Gems from Berkshire letters ‘88– ’15

26 min readDec 29, 2022

Hope everyone had a good year! If not, wish 2023 is better! I want to share quality (plagiarized) content from the annual Berkshire shareholderholder letters between the years 1988 to 2015. Please let me know if you’d like more of these!

1988-

You can’t teach a new dog old tricks

Please include me out

I am the fruit of that intellectual tree

Too much of a good thing can be wonderful

There hasn’t been much going on in Christianity for a while; maybe we should switch to Buddhism next week

1989-

If you don’t know jewelry, know your jeweler // crass version- if you don’t know your drug, know your dealer

greater-fool game

what the wise do in the beginning, fools do in the end

The embezzlers are richer by the amount of the bezzle, while the embezzlees do not yet feel poorer.

Transactions are the mother’s milk of finance

Time elapsing between folly and failure can be stretched out

At a minimum, therefore, the banker’s conduct should rise to that of a responsible bartender who, when necessary, refuses the profit from the next drink to avoid sending a drunk out on the highway.

never is there just one cockroach in the kitchen

Time is the friend of the wonderful business, the enemy of the mediocre.

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

Good jockeys will do well on good horses, but not on broken-down nags

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

We’ve done better by avoiding dragons than by slaying them.

We’ve never succeeded in making a good deal with a bad person.

(1) As if governed by Newton’s First Law of Motion, an institution will resist any change in its current direction; (2) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds; (3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and (4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.

1990-

Optimism is the enemy of the rational buyer.

I can’t understand why more people aren’t bi-sexual because it doubles your chances for a date on Saturday night.

If history books were the key to riches, the Forbes 400 would consist of librarians.

That was an error similar to checking the historical death rate from Kool-Aid before drinking the version served at Jonestown

The only time to buy these is on a day with no “y” in it.Any good ad salesman will tell you that trying to sell something without advertising is like winking at a girl in the dark.

When the phone don’t ring, you’ll know it’s me.

Contracts cannot guarantee your continued interest; we would simply rely on your word.

1991-

HBS student asked me when I planned to retire and I replied, “About five to ten years after I die.”

As time goes on, I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. . . .

One’s knowledge and experience are definitely limited and there are seldom more than two or three enterprises at any given time in which I personally feel myself entitled to put full confidence.

Post-mortems prove useful for hospitals and football teams; why not for businesses and investors?

So join us to watch a continuation of this lop-sided battle of wits

1992-

The only value of stock forecasters is to make fortune tellers look good

Fanaticism,” said Santyana, “consists of redoubling your effort when you’ve forgotten your aim.

“Practice doesn’t make perfect; practice makes permanent.

It’s only when the tide goes out that you learn who’s been swimming naked.

A fool and his money are soon invited everywhere

We have no ability to forecast the economics of the investment banking business, the airline industry, or the paper industry.

Abraham Lincoln’s favorite riddles: “How many legs does a dog have if you call his tail a leg?” The answer: “Four, because calling a tail a leg does not make it a leg.”

I recall that one woman, upon being asked to describe the perfect spouse, specified an archeologist: “The older I get,” she said, “the more he’ll be interested in me.”

My dogma was run over by my karma

1994-

If something is not worth doing at all, it’s not worth doing well.

It’s probably true that hard work never killed anyone, but I figure why take the chance.

We try to price, rather than time, purchases. In our view, it is folly to forego buying shares in an outstanding business whose long-term future is predictable, because of short-term worries about an economy or a stock market that we know to be unpredictable. Why scrap an informed decision because of an uninformed guess?

1995-

Things are seldom what they seem, skim milk masquerades as cream.

I will tell you a secret: Dealmaking beats working. Dealmaking is exciting and fun, and working is grubby. Running anything is primarily an enormous amount of grubby detail work . . . dealmaking is romantic, sexy. That’s why you have deals that make no sense.

It’s not what you’ve got — it’s what you do with what you’ve got

Just tell me the bad news; the good news will take care of itself”

Winston Churchill once said that “eating my words has never given me indigestion.”

