Wed 20 Aug 2008
• You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.
• We do not view the company itself as the ultimate owner of our business assets but instead view the company as a conduit through which our shareholders own assets.
• When Berkshire buys common stock, we approach the transaction as if we were buying into a private business.
• Wide diversification is only required when investors do not understand what they are doing.
• Never invest in a business you cannot understand.
• Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.
• The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price.
• Risk can be greatly reduced by concentrating on only a few holdings.
• Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.
• Buy companies with strong histories of profitability and with a dominant business franchise.
• Be fearful when others are greedy and greedy only when others are fearful.
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