Warren Buffett reveals the three investing lessons that changed his life
| Warren Buffett reveals the three investing lessons that changed his life
From the CNBC Warren Buffett Archive: 2008 Annual Meeting
WARREN BUFFETT: I will tell you what changed my own life on investing.
I started investing when I was 11. I first started reading about it — I believe in reading everything in sight. And I first started reading about it when I was probably six or seven years old.
But for about eight years I wandered around with technical analysis and doing all kinds of things, and then I read a book called "The Intelligent Investor." And I did that when I was 19 down at the University of Nebraska.
And I would say that if you absorb the lessons of "The Intelligent Investor," mainly in — I wrote a forward and I recommended particularly Chapters 8 and 20 — that you will not behave like a lemming and you may do very well compared to the lemmings.
*** And there's three big lessons in there which relate to your attitude towards stocks generally, which is that you think of them as parts of a business; and your attitude toward the market, which is that you use it to serve you and not to instruct you; and then the idea of a margin of safety, of always leaving some extra room and things.
*** Charlie and I haven't the faintest idea where the stock market is going to go next week, next month, or next year. We never talk about it. You know, it never comes up.
Our directors will tell you that they've never been to a directors meeting where the subject of the direction of the stock market is — we are not in that business. We don't know how to be in that business.  Obviously, if we could guess successfully a high percentage of the time where the stock market was going to go, we would do nothing but play the S&P futures market. There wouldn't be any reason to look at businesses and stocks. So it's just not our game.
We don't think — what we see when we look at the stock market is we see thousands and thousands and thousands of companies priced every day, and we ignore 99.9 percent of what we see, although we run our eyes over them.
And then every now and then we see something that looks like it's attractively priced to us, as a business. Forget about the word "stock."
So when we buy a stock, we would be happy with that stock if they told us the market was going to close for a couple years. We look to the business.
It's exactly the same way as if you were going to buy a farm a few miles here outside of Omaha. You would not get a price on it every day, and you wouldn't ask, you know, whether the yield was a little above expectation this year or down a little bit.
You'd look at what the farm was going to produce over time. You'd look at THE expected yields. You'd look at expected prices, the taxes, the cost of fertilizer, and you would evaluate the intelligence of your purchase based on what the farm produced relative to your purchase price.
Quotes would have nothing to do with it. That's exactly the way we look at stocks.
We look at them as businesses. We make judgments about what the future of those businesses will be. And if we're right about — in those judgments — the stocks will take care of themselves.
Charlie?
CHARLIE MUNGER: Nothing to add. (Laughter)
WARREN BUFFETT: He's been practicing for weeks. (Laughter)
BUFFETT AROUND THE INTERNET Some links may require a subscription
BERKSHIRE STOCK WATCH
  BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Sept. 17, 2021
 Berkshire's top holdings of disclosed publicly-traded U.S. stocks by market value, based on today's closing prices.
Holdings are as of June 30, 2021 as reported in Berkshire Hathaway's 13F filing on August 16, 2021, except for Apple, Bank of America, and U.S. Bancorp, which also include shares held as of June 30, 2021 as disclosed in New England Asset Management's 13F filing on August 16, 2021.
In addition to U.S. stocks, shares held as of December 31, 2020 of China's BYD, as listed in Buffett's 2020 letter to shareholders, are included. The price of those shares in U.S. trading is used to approximate the current market value of the position. The value of the stake as a percentage of the company's market value is fixed at what was listed as of December 31, 2020 in the letter.
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
QUESTIONS OR COMMENTS
Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)
If you aren't already subscribed to this newsletter, you can sign up here.
-- Alex Crippen, Editor, Warren Buffett Watch
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Post a Comment