From the Presidential Medal
of Freedom presentation

Warren E. Buffett : as a world-known investor and philanthropist, Warren E. Buffett business acumen is matched only by his dedication to improve the lives of others. He is the co/founder of the Giving Pledge, an
organization that encourages wealthy Americans to donate at least 50percent of their wealth to philanthropic causes.

Warren Buffett’s example of Generosity and Compassion has shown us the power of one individual’s determination in inspiring countless women and men to help make our world a brighter place.

Last posts

Permanent Holdings

Puo’ essere che “Forever is not as long as it used to be”. Maybe, ma non di meno I grandi risultati per il vero investitore si misurano sul lungo termine. Wall Street ne e’ una evidente dimostrazione. Chi ha investito con me condivide da principio che noi siamo un Gruppo “long-term greedy”. Alcuni businesses acquisiti ad un Prezzo che ha garantito un sufficiente “Margin of Safety” sono giustamente considerati nel portafoglio di un vero Value Investor come Permanent Holdings. Il compito dello scrupoloso e diligente portfolio manager come analista e’ quello di monitorare le vicissitudini dell’azienda, di cui possiede un pezzo, attraverso il medium delle sue azioni. Per vicissitudini si intende le caratteristiche del business sottostante e il mantenimento del proprio valore e potere di produrre utili e un buon cash-flow costanti nel tempo. Il mantenimento di un vantaggio competitivo e I numeri confortanti dei bilanci sono I fatti su cui basare le decisioni di acquisto ulteriore o vendita. Le grandi meravigliose aziende sono rare e la filosofia giusta e’ quella di rimanere per lunghissimo tempo proprietari di un business simile. Siamo indifferenti alle vicissitudini e fluttuazioni del Prezzo nel breve termine, se non nella misura in cui si possano utilizzare le discrepanze tra prezzo e valore per comprare di piu’ di cio’ che gia’ si possiede. “Dancing in and out” non ha senso in una visione di lungo termine basata sul conoscere a fondo cio’ di cui si e’ proprietari. Se siete dei “business owners” conoscete a fondo la vostra azienda e cio’ che possedete, pregi e difetti. E’ sotto questa luce e lo sforzo che e’ richiesto per fare cio’ (il lavoro di approfondita ricerca ed analisi) che possedere un elevato numero di azioni in portafoglio non ha senso. Anzi aumenta il rischio al posto di eliminarlo (e’ difficile seguire approfonditamente e pretendere di conoscere molteplici settori e aziende) ed e’ una manifesta ammissione che non si conosce a fondo cio’ che si possiede. La diversificazione e’ un giusto strumento di protezione contro l’ignoranza come dice Buffett. Utile e doverosa per chi non ha il tempo e la voglia di approfondire la conoscenza di cio’ in cui investe. Per l’Investitore Intelligente una volta individuate con lunga analisi e duro lavoro un business e comprate le sue azioni ad un Prezzo attraente, la tentazione ammissibile e’ solo quella di averne il piu’ possible. “I don’t have to win in every game”. WB. Ditto.

Per concludere, ricevo emails con consigli di libri da leggere e richieste dei libri che leggo. Sto leggendo due libri non nuovi. Cosa che faccio spesso per confrontare previsioni di vecchi autori su cio’ che e’ poi davvero successo dopo, cioe’ oggi nei mercati. Ne scrivero’ appena li finisco. Il mio prossimo acquisto coerente con questo breve articolo sara’ invece “The long Game” di Dorie Clark, “How to be a long term thinker in a short-term world” (Harvard business Review) consigliato da Guy Spier, sul cui sito trovate una “review”.

