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

“Graham and Doddsville” (big trouble again now)

I apologize to my american friends for this week i promised to write something about Buffett in Italy, and it’ll be in italian, language of which i’m not a native speaker either because my first language was the strange dialect of the southern town in Italy in which I was born. But, is what it is..Having said that, cominciamo. Ho notato come Buffett in Italia possa essere male interpretato quando mi hanno fatto vedere un video in cui un ragazzo dice “non puoi fare quello che fa Buffett, o non puoi essere come Warren Buffett..”. In un certo senso bella scoperta, ma quando spiega i motivi li trovo tutti sbagliati. Per cui mi sento in dovere, nello spirito di questo sito e del suo titolo, di scrivere qualcosa a riguardo.

Buffett, per chi sa ascoltarlo e capirlo, insegna uno spirito piu’ che un metodo o una formula. Infatti entrambi non esistono, nè metodo (è cambiato nel corso dei decenni e si è evoluto e parecchio..nè formula, mai esistita ed inesistente). Se leggete e bene e a fondo il discorso del maggio 1986 che festeggia l’anniversario della pubblicazione di “Security Analysis” di Graham e Dodd, tutto vi apparirà piu’ chiaro. E’ semplice: vi invita ad essere residenti di una città che Buffett chiama “Graham and Doddsville” cioè a fare “vostri” dei principi e consigli di cui molto parlo in questo sito che sono semplici e funzionano e sono basati molto spesso su qualità di disciplina e razionalità (e una forte cornice emotiva) che molti “pundits” saputelli ignorano. Leggono un libro e ti dicono : “questo non lo puoi replicare”. Infatti ! Se ascolti veramente Buffett puoi fare di meglio. Se ti sforzi (e non è facile) ad ottenere le qualità per un visto nella città di “Graham and Doddsville” e hai 100.000 dollari da gestire e non 10 miliardi di dollari..in percentuale puoi fare molto meglio. Puoi raddoppiare piu’ agilmente 100.000 dollari, quasi impossibile rispetto a 10.000 milioni, molto piu’ difficili da allocare intelligentemente. Puoi acquistare aziende, anche attraverso il medium delle azioni, che Buffett non puo’ nemmeno considerare perchè troppo piccole. Profittevoli, ma che per la loro dimensione non sposterebbero un cosi’ grande portafoglio. Quindi puoi, anzi devi e puoi fare meglio di Buffett se sai applicare il principio di analisi che è lo stesso che lui ha imparato da Ben Graham, da David Dodd, e che seguendo loro (e anche Munger e Philip Fisher) ha fatto proprio. E’ quello che Buffett comincio’ a fare nel maggio del 1952, con 101.000 dollari di parenti e amici e 100 dollari suoi.

il problema per tutti è fare veramente proprio lo spirito e l’aria di Graham and Doddsville. E ci vuole tempo, per cui bisogna iniziare il prima possibile. Non avete bisogno di conoscere o andare a cena con Tim Cook per sapere che apple è un meraviglioso business. Quando ho cominciato a comprarla io, prima di Buffett, stava li’ nei suoi numeri, Negli “economics”, nei conti, nel 10k e nei 10Q. Stava nell’abitare a Graham and Doddsville con la propria anima, non a casa di Tim Cook.

Libri in italiano su Buffett (ouch! Big trouble now)

Non pretendo averli letti tutti. Ma non ne consiglio nessuno. L’unico libro che consiglio su Buffett è “the Snowball” che è l’unica biografia autorizzata e “narrata” da lui stesso. E scritta benissimo ed in un magnifico stile dalla brava Alice Schroeder.  Voluminosa e dettagliata e ovviamente non tradotta in italiano. E qui direi inizia un punto cruciale. La lingua. Ho sentito anche qualche italiano tentare delle “delucidazioni” sul metodo Warren Buffett pretendendo di averlo capito attraverso magari la semplice lettura dell’omonimo libro disponibile in italiano…sinceramente condivido cio’ che ha detto Charlie Munger su quel libro: E’ informato, è dettagliato, intendiamoci è frutto di un lavoro non da poco di studio o ricerca, ma  “non e’ un grande contributo alla conoscenza”.

