Both of these seem extremely odd

By Lucia Lepe

When he first started his career, Warren only cared about the company's financial situation, he didn't really pay attention to the products the company produced. His patron Graham believed the number told all there was to know; He does not separate standard-goods companies like textiles, which often have weak long-term economic structures, from

• Language: English
• Publisher: Lucia Lepe
• Release date: Feb 1, 2024
• ISBN: 9798869216076

Book preview

Both of these seem extremely odd

Both Of These Seem Extremely Odd

Copyright © 2023 by Lucia Lepe

All rights reserved

TABLE OF CONTENTS

CHAPTER 1 : A GOOD BUSINESSMAN KNOWS THE DIFFERENCE

CHAPTER 2 : THE GOVERNMENT IS NOT ALLOWED TO USE A SINGLE TAX DOLLAR FROM THE PEOPLE.

CHAPTER 3 : IN THE SAME DIRECTION

CHAPTER 4 : ECONOMIC EFFICIENCY FROM WORD OF MOUTH

CHAPTER 5 : SOME PEOPLE, AFTER HEARING ABOUT SOFTER

CHAPTER 1 : A GOOD BUSINESSMAN KNOWS THE DIFFERENCE

between a good company and a bad one — and a good investor knows when a company is cheap or overvalued. Therefore, to invest well, you need to be a business person and clearly understand what a good or bad company is; And when you're about to buy a company, you have to be a smart investor who understands whether the asking price is low or high. Combine the two and you can make billions. It's so simple, but also extremely difficult.

When he first started his career, Warren only cared about the company's financial situation, he didn't really pay attention to the products the company produced. His patron Graham believed the number told all there was to know; He does not separate standard-goods companies like textiles, which often have weak long-term economic structures, from consumer monopoly companies like Coke, which have strong long-term economic structures. But as Warren began to struggle and run a standard goods company, he soon realized that only exclusive consumer goods companies had a competitive advantage and delivered superior efficiency. Graham is willing to buy any stock as long as it is sold at a cheap price. Warren only buys stock in monopolistic consumer goods companies that have a competitive advantage, and he doesn't have to wait for a bargain. A reasonable price is enough, and if you just hold them long enough, you can become a billionaire.

WORD NO. 40

When principles age, they are no longer considered principles.

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Warren woke up one morning and realized that the investing principles he learned from Graham were no longer relevant. Graham advocates buying cheap stocks of companies regardless of their economic structure. This strategy worked well in the 40s and 50s, but it no longer works when a large group of investors take on the strategy — it becomes increasingly difficult to find the golden eggs. Instead of following this well-trodden path, Warren jumped off the bandwagon and proposed a philosophy of investing in superior companies with sustainable competitive advantages, as long as their shares were sold at reasonable prices—then Then he just needs to rely on the rising tide over time and revenue to push the stock price up. This philosophy took him from a rich man to super rich.

A great example of this philosophy is that when he invested in Coca-Cola, he paid the equivalent of twenty times the earnings per share. An old Warren wouldn't have spent this kind of money because Graham's valuation techniques showed the price was too high. But a new era Warren sees that this is a very reasonable price that will bring him billions. Sometimes it would be nice if a leopard could change its skin color.

WORD NO. 41

You pay a very high price for consensus in the stock market.

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If everyone agrees with you that a certain stock will be the next Microsoft, you'll pay a sky-high price — which means little profit and a lot of risk. What you want is to find a stock that no one cares about, or is not very popular with investment funds, and is offered at a low price compared to its long-term economic value. Stocks that are rising will sometimes fall, and stocks that are falling will sometimes rise. This was the battle cry of Benjamin Graham, Warren's patron. We only care about the falling part that will rise - we don't want to pay sky high prices for stocks waiting to fall - we want to pay a bargain price for stocks waiting to rise.

EDUCATION

WORD NO. 42

If I had to be good at algebra or calculus to be a great investor, I would probably have to go back to delivering newspapers.

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According to Warren, the math skills you need to become a great investor are addition, subtraction, multiplication, division, and the ability to mentally calculate percentages and probabilities. Any more, as the French say, is just a waste. But if you don't have it, you can't play the game.

WORD NO. 43

You have to think for yourself. I am always surprised to see many people with high IQs but only aim to imitate others. I have never gotten any good ideas by talking to other people.