Remember: the best way to become successful is to deserve it

MT

marco@blikebuffett.com

Supermoney

Quanto sono attuali ed applicabili oggi i principi dell’ “old school” of investing nel mondo tech dominato da Amazon, FB, etc? E’ Supermoney, il libro di Adam Smith del 1972 diventato sinonimo di Supervalutazioni a Wall Street oggi? E titoli come Tesla si sgonfieranno mai? Marketwatch di recente ha pubblicato un articolo il cui titolo era un invito a tornare ai principi buffettiani ora piu’ che mai in un mercato definito “frothy”: gonfio di bolle quindi, non necessariamente una bolla totale in se’ per se’. Bella scoperta. Le discrepanze tra prezzo e valore sono sempre state presenti e anche se erano in numero infinitamente superiore in passato (e addirittura migliaia nel periodo dal 1974 in poi quando Buffett poteva comprare l’intero Washington Post per 80 milioni e mille altre cose a prezzi ridicoli) non significa che il metodo per individuarle sia poi cambiato di molto. Il problema e’ che semmai oggi, dopo avere individuato una corporation che e’ sottovalutata e con buoni numeri e poco debito, una balance sheet pulita insomma ad un prezzo attraente o ragionevole..be’ il giorno dopo lo sanno gia’ tutti e anche se oscura, il prezzo per azione comincia a schizzare in alto e non e’ piu’ comprabile. Almeno non per l’investitore professionista o il broker-dealer alla ricerca di un certo margine di sicurezza e risultati non mediocri per i propri investitori e clienti. Io credo che la necessita’ ancora maggiore oggi di pazienza, attesa e qualita’ caratteriali e temperamentali sia un vantaggio ulteriore sulla massa da parte dell’investitore intelligente del XXI secolo. La sua macchina da guerra, il cervello, che valuta indipendementente da Wall street e dagli analisti, deve aggiornarsi e si aggiorna con la sua disciplina quotidiana. Se hai queste necessarie qualita’ e le applichi con 8 o 9 ore al giorno di studio e lettura, usando gli strumenti giusti, la teoria e’ rimasta la stessa. La stessa di Schloss, di Guerin, di Bill Ruane e Warren e Munger decenni fa. Possiamo spostare soglie, parametri, cambiare anche geografia se necessario nella ricerca, ma la cornice intellettuale e razionale e’ invariata. Anche nell’ ipervalutato e iperattivo mondo del daytrading, comprare dollari per 40 centesimi rimane ancora l’unico scopo del SuperInvestor. Il metodo e la disciplina per ottenere questo scopo e’ cio’ che lo interessa, ogni giorno ed in ogni condizione di mercato.

marco@blikebuffett.com

Waiting (part2) and “Is investing for everyone?”

WAITING (part 2) and “Is Investing for everyone?”

“If you are not ready to own a stock for ten years, you shouldn’t own it for 10 minutes” Uncle Warren says. As I have said previously, too much of a good thing is a wonderful thing in investing. But good businesses are really hard to find. That’s why when you find one, you’ve got to seize it. And stick with it as long as it remains a trusted partner, a best friend, and serves you well.  It must also be understood that while you are the owner of this wonderful piece of business, its price will fluctuate, regardless of the intrinsic value of the business itself.  Be patient, your reasoned choice will pay off. Keep reminding yourself of that in moments of doubt, when you’re tempted to offload it so you can buy ‘more’ at a discount.

Investing can be for everyone, but with one condition: you have to be ready to do the extra-work. Make an effort to become more disciplined. Every single day. Reading, studying, and planning out investments shouldn’t be annoying or overwhelming. It has to become a part of you, a second-nature. It shouldn’t vex you or cause you pain. Conversely, it should be a world in which you feel completely free to create; your own personal canvas where you get to paint using your unique colors. Pursuing wisdom and knowledge is the ultimate goal in your art. Being willing to learn and success will make you pick the right colors, the ones that are good for your soul and your wallet. “Nothing is forced upon you” says Warren. If you are not inspired, you don’t have to paint anything. Just like in jazz a good silence can become a wonderful piece of improvisation. It’s okay to wait patiently until you feel sure that you can bring something to the table, “and then you swing”. It doesn’t mean you have to know everything. Absolutely. But you really have to know what you know. More importantly, you have to know what you don’t know, and that there are things that you simply don’t understand or are able to put in practice.

Patience, perseverance and time will tell if your “facts and reasoning” were right. And they will show you that you can invest and make a profit if you like learning and you don’t give up. Again “You don’t have to win in every game” says Buffett. You’ll find your way. Learning from the greatest investors will give your reasoned choice the opportunity to adjust itself while you gain experience making your own decision. With time and patience, you’ll discover how to put your own twist on others’ ideas.