1996-

My taste for social events being low, I immediately, and in my standard, gracious way, began to invent reasons for skipping the event to get a job with us, just employ the tactic of the 76-year-old who persuaded a dazzling beauty of 25 to marry him. “How did you ever get her to accept?” asked his envious contemporaries. The comeback: “I told her I was 86.”

Charlie and I would much rather earn a lumpy 15% over time than a smooth 12%. (After all, our earnings swing wildly on a daily and weekly basis — why should we demand that smoothness accompany each orbit that the earth makes of the sun?)

1997-

In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world. A right-thinking duck would instead compare its position after the downpour to that of the other ducks on the pond.

So smile when you read a headline that says “Investors lose as market falls.” Edit it in your mind to “Disinvestors lose as market falls — but investors gain.” Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other. (As they say in golf matches: “Every putt makes someone happy.”)

Our situation is the opposite of Camelot’s Mordred, of whom Guenevere commented, “The one thing I can say for him is that he is bound to marry well. Everybody is above him.” Marrying well is extremely difficult for Berkshire.

At that time skepticism and disappointment prevailed, and my point was that investors should be glad of the fact, since pessimism drives down prices to truly attractive levels. Now, however, we have a very cheery consensus. That does not necessarily mean this is the wrong time to buy stocks: Corporate America is now earning far more money than it was just a few years ago, and in the presence of lower interest rates, every dollar of earnings becomes more valuable. Today’s price levels, though, have materially eroded the “margin of safety” that Ben Graham identified as the cornerstone of intelligent investing.

I felt like the drama critic who wrote: “I would have enjoyed the play except that I had an unfortunate seat. It faced the stage.”

I have compiled a record that is unblemished by success. I was wrong in originally purchasing the stock, and I was wrong later, in repeatedly trying to unload our holdings at 50 cents on the dollar.

This holding has proved extraordinarily profitable thanks to a move by your Chairman that combined luck and skill — 110% luck, the balance skill.

1998-

When a plane is slated for personal use, the clinching argument is that either the client signs up now or his children likely will later. That’s an equation I explained to my wonderful Aunt Alice 40 years ago when she asked me whether she could afford a fur coat. My reply settled the issue: “Alice, you aren’t buying it; your heirs are.”

Indeed, in the fields of investments and acquisitions, frenetic behavior is often counterproductive. Therefore, Charlie and I mainly just wait for the phone to ring.

Our never-comment-even-if-untrue policy in regard to investments may disappoint “piggybackers” but will

benefit owners: Your Berkshire shares would be worth less if we discussed what we are doing. Incidentally, we

should warn you that media speculation about our investment moves continues in most cases to be incorrect.

People who rely on such commentary do so at their own peril.

Michael Kinsley has said about Washington: “The scandal isn’t in what’s done that’s illegal but rather in what’s legal.”

Voltaire’s comment on sexual experimentation: “Once a philosopher, twice a pervert.”

Whose bread I eat, his song I sing.

1999-

If the choice is between a questionable business at a comfortable price or a comfortable business at a questionable price, we much prefer the latter. What really gets our attention, however, is a comfortable business at a comfortable price.

Fools give you reasons, wise men never try.

repurchases are all the rage, but are all too often made for an unstated and, in our view, ignoble reason: to pump or support the stock price. The shareholder who chooses to sell today, of course, is benefitted by any buyer, whatever his origin or motives. But the continuing shareholder is penalized by repurchases above intrinsic value. Buying dollar bills for $1.10 is not good business for those who stick around.

My reflexes are like Woody Allen’s, who said his were so slow that he was once hit by a car being pushed by two guys.

2000-

The oracle was Aesop and his enduring, though somewhat incomplete, investment insight was “a bird in the hand is worth two in the bush.” To flesh out this principle, you must answer only three questions. How certain are you that there are indeed birds in the bush? When will they emerge and how many will there be? What is the risk-free interest rate (which we consider to be the yield on long-term U.S. bonds)? If you can answer these three questions, you will know the maximum value of the bush ¾ and the maximum number of the birds you now possess that should be offered for it. And, of course, don’t literally think birds. Think dollars.

Now, speculation — in which the focus is not on what an asset will produce but rather on what the next fellow will pay for it — is neither illegal, immoral nor un-American. But it is not a game in which Charlie and I wish to play. We bring nothing to the party, so why should we expect to take anything home?

