It takes 150 years to build an investment bank and only five minutes to convince you to sell me preferred stock in it at a 10% interest rate.
An investment in education always pays the highest returns.
My financial adviser Ric Edelman...thinks the time to start educating people about money is when they are children. He's set up a retirement plan called the RIC-E-Trust that can provide retirement security. A $5,000 one-time tax-deferred investment at birth, with an average interest rate of ten percent compounded, means that a child would have $2.4 million when he or she is 65 years old. Who needs Social Security with that kind of nest egg?
It is important for investors to understand what they do and don't know. Learn to recognize that you cannot possibly know what is going to happen in the future, and any investment plan that is dependent on accurately forecasting where markets will be next year is doomed to failure.
Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test.
The great personal fortunes in the country weren't built on a portfolio of fifty companies. They were built by someone who identified one wonderful business. With each investment you make, you should have the courage and the conviction to place at least 10% of your net worth in that stock.
One thing I want to emphasize is that, like any human being, we can discuss our view of the economy and the market. Fortunately for our clients, we don't tend to operate based on the view. Our investment strategy is to invest bottom up, one stock at a time, based on price compared to value. And while we may have a macro view that things aren't very good right now - which in fact we feel very strongly we will put money to work regardless of that macro view if we find bargains. So tomorrow, if we found half a dozen bargains, we would invest all our cash.
A low-cost index fund is the most sensible equity investment for the great majority of investors. My mentor, Ben Graham, took this position many years ago, and everything I have seen since convinces me of its truth.
Investment decision should be made on the basis of the most probable compounding of after-tax net worth with minimum risk.
In my opinion, the entire field of investment management, involving hundreds of billions of dollars, would be more satisfactorily conducted if everyone had a good yardstick for measurement of ability and sensibly applied it.
We make investment decisions based on our evaluation of the most profitable combination of probabilities.
There is no question that an important service is provided to investors by investment companies, investment advisors, trust departments, etc. This service revolves around the attainment of adequate diversification, the preservation of a long-term outlook, the ease of handling investment decisions and mechanics, and most importantly, the avoidance of the patently inferior investment techniques which seem to entice some individuals.
All but a few of the organizations do not specifically promise to deliver superior investment performance although it is perhaps not unreasonable for the public to draw such an inference from their advertised emphasis on professional management.
People who watch their weight, golf scores, and fuel bills seem to shun quantitative evaluation of their investment management skills although it involves the most important client in the world-themselves.
It is unquestionably true that the investment companies have their money more conventionally invested than we do. To many people conventionality is indistinguishable from conservatism. In my view, this represents erroneous thinking. Neither a conventional nor an unconventional approach, per se, is conservative.
My rather puritanical view is that any investment manager, whether operating as broker, investment counselor of a trust department, investment company, etc., should be willing to state unequivocally what he is going to attempt to accomplish and how he proposes to measure the extent to which he gets the job done.
More investment sins are probably committed by otherwise quite intelligent people because of "tax considerations" than from any other cause. One of my friends-a noted West Coast philosopher-maintains that a majority of life's errors are caused by forgetting what one is really trying to do. This is certainly the case when an emotionally supercharged element like taxes enters the picture (I have another friend-a noted East Coast philosopher who says it isn't the lack of representation he minds-it's the taxation).
So if you are evaluating others (or yourself!) in the investment field, think out some standards - apply them - interpret them.
I am not in the business of predicting general stock market of business fluctuations. If you think I can do this, or think it is essential to an investment program, you should not be in the partnership.
Market price, while used exclusively to value our investments in minority positions, is not a relevant factor when applied to our controlling interests.
As I have mentioned before, we cannot make the same sort of money out of permanent ownership of controlled businesses that can be made from buying and reselling such businesses, or from skilled investment in marketable securities. Nevertheless, they offer a pleasant long term form of activity (when conducted in conjunction with high grade, able people) at satisfactory rates of return.
Investment ideas, like women are often more exciting than punctual.
We will prosper or suffer in controlled investments in relation to the operating performances of our businesses - we will not attempt to profit by playing various games in the securities markets.
One observer commenting on security analysts over forty stated: "They know too many things that are no longer true." As long as I am "on stage", publishing a regular record and assuming responsibility for management of what amounts to virtually 100% of the net worth of many partners, I will never be able to put sustained effort into any non-BPL activity. If I am going to participate publicly. I can't help being competitive. I know I don't want to be totally occupied with out-pacing an investment rabbit all my life. The only way to slow down is to stop.
There is one bit of advice given us by the ancient Greeks, and by the Jews in the Old Testament, and by the great Christian teachers of the Middle Ages, which the modern economic system has completely disobeyed. All these people told us not to lend money at interest; and lending money at interest - what we call investment - is the basis of our whole system.
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