Waiting

WAITING (part 1)

In the investment world, you need patience. Unlike trading or speculating where the short-term benefit comes from being opportunistic, in ‘real’ investing, it is essential for the intelligent investor to wait patiently to reap long-term rewards. Waiting also possesses another virtue: the ability of gleaning more wisdom while waiting for the right pitch. Be prepared to wait for years if necessary. I have learned from Buffett and Munger to be patient. Watching the most successful investors put aside their impatience to just do ‘something’ with the market when there is in fact nothing to be done, was a real-opener for me. All value investors have this and other similar traits in common. Yet at the same time, they are never clones. Even though they start off from ‘the same house’ of their patriarch Benjamin Graham, they follow different paths and explore different streets in ‘the same town’ Buffett calls “Graham and Doddsville”. Over the decades, more than just one have successfully applied an ‘updated version’ of the same old principles to investing (which still work in the modern investment world). Having said that, even the more traditionalist like Walter Schloss and his son have done more than ok.

Whenever I find something very interesting in one of Buffett’s interviews, I watch it multiple times, again and again. It helps me think about how I can put in practice what he is saying or recommending; how I can utilize it in my everyday life. If you’re able to read through some of the quotes of great investors, you’ll find treasure expressed in just a few words. I’ve learnt as a business owner that if it takes a lot of words and negotiating to come to a deal, it’s probably the wrong deal. So as value investors, let’s not forget the key-concept that underpin our investment philosophy: we must remind ourselves each and every day to bid our time. You don’t make money when you buy stocks and you don’t make money when you sell stocks; you make money by waiting.

Humans have a tendency to be impatient and to suffer from boredom. While on the other hand, they also have a tendency to gamble. Investing is all about becoming a better human being in order to succeed. And it’s training in how to be a stoic. The pursuit of good virtues. You have to be able to find the part of yourself that controls your emotions and learn the best way to keep yourself in check. There are certain times that it is crucial you don’t get swept away by emotions; you have to bring to the table rationality, you have to be like Buffett. Let’s utilize the best attributes of being human: our reasoned choice, our rationality. Let’s put them both to work. We’ve conquered this world as a species because of our inquisitive minds. We can do wonderful things and avoid disasters by simply letting facts and reasoning defeat irrationality and weakness of spirit. It’s hard to do it but it can be done. How? With practice. And practice demands time and patience. It requires focus. The good thing about practice is that it requires strength more than having any special talent or a high IQ. It can be achieved by anyone. Don’t be afraid of repetition or practice or starting all over again. If it’s a fun and useful game, why not play it again? It is a huge advantage to have such an attitude (even though stoics are often criticized for it). Being repetitive is a bad thing? Not at all, it works fabulously not only in some aspects of life, but also in investing. Investing is not like cake in a diet: in investing too much of a good thing is a good thing!  (to be continued)

“Take the high road, its uncrowded”

I highly recommend reading Warren Buffett’s most recent letter regarding the donation on 23rd of June (4.1 billion). It’s on the Berkshire Hathaway website, and if it doesn’t resonate with your capitalist heart, it means that all your efforts to be a better person and a true capitalist are in vain. In my opinion, it doesn’t mean anything if you make a lot of money and don’t have any concept of appreciation; you’ll just be part of the crowded road of jerks that become jerkier when they get more money. I’m not a writer so I need as usual an appropriate stoic to help better explain what I mean:

“If only the hearts of the wealthy were opened to all! How great the fears high fortune stirs up within them.” (Seneca)

Doing the right thing is appreciating what you achieved. If you manage to get good results by just doing your job (for example, you made a good investment and successfully completed your task), why don’t you just silently and humbly move on to the next task? Move on to the next thing, without having to take credit, bragging or looking for a recognition for simply doing what you are supposed to do. In a nutshell, just do your job. Do it consistently, happily. Be thankful that things, big or small, are going in the direction you planned or wanted. Don’t think you need to become a different person. Take the next step; do the job at hand. And try to do it right again. Remember, many people are also trying to find success (following the same steps as you) but for many different reasons they are incapable of achieving good results. Think about others and make a reasoned choice about what you have, especially if you have more than you need, and think how to make good use of it.