Nothing sedates rationality like large doses of effortless money.

But a pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons: First, many in Wall Street ¾ a community in which quality control is not prized ¾ will sell investors anything they will buy. Second, speculation is most dangerous when it looks easiest

Though I am not a fan of stock splits, I am planning to split Al’s age 2-for-1 when he hits 100. (If it works, guess who’s next.)

More money, it has been noted, has been stolen with the point of a pen than at the point of a gun.

2001-

Horace: Many shall be restored that now are fallen and many shall fall that are now in honor Iíve told the story in the fellow traveling abroad whose sister called to tell him that their dad had died. The brother replied that it was impossible for him to get home for the funeral; he volunteered, however, to shoulder its cost. Upon returning, the brother received a bill from the mortuary for $4,500, which he promptly paid. A month later, and a month after that also, he paid $10 pursuant to an add-on invoice. When a third $10 invoice came, he called his sister for an explanation. ìOh,î she replied, ìI forgot to tell you. We buried dad in a rented suit.

2002-

Jack Benny once said upon receiving an award: “I don’t deserve this honor — but, then, I have arthritis, and I don’t deserve that either.”

to be a winner, work with winners

If you see Ajit at our annual meeting, bow deeply.

We cherish cost-consciousness at Berkshire. Our model is the widow who went to the local newspaper to place an obituary notice. Told there was a 25-cents-a-word charge, she requested

“Fred Brown died.” She was then informed there was a seven-word minimum. “Okay” the bereaved woman replied, “make it ‘Fred Brown died, golf clubs for sale’.

Both the ability and fidelity of managers have long needed monitoring. Indeed, nearly 2,000 years ago, Jesus Christ addressed this subject, speaking (Luke 16:2) approvingly of “a certain rich man” who told

his manager, “Give an account of thy stewardship; for thou mayest no longer be steward.”

Directors must react as did the chorus-girl bride of an 85-yearold multimillionaire when he asked whether she would love him if he lost his money. “Of course,” the young beauty replied, “I would miss you, but I would still love you.”

Finally, when the compensation committee — armed, as always, with support from a high-paid consultant — reports on a megagrant of options to the CEO, it would be like belching at the dinner table for a director to suggest that the committee reconsider collegiality trumped independence.

If you can’t tell whose side someone is on, they are not on yours.

2003-

So when one tells you that increased funds won’t hurt his investmentperformance, step back: His nose is about to grow.

In buying businesses, I’ve made some terrible mistakes, both of commission and omission.

Our capital is underutilized now, but that will happen periodically. It’s a painful condition to be in — but not as painful as doing something stupid. (I speak from experience.)

As one compensation consultant commented: “There are two classes of clients you don’t want to offend — actual and potential.”

If you don’t know whose side someone is on, he’s probably not on yours.”

directors should have business savvy, a shareholder orientation and a genuine interest in the company. The rarest of these qualities is business savvy — and if it is lacking, the other two are of little help.

Many people who are smart, articulate and admired have no real understanding of business. That’s no sin; they may shine elsewhere. But they don’t belong on corporate boards. Similarly, I would be useless on a medical or scientific board (though I would likely be welcomed by a chairman who wanted to run things his way). My name would dress up the list of directors, but I wouldn’t know enough to critically evaluate proposals. Moreover, to cloak my ignorance, I would keep my mouth shut (if you can imagine that). In effect, I could be replaced, without loss, by a potted plant.

David Ogilvy had it right when he said: “Develop your eccentricities when young. That way, when you get older, people won’t think you are going gaga.”

When analyzing Berkshire, be sure to remember that the company should be viewed as an unfolding movie, not as a still photograph.

Those who focused in the past on only the snapshot of the day sometimes reached erroneous conclusions.

If you have the lowest price, customers will find you at the bottom of a river.”

“Victory,” President Kennedy told us after the Bay of Pigs disaster, “has a thousand fathers, but defeat is an orphan.” At NFM, we knew we had a winner a month after the boffo opening in Kansas City, when our new store attracted an unexpected paternity claim. A speaker there, referring to the Blumkinfamily, asserted, “They had enough confidence and the policies of the Administration were working such that they were able to provide work for 1,000 of our fellow citizens.” The proud papa at thepodium? President George W. Bush.

