
Well, one time some attractive woman sat next to Charlie and asked him what he owed his success to, and, unfortunately, she insisted on a one word answer. He had a speech prepared that would have gone on for several hours. But when forced to boil it down to one word, he said that was "rational". You know, he comes equipped for rationality, and he applies it in business. He doesn't always apply it elsewhere, but he applies it in business and that has made him a huge business success.
Situations in life often permit no delay; and when we cannot determine the course which is certainly best, we must follow the one which is probably the best. This frame of mind freed me also from the repentance and remorse commonly felt by those vacillating individuals who are always seeking as worthwhile things which they later judge to be bad.
We attracted a lot of market timers and asset allocators. I don't need those ... amateurs in my fund.
People like the robber barons assumed that the doctrine of the survival of the fittest authenticated them as deserving power. You know, "I'm the richest. Therefore, I'm the best. God's in his heaven, etc." And that reaction of the robber barons was so irritating to people that it made it unfashionable to think of an economy as an ecosystem. But the truth is that it is a lot like an ecosystem. And you get many of the same results.
In the financial world it tends to be misleading to state, "There is no free lunch." Rather the more meaningful comment is, "Somebody has to pay for lunch."
I invest because I love helping entrepreneurs and watching them learn and succeed. In my opinion your motives are driven by self serving factors around ego satisfaction and "making a buck". My motives and values are very different.
Smart tech investor thinks about: a) future product roadmap, b) bottoms-up market size & growth, c) talent and skill of team. Essentially you are valuing things that have not yet happened, and the likelihood of the CEO and team being able to make them happen. Finance people find this appalling, but investors who do this well can make a lot of money.
Wait until companies have an initial prototype, have shown that they have the potential to be profitable and have the ability to scale. That's the best time to invest.
The business model piece is we're always talking about competing more effectively. If you're starting a company or career you don't want to compete. You want to create a monopoly. We want to invest in a company that has a good plan to create a monopoly.
Entrepreneurs usually don't listen to people. Trust them to do their job. Remember, you invested with the understanding the project was likely to fail.
Most people are too fretful, they worry to much. Success means being very patient, but aggressive when it's time.
Always associate yourself with people who are better than you.
If the growth rate is so good that in another ten years the company might well have quadrupled, is it really of such great concern whether at the moment the stock might or might not be 35% overpriced?
The successful investor is usually an individual who is inherently interested in business problems.
Of one thing the investor can be certain: A large company's need to bring in a new chief executive from the outside is a damning sign of something basically wrong with the existing management - no matter how good the surface signs may have been as indicated by the most recent earnings statement.
Practical investors usually learn their problem is finding enough outstanding investments, rather than choosing among too many.
I remember my sense of shock some half-dozen years ago when I read a recommendation to sell shares of a company ... The recommendation was not based on any long-term fundamentals. Rather, it was that over the next six months the funds could be employed more profitably elsewhere.
I had made what I believe was one of the more valuable decisions of my business life. This was to confine all efforts solely to making major gains in the long-run.
Be extra careful when buying into companies and industries that are the current darlings of the financial community.
My mistake was to project my skill beyond the limits of experience. I began investing outside the industries which I believe I thoroughly understood, in completely different spheres of activity; situations where I did not have comparable background knowledge.
One, which I mention several times elsewhere, is the need for patience if big profits are to be made from investment. Put another way, it is often easier to tell what will happen to the price of a stock than how much time will elapse before it happens. The other is the inherently deceptive nature of the stock market. Doing what everybody else is doing at the moment, and therefore what you have an almost irresistible urge to do, is often the wrong thing to do at all.
Even in those earlier times, finding the really outstanding companies and staying with them through all the fluctuations of a gyrating market proved far more profitable to far more people than did the more colorful practice of trying to buy them cheap and sell them dear.
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