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Be an investment specialist
Category: Quotes
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Patience is an investing virtue
A “price conscious” buy is the critical lynchpin for our strategy, as it not only sets the basis for future return potential, but as importantly provides downside protection to avoid a return sapping capital loss. It is said that patience is a virtue, and indeed for our strategy, patience for an appropriate discount is essential for our purchase decisions. As we scour our broad and eclectic investment universe, we analyze many more companies than we will ever own. It is this continuing due diligence of management discussions, supplier, vendor and competitor interviews and financial statement analysis that helps us build our industry knowledge and form our unique view on what an enterprise and its assets are worth. We analyze many ‘good’ companies, but it is critical that we are patient and buy opportunistically when the discount to asset value provides an acceptable return and a mitigation of risk.-wrote fund manager Chip Rewey
“Why do gamblers continue betting even when they are losing money?” he asked while flicking through screens of stock prices and charts on a trading terminal at a Beijing brokerage firm this month. “It’s the same investing in stocks. If you lose money, you want to make up the losses. If you earn money, you want to earn more.”-from NYTimes
Someone once asked Warren Buffett how to become a better investor. He pointed to a stack of annual reports. “Read 500 pages like this every day,” he said. “That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”
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Warren Buffett on EBITDA
“Trumpeting EBITDA is a particularly pernicious practice. Doing so implies that depreciation is not truly an expense, given that it is a “non-cash” charge. That’s nonsense. In truth, depreciation is a particularly unattractive expense because the cash outlay it represents is paid upfront, before the asset acquired has delivered any benefits to the business. Imagine, if you will, that at the beginning of this year a company paid all of its employees for the next ten years of their service. In the following nine years, compensation would be a “non-cash” expense- a reduction of a pre paid compensation asset established this year. Would anyone care to argue that the recording of the expense in years two through ten would be simply a bookkeeping formality?”-wrote Warren Buffett