Yesterday’s weeds are today being priced as flowers.

2004-

the sons would truly pay for the sins of their fathers

Proponents of the trade status quo are fond of quoting Adam Smith: “What is prudence in the conduct of every family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” John Maynard Keynes said in his masterful The General Theory: “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.” (Or, to put it in less elegant terms, lemmings as a class may be derided but never does an individual lemming get criticized.) From a reputational standpoint, Charlie and I run a clear risk with our foreign-exchange commitment.

Most of the complaints we have received are of “the guy next to me has bad breath” variety, but on occasion I have learned of important problems at our subsidiaries that I otherwise would have missed. The issues raised are usually not of a type discoverable by audit, but relate instead to personnel and business practices. Berkshire would be more valuable today if I had put in a whistleblower line decades ago.

I can’t resist mentioning that Jesus understood the calibration of independence far more clearly than do the protesting institutions. In Matthew 6:21 He observed: “For where your treasure is, there will your heart be also.” Even to an institutional investor, $8 billion should qualify as “treasure” that dwarfs any profits Berkshire might earn on its routine transactions with Coke. Measured by the biblical standard, the Berkshire board is a model: (a) every director is a member of a family owning at least $4 million of stock; (b) none of these shares were acquired from Berkshire via options or grants; (c) no directors receive committee, consulting or board fees from the company that are more than a tiny portion of their annual income; and (d) although we have a standard corporate indemnity arrangement, we carry no liability insurance for directors.

At Berkshire, board members travel the same road as shareholders.

2005-

In this ambition, we hope — metaphorically — to avoid the fate of the elderly couple who had been romantically challenged for some time. As they finished dinner on their 50th anniversary, however, the wife — stimulated by soft music, wine and candlelight — felt a long-absent tickle and demurely suggested to her husband that they go upstairs and make love. He agonized for a moment and then replied, “I can do one or the other, but not both.”

We run a tight ship and keep unnecessary spending under wraps. No secretaries or management layers here. Yet we’ll invest big dollars to gain a technological advantage and move the business forward.

Like a hopeful teenage girl, I’ll be waiting by the phone.

You are lucky if you get one that is pleasant for every ten that go the other way. Too often, however, insurers react to looming loss problems with optimism. They behave like the fellow in a switchblade fight who, after his opponent has taken a mighty swipe at his throat, exclaimed, “You never touched me.” His adversary’s reply: “Just wait until you try to shake your head.”

Long ago, Mark Twain said: “A man who tries to carry a cat home by its tail will learn a lesson that can be learned in no other way.” If Twain were around now, he might try winding up a derivatives business. After a few days, he would opt for cats.

my feelings about its departure will be akin to those expressed in a country song, “My wife ran away with my best friend, and I sure miss him a lot.”

Charlie is fond of quoting Ben Franklin’s “An ounce of prevention is worth a pound of cure.” But sometimes no amount of cure will overcome the mistakes of the past.

The attitude of our managers vividly contrasts with that of the young man who married a tycoon’s

only child, a decidedly homely and dull lass. Relieved, the father called in his new son-in-law after the wedding and began to discuss the future:

“Son, you’re the boy I always wanted and never had. Here’s a stock certificate for 50% of the company. You’re my equal partner from now on.”

“Thanks, dad.”
“Now, what would you like to run? How about sales?”
“I’m afraid I couldn’t sell water to a man crawling in the Sahara.”
“Well then, how about heading human relations?”
“I really don’t care for people.”
“No problem, we have lots of other spots in the business. What would you like to do?” “Actually, nothing appeals to me. Why don’t you just buy me out?”

Quite simply, what Gillette received in business value in this acquisition was not equivalent to what it gave up. (Amazingly, this most fundamental of yardsticks is almost always ignored by both managements and their investment bankers when acquisitions are under discussion.)

For investors as a whole, returns decrease as motion increases

2006-

n Churchill’s words: “We shape our buildings, and afterwards our buildings shape us.” Here’s a telling fact: Of the ten non-oil companies having the largest market capitalization in 1965 — titans such as General Motors, Sears, DuPont and Eastman Kodak — only one made the 2006 list.