When I encourage you to think like a true rich person or to be like Buffett, that’s what I have in mind. That’s the happiness and peace of mind I visualize in taking the high road: to pursue with honesty your own goals, whatever they might be. In the end, we all want to be happy, independent, free to apply reasoned choices to our lives. To put it in a few words, we want to be a better person than we were the day before, and if possible, leave the world a better place than we found it. As the stoics would say, we want to behave and think like a “philosopher”. Buffett is the most famous and well-known example of the good a rich investor/philosopher can do for a society by giving back what his talents produced, in terms of wealth. This ‘true wealth’ was accomplished over many decades, while living a happy life, doing what he likes the most: investing. Everyday. Without stopping and indulging in self-celebration or becoming complacent (the biggest danger around the corner for many successful people and businesses). “If only the hearts of the wealthy were opened to all!” If you can pile up extra-money that is of no use to you, you can easily give 99.9 percent away. Or you can be useful to others in many ways, not only with your money… even when your name is not Seneca or Warren Buffett.

P.S: Happy investing everyone. And when I say everyone I really mean everyone. Because remember : blikebuffett and Value Investing is more a “How” than a “How much” .

Wanna be a pro? Practice!

“Thats why the philosophers warn us not to be satisfied with mere learning, but to add practice and then training”.(Epictetus, Discourses) 

In investing,the goal is very simple: “Investing is laying out money now to get more money back in the future-more money in real terms, after taking inflation into account”.

We already know many people forget that and start to say that investing is merely speculative and not an investment at all. Another idea(including mine) is that the investment world purposely uses a variety of investment products and instruments that make it even more complicated for a layman to grasp, just to try and take advantage of their savings, while charging them outrageous fees.

Out of all instruments I know (preferred stocks included), common stocks are the only thing that I consider pieces of a business. And, as a business man and business owner, I assess stocks and analyze a publicly traded company using that caveat. I have just one approach when I’m buying a business’s stocks: I act like I’m buying the entire business. Whenever I am taking a business into consideration, the first thing I check is if it is a business I understand or I have experience with. It must be within my area of expertise. Over time,I’ve created my own ‘filter system’ and I’ve started to filter out the characteristics of the business that I don’t like. If a business or a corporation makes it through those filters, I move on to my ‘evaluation’ phase. When I figure out the intrinsic value of an entire business, I ask myself if I’m also able to predict what will happen with this business in the future. Only then do I check the actual market value and the price of the outstanding shares.The concept of ‘Intrinsic Value’ and ‘Margin of Safety’, (combined with as much understanding of accounting as possible), complete my set of mental tools and analysis. However,I will say that it’s all a lifelong process that everybody has to figure out for themselves.

So, why after many decades of studying and learning from Graham, Buffett, and Value Investing, do most students forget to just keep it simple? They tend to use the concepts and tools that they’ve learned and studied (or developed themselves), and forget the basic lessons of Value Investing. For example, they often fail to focus on accounting and instead focus on irrevelant things. Or they underestimate how much they can learn from a Nebraskan woman with a cart that created from scratch the biggest furniture store in the country.

Learning from real life experiences is the way to go; the ‘hands on’ approach of ‘just doing it’. Simply studying a bunch of formulas and theories  doesn’t work….at all. You can’t learn how to drive a car or fly a plane by just studying the manual

I’ve noticed that many young “investors” or “professional money managers” learn and study one thing, but then put into practice something else, without being consistent or rational.  It would be much more advantageous to merely practice and apply one investment philosophy.

The first thing you have to check before going into the investment business is if you are emotionally capable of handling ‘real investing’.

Not only applying what seems to be right theoretically, but also being able to rationally apply real world methods consistently.

Time and again, I’ve seen many guys on blogs, podcasts, and videos, profess they’ve read “The Intelligent Investor” or “Security Analysis”. They claim to agree with Buffett’s approach to investing but their actions simply don’t add up; they do not demostrate his approach or philosophy. They aren’t even able to quote Buffet or Graham accurately so I can’t imagine what they do when investing money.
I don’t know any other way when evaluating a business except the one that makes sense from a value standpoint. I don’t study any other approach or method except the “Value Investment”. It hooked me from the get-go, and like a Catholic marriage, I’ve never ‘changed horses’ (like Abe Lincoln used to say, it may not be a perfect horse, but I know its flaws and it serves me pretty well) .
So I think I will never exchange my ‘spouse’. I was lucky enough to be a virgin before my ‘marriage’; I had no formal business school training. It probably helped me to wade through a lot of distractions and strange theories. Always remember: Every good investment is a value investment by definition. That’s why I persistently stuck with learning how to better read financial reports,10ks, and 10Qs and refined my skills.
To have a good mind for business and investing it is crucial to own and start a business or more than one at a young age. There’s no use in learning anything if you don’t actually use those principles in the real world. “For as time passes we forget what we learned and end up doing the opposite, and hold opinions the opposite of what we should” (Epictetus, Discourses 2.9.13-14) 

