Gems From Buf­fett’s Letters

Austin American-Statesman Sunday - - PERSONAL FINANCE EXTRA -

Bil­lion­aire Warren Buf­fett is ready to teach you a lot about money, in­vest­ing and life — and a great place to learn is in his an­nual letters to share­hold­ers, archived at berk­shire­hath­away.com. Here are a few nuggets:

• 1978: “We make no at­tempt to pre­dict how se­cu­rity mar­kets will be­have; suc­cess­fully fore­cast­ing short-term stock price move­ments is some­thing we think nei­ther we nor any­one else can do.”

• 1979: “Both our op­er­at­ing and in­vest­ment ex­pe­ri­ence cause us to con­clude that ‘turn­arounds’ sel­dom turn, and that the same en­er­gies and tal­ent are much bet­ter em­ployed in a good busi­ness pur­chased at a fair price than in a poor busi­ness pur­chased at a bar­gain price.”

• 1997: “Only those who will be sellers of (stocks) in the near fu­ture should be happy at see­ing stocks rise. Prospec­tive pur­chasers should much pre­fer sink­ing prices.”

• 2007: “A truly great busi­ness must have an en­dur­ing ‘moat’ that pro­tects ex­cel­lent re­turns … com­peti­tors will re­peat­edly as­sault any busi­ness ‘cas­tle’ that is earn­ing high re­turns. There­fore, a for­mi­da­ble bar­rier such as a com­pany’s be­ing the low-cost pro­ducer … or pos­sess­ing a pow­er­ful world­wide brand … is es­sen­tial for sus­tained suc­cess.”

• 2008: “Whether we’re talk­ing about socks or stocks, I like buy­ing qual­ity mer­chan­dise when it is marked down.”

• 2013: “My ad­vice to the trustee (of my es­tate) could not be more sim­ple: Put 10 per­cent of the cash in short-term gov­ern­ment bonds and 90 per­cent in a very low-cost S&P 500 in­dex fund. (I sug­gest Van­guard’s.) I believe the trust’s long-term re­sults from this pol­icy will be su­pe­rior to those at­tained by most in­vestors — whether pen­sion funds, in­sti­tu­tions or in­di­vid­u­als — who em­ploy high-fee man­agers.”

• 2016: “Amer­i­can busi­ness — and con­se­quently a bas­ket of stocks — is vir­tu­ally cer­tain to be worth far more in the years ahead. In­no­va­tion, pro­duc­tiv­ity gains, en­tre­pre­neur­ial spirit and an abun­dance of cap­i­tal will see to that. Ever-present naysay­ers may pros­per by mar­ket­ing their gloomy fore­casts. But heaven help them if they act on the non­sense they ped­dle.”

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