An Introduction to Warren Buffet
No doubt there is plenty of information out there in print and on the Internet surrounding the business philosophies one of the world’s best investors, Warren Buffett. For those who are unfamiliar with them, the video below is an excellent introduction. In it, Buffett answers many questions about how he values a business, what makes strong long-term investments, and much more. This video was recorded during a talk Buffett gave at the University of Florida around 1998 I estimate. Despite its age, the advice it contains is timeless. The video is part 1 of 10 and the rest can be found here. It’s an informative and entertaining watch. Check it out. And thanks to Neville’s Financial Blog for the link.
Here are some of my favorite excerpts.
On investing only in things you truly understand:
Know what you do understand and don’t understand. That is the key. It’s to find what I call your circle of competance. The important thing is not how big the circle is. The important thing is staying inside the circle.
On how to determine the best company in a field. Ask other companies:
If you had a silver bullet, and you could put it through the head of one competitor, which competitor and why?
On the difference between working on Wall Street and working half a country away, in Omaha:
The best way to think about investments is to be in a room with no one else and just think. The disadvantage of being in a market-type environment like Wall Street: you get overstimulated. You think you have to do something every day.
On the failure of the investment firm Long Term Capital Management, which took on a lot of debt in order to leverage investment returns:
To make money they didn’t have and didn’t need, they risked what they did have and did need. And that’s foolish. It doesn’t make any difference what your IQ is. If you risk something that’s important to you for something that is unimportant, it just does not make any sense… And yet people do it financially without thinking about it.