Feel free to reach out or to comment at :

marco@blikebuffett.com

 

 

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Last posts

Permanent Holdings

Puo’ essere che “Forever is not as long as it used to be”. Maybe, ma non di meno I grandi risultati per il vero investitore si misurano sul lungo termine. Wall Street ne e’ una evidente dimostrazione. Chi ha investito con me condivide da principio che noi siamo un Gruppo “long-term greedy”. Alcuni businesses acquisiti ad un Prezzo che ha garantito un sufficiente “Margin of Safety” sono giustamente considerati nel portafoglio di un vero Value Investor come Permanent Holdings. Il compito dello scrupoloso e diligente portfolio manager come analista e’ quello di monitorare le vicissitudini dell’azienda, di cui possiede un pezzo, attraverso il medium delle sue azioni. Per vicissitudini si intende le caratteristiche del business sottostante e il mantenimento del proprio valore e potere di produrre utili e un buon cash-flow costanti nel tempo. Il mantenimento di un vantaggio competitivo e I numeri confortanti dei bilanci sono I fatti su cui basare le decisioni di acquisto ulteriore o vendita. Le grandi meravigliose aziende sono rare e la filosofia giusta e’ quella di rimanere per lunghissimo tempo proprietari di un business simile. Siamo indifferenti alle vicissitudini e fluttuazioni del Prezzo nel breve termine, se non nella misura in cui si possano utilizzare le discrepanze tra prezzo e valore per comprare di piu’ di cio’ che gia’ si possiede. “Dancing in and out” non ha senso in una visione di lungo termine basata sul conoscere a fondo cio’ di cui si e’ proprietari. Se siete dei “business owners” conoscete a fondo la vostra azienda e cio’ che possedete, pregi e difetti. E’ sotto questa luce e lo sforzo che e’ richiesto per fare cio’ (il lavoro di approfondita ricerca ed analisi) che possedere un elevato numero di azioni in portafoglio non ha senso. Anzi aumenta il rischio al posto di eliminarlo (e’ difficile seguire approfonditamente e pretendere di conoscere molteplici settori e aziende) ed e’ una manifesta ammissione che non si conosce a fondo cio’ che si possiede. La diversificazione e’ un giusto strumento di protezione contro l’ignoranza come dice Buffett. Utile e doverosa per chi non ha il tempo e la voglia di approfondire la conoscenza di cio’ in cui investe. Per l’Investitore Intelligente una volta individuate con lunga analisi e duro lavoro un business e comprate le sue azioni ad un Prezzo attraente, la tentazione ammissibile e’ solo quella di averne il piu’ possible. “I don’t have to win in every game”. WB. Ditto.

Per concludere, ricevo emails con consigli di libri da leggere e richieste dei libri che leggo. Sto leggendo due libri non nuovi. Cosa che faccio spesso per confrontare previsioni di vecchi autori su cio’ che e’ poi davvero successo dopo, cioe’ oggi nei mercati. Ne scrivero’ appena li finisco. Il mio prossimo acquisto coerente con questo breve articolo sara’ invece “The long Game” di Dorie Clark, “How to be a long term thinker in a short-term world” (Harvard business Review) consigliato da Guy Spier, sul cui sito trovate una “review”.

