Investors have to remember: corporate profits are going up, but stocks are going up faster. How can that continue indefinitely? Investors can only earn what companies themselves can earn; the government or the markets themselves don't kick anything in. How can you get anything more out of a farm than what it grows?
That goes back to 1932, although it was really implemented in '33 under Jesse Jones, and it invested in mostly banks initially and preferred stock and that sort of thing. So there are two things needed in the system, the one that's needed overwhelmingly is liquidity. I mean, when people are trying to [unintelligible], there has to be somebody there to buy.
The most common cause of low prices is pessimism - sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces.
On his Giving Pledge philanthropy: The way I got the message out was to get a copy of FORBES, look down that 400 list and start making phone calls! Bill and Melinda [Gates] did the same thing. So keep publishing
the list so I can milk it.
I always say that in investing you want to buy stock in a company that has a business that's so good that an idiot can run it, because sooner or later one will. We have a country like that.
Buy a cross section of American industry, and if a cross section of American industry doesn't work, certainly trying to pick the little beauties here and there isn't going to work either.
To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. You must supply the emotional discipline.
You ought to be able to explain why you’re taking the job you’re taking, why you’re making the investment you’re making, or whatever it may be. And if it can’t stand applying pencil to paper, you’d better think it through some more. And if you can’t write an intelligent answer to those questions, don’t do it.
If anything, taxes for the lower and middle class and maybe even the upper-middle class should even probably be cut further. But I think that people at the high end - people like myself - should be paying a lot more in taxes. We have it better than we've ever had it.
In the end, alchemy, whether it is metallurgical or financial, fails. A base business can not be transformed into a golden business by tricks of accounting or capital structure. The man claiming to be a financial alchemist may become rich. But gullible investors rather than business achievements will usually be the source of his wealth.
One observer commenting on security analysts over forty stated: "They know too many things that are no longer true." As long as I am "on stage", publishing a regular record and assuming responsibility for management of what amounts to virtually 100% of the net worth of many partners, I will never be able to put sustained effort into any non-BPL activity. If I am going to participate publicly. I can't help being competitive. I know I don't want to be totally occupied with out-pacing an investment rabbit all my life. The only way to slow down is to stop.