For me, Ronald Reagan had it right: “It’s probably true that hard work never killed anyone — but why take the chance?”

“We must all hang together, or assuredly we shall hang separately.”

eroding fundamentals will overwhelm managerial brilliance. (As a wise friend told me long ago, “If you want to get a reputation as a good businessman, be sure to get into a good business.”)

As one not-too-bright publisher famously said, “I owe my fortune to two great American institutions: monopoly and nepotism.” No paper in a one-paper city, however bad the product or however inept the management, could avoid gushing profits.

In the 1980s the company had a barber, Jimmy by name, who came in weekly to give free haircuts to the top brass. A manicurist was also on tap. Then, because of a cost-cutting drive, patrons were told to pay their own way. One top executive (not the CEO) who had previously visited Jimmy weekly went immediately to a once-every-three-weeks schedule.

Its effects bring to mind the old adage: When someone with experience proposes a deal to someone with money, too often the fellow with money ends up with the experience, and the fellow with experience ends up with the money.

Unfortunately, they reacted in all-too-human fashion: Rather than opening their minds, they closed their eyes.

After all, if you are in the shipping business, it’s helpful to have all of your potential competitors be taught that the earth is flat.

One hapless soul last year asked Charlie what he should do if he didn’t enjoy the book. Back came a Mungerism: “No problem — just give it to someone more intelligent.”

2007-

John Stumpf, CEO of Wells Fargo, aptly dissected the recent behavior of many lenders: “It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine.”

You may recall a 2003 Silicon Valley bumper sticker that implored, “Please, God, Just One More Bubble.”

You only learn who has been swimming naked when the tide goes out — and what we are witnessing at some of our largest financial institutions is an ugly sight.

Just as Adam and Eve kick-started an activity that led to six billion humans, See’s has given birth to multiple new streams of cash for us. (The biblical command to “be fruitful and multiply” is one we take seriously at Berkshire.)

The only explanation is that my brain had gone on vacation and forgot to notify me. (My behavior resembled that of a politician Molly Ivins once described: “If his I.Q. was any lower, you would have to water him twice a day.”)

A line from Bobby Bare’s country song explains what too often happens with acquisitions: “I’ve never gone to bed with an ugly woman, but I’ve sure woke up with a few.”

https://www.youtube.com/watch?v=QbNpl9Bqdys

The best anecdote I’ve heard during the current presidential campaign came from Mitt Romney, who asked his wife, Ann, “When we were young, did you ever in your wildest dreams think I might be president?” To which she replied, “Honey, you weren’t in my wildest dreams.”

If you were to pick someone to join you in a foxhole, you couldn’t do better than Rich. No matter what the obstacles, he just doesn’t stop.

2008-

“Price is what you pay; value is what you get.” Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down. most remarkable businesses in the world, hard to characterize but easy to admire country song: “I liked you better before I got to know you so well.”

(I can report as well that this inversion approach works on a less lofty level: Sing a country song in reverse, and you will quickly recover your car, house and wife.)

We would rather suffer the visible costs of a few bad decisions than incur the many invisible costs that come from decisions made too slowly — or not at all — because of a stifling bureaucracy.

A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance. In the end, what counts in investing is what you pay for a business — through the purchase of a small piece of it in the stock market — and what that business earns in the succeeding decade or two.

2009-

Charlie’s reaction at the time: “Are we supposed to applaud because the dog that fouls our lawn is a Chihuahua rather than a Saint Bernard?”

Its managers — fine people and able bankers — not unexpectedly began to behave like teenage boys who had just discovered girls

mandatory for any fan of fine dining

2010-

Our trust is in people rather than process. A “hire well, manage little” code suits both them and me

Cultures self-propagate. Winston Churchill once said, “You shape your houses and then they shape you.” That wisdom applies to businesses as well. Bureaucratic procedures beget more bureaucracy, and imperial corporate palaces induce imperious behavior. (As one wag put it, “You know you’re no longer CEO when you get in the back seat of your car and it doesn’t move.”) At Berkshire’s “World Headquarters” our annual rent is $270,212. Moreover, the home-office investment in furniture, art, Coke dispenser, lunch room, high-tech equipment — you name it — totals $301,363. As long as Charlie and I treat your money as if it were our own, Berkshire’s managers are likely to be careful with it as well (Indeed, sometimes the correlation goes in reverse.