Remember: the best way to become successful is to deserve it

MT

marco@blikebuffett.com

Supermoney

Quanto sono attuali ed applicabili oggi i principi dell’ “old school” of investing nel mondo tech dominato da Amazon, FB, etc? E’ Supermoney, il libro di Adam Smith del 1972 diventato sinonimo di Supervalutazioni a Wall Street oggi? E titoli come Tesla si sgonfieranno mai? Marketwatch di recente ha pubblicato un articolo il cui titolo era un invito a tornare ai principi buffettiani ora piu’ che mai in un mercato definito “frothy”: gonfio di bolle quindi, non necessariamente una bolla totale in se’ per se’. Bella scoperta. Le discrepanze tra prezzo e valore sono sempre state presenti e anche se erano in numero infinitamente superiore in passato (e addirittura migliaia nel periodo dal 1974 in poi quando Buffett poteva comprare l’intero Washington Post per 80 milioni e mille altre cose a prezzi ridicoli) non significa che il metodo per individuarle sia poi cambiato di molto. Il problema e’ che semmai oggi, dopo avere individuato una corporation che e’ sottovalutata e con buoni numeri e poco debito, una balance sheet pulita insomma ad un prezzo attraente o ragionevole..be’ il giorno dopo lo sanno gia’ tutti e anche se oscura, il prezzo per azione comincia a schizzare in alto e non e’ piu’ comprabile. Almeno non per l’investitore professionista o il broker-dealer alla ricerca di un certo margine di sicurezza e risultati non mediocri per i propri investitori e clienti. Io credo che la necessita’ ancora maggiore oggi di pazienza, attesa e qualita’ caratteriali e temperamentali sia un vantaggio ulteriore sulla massa da parte dell’investitore intelligente del XXI secolo. La sua macchina da guerra, il cervello, che valuta indipendementente da Wall street e dagli analisti, deve aggiornarsi e si aggiorna con la sua disciplina quotidiana. Se hai queste necessarie qualita’ e le applichi con 8 o 9 ore al giorno di studio e lettura, usando gli strumenti giusti, la teoria e’ rimasta la stessa. La stessa di Schloss, di Guerin, di Bill Ruane e Warren e Munger decenni fa. Possiamo spostare soglie, parametri, cambiare anche geografia se necessario nella ricerca, ma la cornice intellettuale e razionale e’ invariata. Anche nell’ ipervalutato e iperattivo mondo del daytrading, comprare dollari per 40 centesimi rimane ancora l’unico scopo del SuperInvestor. Il metodo e la disciplina per ottenere questo scopo e’ cio’ che lo interessa, ogni giorno ed in ogni condizione di mercato.

marco@blikebuffett.com

Waiting (part2) and “Is investing for everyone?”

WAITING (part 2) and “Is Investing for everyone?”

“If you are not ready to own a stock for ten years, you shouldn’t own it for 10 minutes” Uncle Warren says. As I have said previously, too much of a good thing is a wonderful thing in investing. But good businesses are really hard to find. That’s why when you find one, you’ve got to seize it. And stick with it as long as it remains a trusted partner, a best friend, and serves you well.  It must also be understood that while you are the owner of this wonderful piece of business, its price will fluctuate, regardless of the intrinsic value of the business itself.  Be patient, your reasoned choice will pay off. Keep reminding yourself of that in moments of doubt, when you’re tempted to offload it so you can buy ‘more’ at a discount.

Investing can be for everyone, but with one condition: you have to be ready to do the extra-work. Make an effort to become more disciplined. Every single day. Reading, studying, and planning out investments shouldn’t be annoying or overwhelming. It has to become a part of you, a second-nature. It shouldn’t vex you or cause you pain. Conversely, it should be a world in which you feel completely free to create; your own personal canvas where you get to paint using your unique colors. Pursuing wisdom and knowledge is the ultimate goal in your art. Being willing to learn and success will make you pick the right colors, the ones that are good for your soul and your wallet. “Nothing is forced upon you” says Warren. If you are not inspired, you don’t have to paint anything. Just like in jazz a good silence can become a wonderful piece of improvisation. It’s okay to wait patiently until you feel sure that you can bring something to the table, “and then you swing”. It doesn’t mean you have to know everything. Absolutely. But you really have to know what you know. More importantly, you have to know what you don’t know, and that there are things that you simply don’t understand or are able to put in practice.

Patience, perseverance and time will tell if your “facts and reasoning” were right. And they will show you that you can invest and make a profit if you like learning and you don’t give up. Again “You don’t have to win in every game” says Buffett. You’ll find your way. Learning from the greatest investors will give your reasoned choice the opportunity to adjust itself while you gain experience making your own decision. With time and patience, you’ll discover how to put your own twist on others’ ideas.

Waiting

WAITING (part 1)

In the investment world, you need patience. Unlike trading or speculating where the short-term benefit comes from being opportunistic, in ‘real’ investing, it is essential for the intelligent investor to wait patiently to reap long-term rewards. Waiting also possesses another virtue: the ability of gleaning more wisdom while waiting for the right pitch. Be prepared to wait for years if necessary. I have learned from Buffett and Munger to be patient. Watching the most successful investors put aside their impatience to just do ‘something’ with the market when there is in fact nothing to be done, was a real-opener for me. All value investors have this and other similar traits in common. Yet at the same time, they are never clones. Even though they start off from ‘the same house’ of their patriarch Benjamin Graham, they follow different paths and explore different streets in ‘the same town’ Buffett calls “Graham and Doddsville”. Over the decades, more than just one have successfully applied an ‘updated version’ of the same old principles to investing (which still work in the modern investment world). Having said that, even the more traditionalist like Walter Schloss and his son have done more than ok.