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Many people with high IQs think that the way to get rich is to imitate others. This partly comes from an education system that praises imitation of teachers. On Wall Street, a popular investing strategy is to rely on what many other people are doing - it's easier to sell something that's popular than to buy or sell something that's of little interest. Warren isn't trying to sell anyone investment opportunities — he just wants to get rich from investing. This comes not by listening to the majority, but by finding stocks that Wall Street forgets today but will compete to buy back tomorrow. As for those who just follow the crowd — often they have to spend time peeling dirt off their heels.

WORD NO. 44

If journalists are more intelligent, society is better.

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We use information to process investment ideas from the media, which means we are completely dependent on journalists to provide accurate information and sound analysis of the situation. Do you want to receive information from stupid people, or do you want to leave this job to smart people? Warren has always believed in the idea that the better the teacher, the better the students. Therefore, the smarter the journalist, the more society benefits. Only scammers, thieves, or politicians who want to hide do not want a smarter society.

WORD NO. 45

You want to learn from experience, but it's best to learn more from other people's experiences.

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Experience is the best teacher, but the price is sometimes too high if you have to learn from your own mistakes. It's better to learn from other people's mistakes. That is also the reason why Warren included in his curriculum the reference and analysis of other people's business and investment mistakes. He wanted to know clearly what went wrong so that he could learn from it. know and avoid. This is a completely different strategy than most business schools, which only focus on success stories. In business and investing, more people get stuck in the gutter than fall on the Flat Road — so you need to learn about what to do and what not to do.

WORKPLACE

WORD NO. 46

It's not easy to teach a puppy difficult tricks.

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Warren found that business acumen accumulated over time is nearly impossible to impart to young managers. Veteran birds are so proficient and know how to make money. Warren is in his 70s, partnership partner Charlie Munger is in his 80s, Mrs. B. runs Nebraska Furniture Mard at over 100 years old, and many managers at Berkshire Hathaway, Warren's holding company, also passed the age of 70 a long time ago. Warren does not set a mandatory retirement age for those who work at Berkshire. In Warren's world, 65 is just the beginning - age and experience are far more important values than youth and enthusiasm for making money the old-fashioned way.

WORD NO. 47

"When hiring people, you need to look for three qualities: integrity, intelligence, and enthusiasm. But the most important thing is integrity, because without integrity the other two qualities, intelligence and enthusiasm, will kill you.''

*

When you hire someone else to run your business, you're giving them your piggy bank of savings. If the people you hire are wise and hardworking, they will bring you a lot of money, but if they are dishonest, they will find many ways to turn your money into theirs. So if you have to hire dishonest people, try to find people who aren't hardworking and have a full head of dirt — that way, even if you want to steal, they'll only be stealing dirt.

Integrity is a key ingredient in Warren's management philosophy. When he bought Nebraska Furniture Mart from Mrs. B. he surprised her and the management staff by not requiring an audit of the books. He simply asked her what the company was worth, and after she answered, the next day he gave her a check for $40 million. Later, when Mrs. B. asked, he said he trusted her more than he trusted the accountants.

In addition, Warren's management style is also to give his managers maximum independence in running the business. They have the right to run the company as if they were its owners. He would not have been able to grant such authority if they did not have integrity.

WORD NO. 49

Only when the tide goes out will you know who was defeated.

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Innovative accounting techniques have helped many Wall Street darlings rise to the top. But if real money doesn't appear, then at some point the excitement and illusions gradually fade, and all that's left is an empty bank account with a bankruptcy filing. The tide has receded from Enron's beach and we have witnessed an emperor without clothes. The problem is how to spot the naked swimmers before the tide recedes.

WORD NO. 50

When ideas fail, words become useful.

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This is a Goethe quote that Warren often uses, with the meaning that when your great idea fails miserably and you lose your business opportunity, you use words to blame so that you don't get hurt. People see it as lacking ability. In the world of CEOs, people are constantly looking for suitable excuses to appease shareholder anger at management's bad decisions. When they do not accept criticism, they also say that it is not their responsibility. But if the responsibility doesn't belong to our general managers, then they aren't really our leaders, are they? If that's not the leader, then why don't we find another leader who can run the company? Is this our company? We are the owners, right? Warren has never forgotten that Berkshire's shareholders are the owners of the company he runs. That's why he always frankly announces not only good news but also bad news.

WORD NO. 51

A good company manager doesn't wake up one morning and decide, 'Today is the day I have to cut costs,' just as they don't wake up and decide they need to practice breathing.

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The best time to get vaccinated is not right after you get sick. In the business world, a lot of things are done reactively. Warren believes in proactive management — solving a potential problem before it erupts into a real problem. You must keep costs low from the beginning, helping you have more explosives when your