Consciously paying more for a stock than its calculated value - in the hope that it can soon be sold for a still-higher price - should be labelled speculation
We say we are trying to buy into businesses with excellent economics, run by honest and able people at a decent price. We buy very few securities, so we look at it as "focused" investing.
We will continue to ignore political and economic forecasts, which are an expensive distraction for many investors and
businessmen. Thirty years ago, no one could have foreseen the huge expansion of the Vietnam War, wage and price controls, two oil shocks, the resignation of a president, the dissolution of the Soviet Union, a one-day drop in the Dow of 508 points, or treasury bill yields fluctuating between 2.8% and 17.4%.
...I will give you two pieces of advice. Invest as much in yourself as you can; you are your own best asset by far. Then follow your passion; you want to be really excited to get out of bed every morning.
The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you'll be buying into a wonderful industry, which in effect is all of American industry... People ought to sit back and relax and keep accumulating over time.
The speed at which a business success is recognized, furthermore, is not that important as long as the company's intrinsic value is increasing at a satisfactory rate. In fact, delayed recognition can be an advantage: It may give us the chance to buy more of a good thing at a bargain price.
What could be more advantageous in an intellectual contest - whether it be chess, bridge, or stock selection - than to have opponents who have been taught that thinking is a waste of energy?
If you were at Lehman, the same thing happened. If you were at AIG, the shareholders are getting creamed on these things. And those shareholders are not just a bunch of big shots in Wall Street. Those are pension funds, and those are investors all over the country. I wouldn't worry too much about that. Justice won't be perfect on it.
I spend twelve hours a week - a little over 10% of my waking hours - playing the game. Now I am trying to figure out how to get by on less sleep in order to fit in a few more hands.