Whenever I find something very interesting in one of Buffett’s interviews, I watch it multiple times, again and again. It helps me think about how I can put in practice what he is saying or recommending; how I can utilize it in my everyday life. If you’re able to read through some of the quotes of great investors, you’ll find treasure expressed in just a few words. I’ve learnt as a business owner that if it takes a lot of words and negotiating to come to a deal, it’s probably the wrong deal. So as value investors, let’s not forget the key-concept that underpin our investment philosophy: we must remind ourselves each and every day to bid our time. You don’t make money when you buy stocks and you don’t make money when you sell stocks; you make money by waiting.

Humans have a tendency to be impatient and to suffer from boredom. While on the other hand, they also have a tendency to gamble. Investing is all about becoming a better human being in order to succeed. And it’s training in how to be a stoic. The pursuit of good virtues. You have to be able to find the part of yourself that controls your emotions and learn the best way to keep yourself in check. There are certain times that it is crucial you don’t get swept away by emotions; you have to bring to the table rationality, you have to be like Buffett. Let’s utilize the best attributes of being human: our reasoned choice, our rationality. Let’s put them both to work. We’ve conquered this world as a species because of our inquisitive minds. We can do wonderful things and avoid disasters by simply letting facts and reasoning defeat irrationality and weakness of spirit. It’s hard to do it but it can be done. How? With practice. And practice demands time and patience. It requires focus. The good thing about practice is that it requires strength more than having any special talent or a high IQ. It can be achieved by anyone. Don’t be afraid of repetition or practice or starting all over again. If it’s a fun and useful game, why not play it again? It is a huge advantage to have such an attitude (even though stoics are often criticized for it). Being repetitive is a bad thing? Not at all, it works fabulously not only in some aspects of life, but also in investing. Investing is not like cake in a diet: in investing too much of a good thing is a good thing!  (to be continued)

“Take the high road, its uncrowded”

I highly recommend reading Warren Buffett’s most recent letter regarding the donation on 23rd of June (4.1 billion). It’s on the Berkshire Hathaway website, and if it doesn’t resonate with your capitalist heart, it means that all your efforts to be a better person and a true capitalist are in vain. In my opinion, it doesn’t mean anything if you make a lot of money and don’t have any concept of appreciation; you’ll just be part of the crowded road of jerks that become jerkier when they get more money. I’m not a writer so I need as usual an appropriate stoic to help better explain what I mean:

“If only the hearts of the wealthy were opened to all! How great the fears high fortune stirs up within them.” (Seneca)

Doing the right thing is appreciating what you achieved. If you manage to get good results by just doing your job (for example, you made a good investment and successfully completed your task), why don’t you just silently and humbly move on to the next task? Move on to the next thing, without having to take credit, bragging or looking for a recognition for simply doing what you are supposed to do. In a nutshell, just do your job. Do it consistently, happily. Be thankful that things, big or small, are going in the direction you planned or wanted. Don’t think you need to become a different person. Take the next step; do the job at hand. And try to do it right again. Remember, many people are also trying to find success (following the same steps as you) but for many different reasons they are incapable of achieving good results. Think about others and make a reasoned choice about what you have, especially if you have more than you need, and think how to make good use of it.

When I encourage you to think like a true rich person or to be like Buffett, that’s what I have in mind. That’s the happiness and peace of mind I visualize in taking the high road: to pursue with honesty your own goals, whatever they might be. In the end, we all want to be happy, independent, free to apply reasoned choices to our lives. To put it in a few words, we want to be a better person than we were the day before, and if possible, leave the world a better place than we found it. As the stoics would say, we want to behave and think like a “philosopher”. Buffett is the most famous and well-known example of the good a rich investor/philosopher can do for a society by giving back what his talents produced, in terms of wealth. This ‘true wealth’ was accomplished over many decades, while living a happy life, doing what he likes the most: investing. Everyday. Without stopping and indulging in self-celebration or becoming complacent (the biggest danger around the corner for many successful people and businesses). “If only the hearts of the wealthy were opened to all!” If you can pile up extra-money that is of no use to you, you can easily give 99.9 percent away. Or you can be useful to others in many ways, not only with your money… even when your name is not Seneca or Warren Buffett.