As one investor said in 2009: “This is worse than divorce. I’ve lost half my net worth — and I still have my wife.”) In the future, we expect our market gains to eventually at least equal the earnings our investees retain.

That day can’t come too soon for me: To update Aesop, a girl in a convertible is worth five in the phone book

I always love explanations of that kind: The Flat Earth Society probably views a ship’s circling of the globe as an annoying, but inconsequential, anomaly.

The fundamental principle of auto racing is that to finish first, you must first finish. That dictum is equally applicable to business and guides our every action at Berkshire.

Remember: Anyone who says money can’t buy happiness simply hasn’t learned where to shop

“We can afford to lose money — even a lot of money. But we can’t afford to lose reputation — even a shred of reputation.”

We must continue to measure every act against not only what is legal but also what we would be happy to have written about on the front page of a national newspaper in an article written by an unfriendly but intelligent reporter

2011-

Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day’s supply.

Charlie and I don’t expect to win many of you over to our way of thinking — we’ve observed enough human behavior to know the futility of that — but we do want you to be aware of our personal calculus. And here a confession is in order: In my early days I, too, rejoiced when the market rose. Then I read Chapter Eight of Ben Graham’s The Intelligent Investor, the chapter dealing with how investors should view fluctuations in stock prices. Immediately the scales fell from my eyes, and low prices became my friend. Picking up that book was one of the luckiest moments in my life.

Our lizard has another endearing quality: Unlike human spokesmen or spokeswomen who expensively represent other insurance companies, our little fellow has no agent.

Many years ago Ben Franklin counseled, “Keep thy shop, and thy shop will keep thee.” Translating this to our regulated businesses, he might today say, “Take care of your customer, and the regulator — your customer’s representative — will take care of you.” Good behavior by each party begets good behavior in return.

Please understand, however, that Charlie and I are neither masochists nor Pollyannas.

Charlie long ago told me, “If something’s not worth doing at all, it’s not worth doing well,” and I should have listened harder.

Investing is often described as the process of laying out money now in the expectation of receiving more money in the future. At Berkshire we take a more demanding approach, defining investing as the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power — after taxes have been paid on nominal gains — in the future. More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At

$1,750 per ounce — gold’s price as I write this — its value would be $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

We heard “cash is king” in late 2008, just when cash should have been deployed rather than held. Similarly, we heard “cash is trash” in the early 1980s just when fixed-dollar investments were at their most attractive level in memory. On those occasions, investors who required a supportive crowd paid dearly for that comfort

At Piccolo’s, show some class and order a giant root beer float for dessert. Only sissies get the small one

We instead heed the words from Gary Allan’s new country song, “Every Storm Runs Out of Rain.”

Gary Allan — Every Storm (Runs Out Of Rain) (Official Music Video) — YouTube

American business will do fine over time. And stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game that is heavily stacked in their favor. (The Dow Jones Industrials advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions. And don’t forget that shareholders received substantial dividends throughout the century as well.)

Since the basic game is so favorable, Charlie and I believe it’s a terrible mistake to try to dance in and out of it based upon the turn of tarot cards, the predictions of “experts,” or the ebb and flow of business activity. The risks of being out of the game are huge compared to the risks of being in it.

2012-

At Piccolo’s, order a giant root beer float for dessert. Only sissies get the small one. (I once saw Bill Gates polish off two of the giant variety after a full-course dinner; that’s when I knew he would make a great director.

In deciding what to do, we can water the flowers and skip over the weeds.

2013-

“See that store,” Warren says, pointing at Nebraska Furniture Mart. “That’s a really good business.”

“Why don’t you buy it?” I said.

“It’s privately held,” Warren said.

“Oh,” I said.

“I might buy it anyway,” Warren said. “Someday.”

— Supermoney by Adam Smith (1972)

“Our stock portfolio . . . was worth approximately $17 million less than its carrying value [cost] . . . it is our belief that, over a period of years, the overall portfolio will prove to be worth more than its cost.

