Value Investing

25 Pages of the Best Value Investing Quotes (PAGE WILL LOAD SLOWLY)

http://www.tilsonfunds.com/motley_berkshire_wscmtg01notes.php3

Our culture is very old-fashioned, like Ben Franklin or Andrew Carnegie. Can you imagine Andrew Carnegie hiring consultants?! It’s amazing how well this approach still works. A lot of the businesses we buy are kind of cranky and old-fashioned like us.”  http://www.fool.com/boringport/2000/boringport000501.htm

“If Warrenhas kept the faith until he’s 75 years old, do you really think he’ll  blow the job of passing that culture along? What could be more important? You all have a lot more things to worry about than the candle at Berkshiregoing out because some people eventually die.”  http://www.designs.valueinvestorinsight.com/bonus/bonuscontent/docs/Tilson_2006_BRK_Meeting_Notes.pdf#search=%22Charlie%20munger%20and%20foundation%20and%20croupier%22

 

Debt

“We have monetized houses in this country in a way that’s never occurred before. Ask Joe how he bought a new Cadillac [and he’ll say] from borrowing on his house. We are awash in capital. [Being] awash is leading to very terrible behavior by credit cards and subprime lenders -a very dirty business, luring people into a disadvantageous position. It’s a new way of getting serfs, and it’s a dirty business. We have financial institutions, including those with big names, extending high-cost credit to the least able people. I find a lot of it revolting. Just because it’s a free market doesn’t mean it’s honorable.” http://www.tilsonfunds.com/wscmtg05notes.pdf

 

“Of course I’m troubled by huge consumer debt levels – we’ve pushed consumer credit very hard in the US.  Eventually, if it keeps growing, it will stop growing. As Herb Stein said, “If something cannot go on forever, it will stop.”  When it stops, it may be unpleasant.  Other than Herb Stein’s quote, I have no comment.  But the things that trouble you are troubling me.  http://www.tilsonfunds.com/wscmtg04notes.doc

 

Decisions:

 

“If you took out our 15 best ideas, most of you wouldn’t be here.”  http://www.tilsonfunds.com/motley_berkshire_brkmtg01notes.php3

Declining Prices:

“Over many decades, our usual practice is that if [the stock of] something we like goes down, we buy more and more. Sometimes something happens, you realize you’re wrong, and you get out. But if you develop correct confidence in your judgment, buy more and take advantage of stock prices.”   http://www.fool.com/news/foth/2002/foth020515.htm

Denial:

“If people tell you what you really don’t want to hear what’s unpleasant—there’s an almost automatic reaction of antipathy. You have to train yourself out of it.”  http://ycombinator.com/munger.html

Disasters:

 

“We don’t think because it’s never happened that it won’t. There’s no actuarial science, it’s rough judgment. We just try to be conservative.”  http://www.tilsonfunds.com/motley_berkshire_wscmtg01notes.php3

Deficits:

 

“Generally speaking, it can¹t be good to be running a big current account deficit and a big fiscal deficit and have them both growing. You would be thinking the end there would be a comeuppance.” “[But] it isn’t as though all the other options look wonderful compared to the US. It gives me some feeling that what I regard as fiscal misbehavior on our part could go on some time without paying the price.” http://us.ft.com/ftgateway/superpage.ft?news_id=fto050720060912107064&page=2

“We started from such a strong position. It’s not as if the alternatives are all so great. I can understand why people would rather invest in the  U.S.Do you want to be in Europe, where 12-13% of people are unemployed and most 28-year-olds are living at home and being paid by state to do it? Or be in Brazilor Venezuelawith the political instability that you fear? It’s not totally irrational that  people still like the U.S., despite its faults. Whatever misbehavior there is could go on quite a long time without a price being paid. “ http://www.designs.valueinvestorinsight.com/bonus/bonuscontent/docs/Tilson_2006_BRK_Meeting_Notes.pdf#search=%22Charlie%20munger%20and%20foundation%20and%20croupier%22

Deferred Gratification

 

“Almost all good businesses engage in ‘pain today, gain tomorrow’ activities.”  http://www.tilsonfunds.com/motley_berkshire_brkmtg01notes.php3

Denial:

“If you turn on the television, you’ll find the mothers of the most obvious criminals that man could ever diagnose, and they all think their sons are innocent. That’s simple psychological denial. The reality is too painful to bear, so you just distort it until it’s bearable. We all do that to some extent, and it’s a common psychological misjudgment that causes terrible problems.”  http://www.loschmanagement.com/Berkshire%20Hathaway/Charlie%20munger/The%20Psychology%20of%20Human%20Misjudgement.htm

 

Derivatives

 

“Everyone caved, adopted loose [accounting] standards, and created exotic derivatives linked to theoretical models. As a result, all kinds of earnings, blessed by accountants, are not really being earned. When you reach for the money, it melts away. It was never there. It [accounting for derivatives] is just disgusting. It is a sewer, and if I’m right, there will be hell to pay in due course. All of you will have to prepare to deal with a blow-up of derivative books.  http://www.fool.com/news/foth/2002/foth020515.htm

“No CEO examining books today understands what the hell is going on.”  http://www.law.stanford.edu/publications/stanford_lawyer/issues/64/sl64.pdf

The stupid and dishonest accountants allowed the genie of totally inappropriate accounting to descend on derivatives books. And once this has happened – people get status, etc. – it’s impossible to get it back into the bottle. http://www.tilsonfunds.com/brkmtg05notes.pdf

People don’t think about the consequences of the consequences.  People start by trying to hedge against interest rate changes, which is very difficult and complicated.  Then, the hedges made the results [reported profits] lumpy.  So then they use new derivatives to smooth this.  Well, now you’ve morphed into lying.  This turns into a Mad Hatter’s Party.  This happens to vast, sophisticated corporations.   Somebody has to step in and say, “We’re not going to do it — it’s just too hard… Derivatives are full of clauses that say if one party’s credit gets downgraded, then they have to put up collateral.  It’s like margin – you can go broke.  In attempting to protect themselves, they’ve introduced instability.  Nobody seems to have recognition of what a disaster of a system they’ve created.  It’s a demented system.  http://www.tilsonfunds.com/brkmtg04notes.doc

 

To say accounting for derivatives is  Americais a sewer is an insult to sewage.” http://www.tilsonfunds.com/motley_berkshire_brkmtg02notes.php3

 

Directors:

 

“Generally speaking, if you’re counting on outside