This is the first time I am writing a blog. In the future, I will share my reading notes and good articles here to progress together!
Looking for Acquisition Targets
The company has been looking for suitable acquisition targets both within and outside the textile industry. Although we have not successfully completed any acquisitions so far, we still have a positive interest in such acquisitions.
——December 2, 1966
Kissing Frogs
Investors can always buy frogs at the current price. But if investors provide funds to princesses who are willing to pay double the price for the right to kiss frogs instead of buying frogs themselves, then these kisses had better have a sensational effect. We have observed many kisses, but miracles rarely happen. Nevertheless, many princesses in the management world still have confidence in the power of their kisses in the future, even if the grass in their company's backyard is already crawling with sluggish frogs.
——February 26, 1982
Fear and Greed
"Fear and greed, these two highly contagious diseases, will always appear in the investment world from time to time. The timing of the outbreaks of these two epidemics will be unpredictable. The market abnormalities they cause are also unpredictable in terms of duration and extent. Therefore, we never try to predict the arrival and departure time of any disease. Our approach is more moderate: we just try to be fearful when others are greedy, and greedy only when others are fearful."
——February 27, 1987
Like on a Baseball Field
"Of course, in the long run, the scoreboard for investment decisions is the market price. But the price will be determined by future earnings. In the investment process, just like on a baseball field, if you want to score on the scoreboard, you must focus on the game instead of the scoreboard."
——February 28, 1992
Who's Swimming Naked?
Hurricane "Andrew" destroyed several small insurance companies. In addition, it made some larger companies realize that their reinsurance protection against disasters was far from sufficient. (You only find out who is swimming naked when the tide goes out.)
——March 1, 1993
How Are Our Ducks Rated?
"In a bull market, be sure to avoid making this mistake: after a surge, using your mouth to comb the feathers of your ducks and boasting that it is your own skill that has made you rise in the world. On the contrary, a thinking duck will compare its position with that of other ducks in the pond after a downpour. So, what is our rating for the performance in 1997? As shown in the table on the next page, despite our desperate efforts last year, the passive duck that only invested in the S&P index rose almost as fast as we did. Therefore, our evaluation of the performance in 1997 is: boasting."
——February 27, 1998
An Ugly Report Card
"Even a confused detective can find the culprit of last year: your chairman. My performance reminds me of a quarterback whose report card shows four Fs and one D, but he has an understanding coach. 'Son,' the coach said to him slowly, 'I think you spent too much time on this subject. My 'this subject' is capital allocation, and my grade for this subject in 1999 is definitely a D. The biggest damage to us that year was the poor performance of the Berkshire stock portfolio-except for a small part managed by Lou Simpson of the government employee insurance company (GEICO), I bear full responsibility for this investment portfolio.'"
——March 1, 2000
Don't Take the Little Bird Literally
The sage who conveyed this oracle is Aesop, and his enduring investment insight (although somewhat incomplete) is 'A bird in the hand is worth two in the bush.' To flesh out this principle, you only need to answer three questions. How certain are you that there are really birds in the bushes? When will they appear and how many will appear? How high is the risk-free interest rate (we assume this rate is the yield of long-term US government bonds)? If you can answer these three questions, you will know the maximum value of this piece of bush and the maximum number of birds you should provide for this bush. Of course, don't take the little bird literally. Think of it as dollars.
——February 28, 2001
Riding the Tide
Over the years, Berkshire Hathaway and other American stockholders have easily achieved prosperity. Let's take a real long-term example: from December 31, 1899, to December 31, 1999, the Dow Jones Industrial Average rose from 66 points to 11,497 points. The reason behind this huge increase is simple: for a century, American companies have performed exceptionally well, and investors have ridden the wave of this prosperity.
——February 28, 2006
Capitalists and Kitty Hawk
The worst kind of business is one that grows rapidly, requires a lot of capital to achieve that growth, but doesn't make much money. Think of airlines. Since the days of the Wright brothers, a lasting competitive advantage in this industry has proven to be elusive. In fact, if a visionary capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting down Orville's plane.
——February 2008
The Importance of Price
The first law of capital allocation (whether these funds are used for acquisitions or stock repurchases) is that it is wise to trade at one price but foolish at another.
——February 25, 2012
Bubble Burst
In the past 15 years, both internet stocks and real estate have proven one thing: combining initially reasonable arguments with widely known continuously rising prices will lead to extreme excess. In these bubbles, a large number of initially skeptical investors succumb to the evidence provided by the market, and the buyer group expands to a level sufficient to continue driving the trend. But when the bubble blows up, an ancient proverb is once again confirmed: the wise start, the foolish end.
——February 25, 2012
Be Prepared with a Washbasin, Not a Teaspoon
Charlie and I don't have any magical plans to increase returns, we just have big dreams and are mentally and financially prepared to take action quickly when opportunities arise. Every ten years or so, the economic sky will be filled with dark clouds, followed by a brief golden shower. When this downpour comes, we must rush out the door with a washbasin, not a teaspoon.
——February 25, 2017