2014-

If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. In my lifetime alone, real per-capita U.S. output has sextupled. My parents could not have dreamed in 1930 of the world their son would see.

Though the preachers of pessimism prattle endlessly about America’s problems, I’ve never seen one who wishes to emigrate (though I can think of a few for whom I would happily buy a one-way ticket).

Indeed, borrowed money has no place in the investor’s tool kit: Anything can happen anytime in markets. And no advisor, economist, or TV commentator — and definitely not Charlie nor I — can tell you when chaos will occur. Market forecasters will fill your ear but will never fill your wallet

“The fault, dear Brutus, is not in our stars, but in ourselves.”

A line from a country song expresses our feeling about new ventures, turnarounds, or auction-like sales: “When the phone don’t ring, you’ll know it’s me.”

Jimmy Buffett — If The Phone Doesn’t Ring, It’s Me — YouTube

Selecting a marriage partner clearly requires more demanding criteria than does dating. (Berkshire, it should be noted, would have been a highly satisfactory “date”: If we had taken Seabury Stanton’s $11.375 offer for our shares, BPL’s weighted annual return on its Berkshire investment would have been about 40%.)

When we differ, Charlie usually ends the conversation by saying: “Warren, think it over and you’ll agree with me because you’re smart and I’m right.”

You can’t get rich trading a hundred-dollar bill for eight tens (even if your advisor has handed you an expensive “fairness” opinion endorsing that swap)

That’s important: If horses had controlled investment decisions, there would have been no auto industry.

A caring owner, however — and there are plenty of them — usually does not want to leave his long-time associates sadly singing the old country song: “She got the goldmine, I got the shaft.

(Mental “flexibility” of this sort by the banking fraternity has prompted the saying that fees too often lead to transactions rather than transactions leading to fees.)The Bird By Jerry Reed (Lyrics) — YouTube

Periodically, financial markets will become divorced from reality — you can count on that. More Jimmy Lings will appear. They will look and sound authoritative. The press will hang on their every word. Bankers will fight for their business. What they are saying will recently have “worked.” Their early followers will be feeling very clever. Our suggestion: Whatever their line, never forget that 2+2 will always equal 4. And when someone tells youhow old-fashioned that math is — — zip up your wallet, take a vacation and come back in a few years to buy stocks at cheap prices

Since I know of no way to reliably predict market movements, I recommend that you purchase Berkshire shares only if you expect to hold them for at least five years. Those who seek short-term profits should look elsewhere.

Another warning: Berkshire shares should not be purchased with borrowed money. There have been three times since 1965 when our stock has fallen about 50% from its high point. Someday, something close to this kind of drop will happen again, and no one knows when. Berkshire will almost certainly be a satisfactory holding for investors. But it could well be a disastrous choice for speculators employing leverage.

A good example of bureaucracy fixing was created by George Marshall when he helped win World War II by getting from Congress the right to ignore seniority in choosing generals

2015-

“If you want to guarantee yourself a lifetime of misery, be sure to marry someone with the intent of changing their behavior.” — Charlie Munger

Bonus-

Somebody else is trading turds and you decide, I can’t be left out.

When nothing needs to be done, Warren is good at doing nothing.

When they are talking they are lying. When they are quite, they are stealing.

Those are usually my biggest triumps, when no one shows around.

There is no business bad enough not to get good projections

If Aristotle was alive he would be a very grumpy man, because he would see the same mistakes happen over and over and over again, that maybe the same problem with me.

Whenever you hear a theory described as elegant, watch out.

Keep your eyes wide open before marriage and half shut thereafter.

You campaign in poetry and you govern in prose.

If people wouldn’t be so often wrong, we wouldn’t be so rich.

It is hard to determine the order of precendency between a louse and a flea. — Samuel Johnson

It’s an honor to die for your country; Make sure the other guy gets the honor

My taste for hatred is not unending

The key to learning is assimilating keyideas of many subjects; academia rewards knowing more and of less andless

You dont want a great crisis to go waste

The great part of theology is better than never

A mine is a hole in the ground owned by a liar

It is sinful to be dumber than you have to be