Tag: Value Investing

Warren Buffett is renowned for his brilliant investment decisions, but even he admits that some of his early ones were not so great. In particular, he acknowledges that his initial purchase of Berkshire Hathaway was a costly mistake, resulting in a missed opportunity worth $200 billion. Although the company was ailing in the textile industry, he thought it was a cheap opportunity to acquire assets below their book value. However, he later realized that the money required to keep it afloat would have been better spent on acquiring a high-quality business instead.

“Start from a good base,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “Don’t follow our example in that respect. Start out with a good business and then keep adding on good businesses.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

With a seasoned wisdom born out of decades of astute observation and thoughtful analysis, Warren Buffett urges investors to eschew the siren call of capricious sentiments that too often cloud judgment and lead to grave missteps. For in the delicate dance of financial markets, where fortunes are won and lost amidst the ebb and flow of economic tides, it is the rational mind, steadfast and unswayed by the tempestuous winds of emotion, that emerges victorious.

“We make bad investment decisions plenty of times. I make more than Charlie. I like to think it’s because I make more decisions, but probably my batting average is worse. But, I can’t recall any time in the history of Berkshire that we made an emotional decision,” Buffett said at the 2023 Berkshire Hathaway annual meeting. “You don’t want to be a no emotion person in all of your life, but you definitely want to be a no emotion person in making an investment or business decision.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

In the grip of speculative fervor, as even money-losing enterprises witness their stocks soar skyward, it becomes all too easy to disregard the fundamental truth that enduring triumph in the realm of investments hinges on a company’s profits, not the capricious dance of its price.

“The only money investors are going to make, in the long run, are what the businesses make,” Buffett said at the 1999 Berkshire Hathaway annual meeting. “I mean, there is nothing added. The government doesn’t throw in anything. You know, nobody’s adding to the pot. People are taking out from the pot, in terms of frictional cost, investment management fees, brokerage commissions and all of that.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Warren Buffett’s approach to acquiring companies involves relying on his own research and analysis rather than depending on the opinion of investment bankers. He believes that investment bankers may not always provide trustworthy advice, as they may be incentivized to prioritize their own interests over those of the acquiring company.

“The idea of asking investment bankers or somebody to evaluate the businesses you’re going to buy, I mean, that strikes us as idiocy,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “If you don’t know enough about a business to decide whether to buy it yourself, you’d better forget it. It does not make sense. You bring in somebody who’s going to get a very large check if you buy it, and a very small check if you don’t, that displays a faith in human nature that would strain Charlie and me.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Warren Buffett is resolute in his stance that he would never swap his Berkshire Hathaway shares for gold or any other commodity. He emphasizes that the notion of trading a productive asset for a non-productive one is entirely unfamiliar to him.

“I can’t imagine ever exchanging any of my shares for gold coins,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “I would rather trust in the intrinsic value of a bunch of really fine businesses run by good managers selling products that people like to buy and have liked to buy for a long time, and then exchanging their future efforts, the money that comes from their wages, for See’s Candy or Coca-Cola or whatever, than take some piece of metal that people dig out of the ground in South Africa and then put back in the ground at Fort Knox, you know, after transporting it and insuring it and everything else.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

It is easy for investors to get itchy trigger fingers. After all, they are investors and investing is about putting your money to work. However, Warren Buffett has no problem with waiting until he finds the value and price that he wants.

“The question of how long we wait, we wait indefinitely. We are not going to buy anything just to buy something,” Warren Buffett said at the 1998 Berkshire Hathaway Annual Meeting. “We will only buy something if we think we’re getting something attractive.”

Hear Buffett’s full explanation

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Chasing higher interests rates to boost your return on principal is fine, as long as you don’t put your principal at risk of loss, notes Warren Buffett. It was a lesson that he learned the hard way when he made a mistake in investing in USAir preferred stock in 1989.

“It isn’t the return on principal that you care about,” Buffett said at the 1995 Berkshire Hathaway annual meeting. “It’s the return of principal.”

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Warren Buffett has a preference for brands that are capable of expanding their sales, whether it be regionally, nationally or internationally. He refers to these as brands that “travel well”. Nevertheless, he acknowledges that not all brands have the ability to do so. This is an important reminder when considering the enticing prospect of national distribution or international expansion.

“We love the idea of products that will travel. Some travel well, some don’t,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “I mean, it’s an incredible world that way. Candy bars don’t seem to travel so well, you know. Soft drinks travel terrifically. And razor blades travel terrifically. But the Cadbury bars sell in England. And, you know, and the Hershey bars sell here.”

Hear Buffett’s full explanation

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

The biblical tale of Adam and Eve illustrates how yielding to temptation caused their expulsion from paradise into a more challenging existence. Warren Buffett observes a comparable temptation for thriving businesses that have discovered a prosperous niche, yet strive for additional opportunities.

“I pointed out the danger of having a wonderful business is the temptation to go into less wonderful businesses,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “And it’s a risk I pointed out that when a company with a wonderful business gets into a mediocre business that usually the reputation of the mediocre business prevails over the supposed invincibility of the management of the wonderful business.”

Hear Buffett’s full explanation

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

When Warren Buffett purchases a stock or an entire business, he doesn’t just consider its positive attributes. Instead, one of the most important mental exercises he undertakes is to identify potential threats that could harm or even destroy the business.

“When we look at businesses, we try to think of what can go wrong with them. We try to look [for] businesses that are good businesses now, and we think about what can go wrong with them,” Buffett said at the 2000 Berkshire Hathaway annual meeting. “If we can think of very much that can go wrong with them, we just forget it. We are not in the business of assuming a lot of risk in businesses. That doesn’t mean we don’t do it inadvertently and make mistakes, because we do. But we don’t intentionally, or willingly, voluntarily, go into situations where we perceive really significant risk that the business is going to change in a major way.”

Hear Buffett’s full explanation

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© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.