Legendary value investor Warren Buffet in his first ever interview broadcasted on national television. Buffet describes his investment style and how he analyzes businesses.
- First rule of investment is don’t lose, second rule is don’t forget the first rule
- Most important quality of a successful investment manager is temperamental, not intellectual. Need a stable personality. Not a business that takes polls, but a business where you think. You’re not right or wrong because people agree/disagree with you.
- Most investors worry about what the stock is going to do the next year. Real test whether you’re investing is if you care whether the stock market is open tomorrow.
- Price don’t tell you anything about the business. Business figures themselves do.
- Value the business first before looking at the price, then look at the price to see if it’s worth it
- Avoid getting over stimulated, focus is what the business is worth. Location is not advantage (e.g. being on Wall Street is not an advantage)
- No forces to make you buy or sell a stock. Patience is key to wait for the price to buy a stock. Baseball analogy where the stock markets will give you lots of pitches, you sometimes strike, sometimes miss, but unlike baseball, you don’t have to swing at all the pitches. You can just wait for the 1 that gives you a home run
- Too many tools now in the market, and like all human behaviour, once we’re given a hammer, our behaviour is to hammer away even if it’s not the right tool for the job