P.S: Happy investing everyone. And when I say everyone I really mean everyone. Because remember : blikebuffett and Value Investing is more a “How” than a “How much” .

Wanna be a pro? Practice!

“Thats why the philosophers warn us not to be satisfied with mere learning, but to add practice and then training”.(Epictetus, Discourses) 

In investing,the goal is very simple: “Investing is laying out money now to get more money back in the future-more money in real terms, after taking inflation into account”.

We already know many people forget that and start to say that investing is merely speculative and not an investment at all. Another idea(including mine) is that the investment world purposely uses a variety of investment products and instruments that make it even more complicated for a layman to grasp, just to try and take advantage of their savings, while charging them outrageous fees.

Out of all instruments I know (preferred stocks included), common stocks are the only thing that I consider pieces of a business. And, as a business man and business owner, I assess stocks and analyze a publicly traded company using that caveat. I have just one approach when I’m buying a business’s stocks: I act like I’m buying the entire business. Whenever I am taking a business into consideration, the first thing I check is if it is a business I understand or I have experience with. It must be within my area of expertise. Over time,I’ve created my own ‘filter system’ and I’ve started to filter out the characteristics of the business that I don’t like. If a business or a corporation makes it through those filters, I move on to my ‘evaluation’ phase. When I figure out the intrinsic value of an entire business, I ask myself if I’m also able to predict what will happen with this business in the future. Only then do I check the actual market value and the price of the outstanding shares.The concept of ‘Intrinsic Value’ and ‘Margin of Safety’, (combined with as much understanding of accounting as possible), complete my set of mental tools and analysis. However,I will say that it’s all a lifelong process that everybody has to figure out for themselves.

So, why after many decades of studying and learning from Graham, Buffett, and Value Investing, do most students forget to just keep it simple? They tend to use the concepts and tools that they’ve learned and studied (or developed themselves), and forget the basic lessons of Value Investing. For example, they often fail to focus on accounting and instead focus on irrevelant things. Or they underestimate how much they can learn from a Nebraskan woman with a cart that created from scratch the biggest furniture store in the country.

Learning from real life experiences is the way to go; the ‘hands on’ approach of ‘just doing it’. Simply studying a bunch of formulas and theories  doesn’t work….at all. You can’t learn how to drive a car or fly a plane by just studying the manual

I’ve noticed that many young “investors” or “professional money managers” learn and study one thing, but then put into practice something else, without being consistent or rational.  It would be much more advantageous to merely practice and apply one investment philosophy.

The first thing you have to check before going into the investment business is if you are emotionally capable of handling ‘real investing’.

Not only applying what seems to be right theoretically, but also being able to rationally apply real world methods consistently.

Time and again, I’ve seen many guys on blogs, podcasts, and videos, profess they’ve read “The Intelligent Investor” or “Security Analysis”. They claim to agree with Buffett’s approach to investing but their actions simply don’t add up; they do not demostrate his approach or philosophy. They aren’t even able to quote Buffet or Graham accurately so I can’t imagine what they do when investing money.
I don’t know any other way when evaluating a business except the one that makes sense from a value standpoint. I don’t study any other approach or method except the “Value Investment”. It hooked me from the get-go, and like a Catholic marriage, I’ve never ‘changed horses’ (like Abe Lincoln used to say, it may not be a perfect horse, but I know its flaws and it serves me pretty well) .
So I think I will never exchange my ‘spouse’. I was lucky enough to be a virgin before my ‘marriage’; I had no formal business school training. It probably helped me to wade through a lot of distractions and strange theories. Always remember: Every good investment is a value investment by definition. That’s why I persistently stuck with learning how to better read financial reports,10ks, and 10Qs and refined my skills.
To have a good mind for business and investing it is crucial to own and start a business or more than one at a young age. There’s no use in learning anything if you don’t actually use those principles in the real world. “For as time passes we forget what we learned and end up doing the opposite, and hold opinions the opposite of what we should” (Epictetus, Discourses 2.9.13-14) 

Feel free to reach out or to comment at :

marco@blikebuffett.com