If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety. So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you'd need. If you're driving a truck across a bridge that says it holds 10,000 pounds and you've got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it covers, you may feel okay, but if it's over the Grand Canyon, you may feel you want a little larger margin of safety.
The greatest investment a young person can make is in their own education, in their own mind. Because money comes and goes. Relationships come and go. But what you learn once stays with you forever.
The only question is whether you’re going to do it today or tomorrow. If you keep saying you’re going to do it tomorrow,
you’ll never do it. You have to get on it today.
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.
As an investor with small capital, one should prefer businesses that have high returns on capital and that require little incremental investment to grow.
We've used up a lot of bullets. And we talk about stimulus. But the truth is, we're running a federal deficit that's 9 percent of GDP. That is stimulative as all get out. It's more stimulative than any policy we've followed since World War II.
Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once unthinkable dosages will almost certainly bring on unwelcome after-effects. Their precise nature is anyone's guess, though one likely consequence is an onslaught of inflation.
The true investor welcomes volatility ... a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses.
The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.
I have a house that I bought 55 years ago. It's warm in the winter; it's cool in the summer. It has everything I wanted, plus it has all kinds of good memories. Like my kids, I have good thoughts about that. I can't imagine living any better.