Insomma lo spirito ed i consigli di Warren e lo studio approfondito del suo approccio al mondo degli investimenti vanno ricercati altrove. E dove? Semplice: nelle sue dirette parole! In decenni di precise dichiarazioni che vanno analizzate e capite nella sua lingua senza traduzioni o intermediazioni. As simple as that. Decenni di consigli imparziali e di buon senso che funzionano. E sono semplici se assimilati, assorbiti parola per parola in Inglese, in decenni di ascolto. Io ho passato ore e ore a trascrivere a penna su quaderni e agende in corsivo perle fantastiche da ore e ore di “shareholders meetings”. Leggere in originale tra le righe delle sue “perle” e delle sue geniali “conclusioni” (e quelle di Munger, che Warren reputa uno dei suoi maestri)…e’ l’unica strada. Certo se conoscete l’inglese come Renzi o poco piu’ la vedo dura. Sceglietevi un altro eroe se dovete leggere Buffett in italiano e pure interpretato da altri. Doppio filtro, double trouble. Auguri!

“The more you learn…”

1.How much money this investment will produce in the future?    2. When ?     3.And at what risk? 

The first question must be intended like “the cash flow streaming or streams of cash flow that I can reasonably predict to collect in the future”. And immediately after this, I want to know when is this future. And this second question is related to the critical concept of “the time value of money” and also to “Net Present Value” of monies we predict to collect in the future from this investment. Because to invest is all about this: I put to work an amount of money today to bring me back more money tomorrow. As simple as that. Albeit people sometimes forget about this thinking about speculating, buying to resell as soon as possible assets that don’t produce anything and so on.

Just other two things to mention that usually scare some people but they are not complex to understand : interest rates at which you discount the amount of money you’re investing today, and the answer at the third of our 3 questions: at what risk and what is risk? 

Let’s say for now to stay simple that you have to have an answer in your mind to all three questions. So, you have to have 3 answers based upon facts, reliable datas and an estimate, a valuation of the subject in which you’re investing (a property, a company, a business). The quality and the precision of the answers is based in part upon science , but in part also upon art and above all : Experience. That’s why it is important to start as early as you can.(11 years old like Warren is a high standard to replicate, I know).  To be an intelligent investor takes a lot of time and learning. But guess what, good thing is that it is a field in which your knowledge accumulates. That’s great. Nothing that you learn today and everyday with discipline will be completely unuseful tomorrow. And that’s why it is really true that “the more you learn, the more you’ll earn!”

Price doesn’t tell you much

So, if Value has to be found, what does price is there to say? For stocks price will not tell you that much about the company, the business, the going-on concern value. (That is the value we try to calculate or find for something that produces an inflow (and outflow) of cash. The “numbers” (accounting numbers) of the business will tell you that story you must be eager to learn and know about. That’s why Warren doesn’t look at the price before reading a 10Q or a 10K or a financial report in general of a company. He doesn’t want to be influenced by the price of the stock. In that moment it doesn’t matter. And it’s a critical concept to understand. You look at the price AFTER you have come to a conclusion about a Value, or more than a Value, of this particular company you want to buy. You want this conclusion based on a sound reasoning. You want this conclusion based on supportable evidence and investigation throughout the company, if possible. (But we’ll talk in the future about reputation, management, strenght of the brand and so on..) Let’s focus now about our “Value”. At the end of the day we are looking for just one Value. But there could be more than one..

More than a Value? Exactly right. It can exist more than a value, and professional brokers that come from the Real Estate world they know it very well. For a seasoned appraiser is easy to say that an “investment value” is different from a “market value” of a property. As an investor you don’t want to pay an investment property a price that is very good for the seller. You want to pay a price that is good for you buyer, and that you expect will increase with its value in the future. And here we are about the three fundamental key questions you have to ask yourself before every investment decisions you’re going to make. Those three key questions are..

(to be continued)

“Price is what you pay..”

“..Value is what you get”. Just yesterday evening I’ve been asked a question that’s critical: “How do you know when is the moment to buy a stock?” It’s a very good question, let’s try to answer.

When you buy a business you want to assess a Value for this business. If someone shows you a property, a house for example, you naturally do the same thing. And then you look at the price, right? And immediately after that, you try to make a comparison with what you think is the “right price” that it means for you are looking for what we can generally call a “Value”.

If someone makes you a proposal to buy a Company you should do the same. You better ask yourself which is the Value of this business. With stocks this is particularly true because you are buying pieces of a business. You are going to pay a price for every piece of this business and this price can be different from what you really get. From their real value. The price is known. The Value has to be found…

(..to be continued..”)

The American Tailwind

I would like a little bit to talk about America and why I found so useful for me to learn from Warren and so enjoyable to spread his word to others. Without a true natural passion for everything that was coming from the States since ever, I would have never known about Warren Buffett. He is so underestimate in Italy and in Europe in general, where his story and Berkshire’s one is not well-known or known at all. And this is valid even among investors or financial pros. Probably it’s because his story can be fully understood if you are tuned well with a soundtrack that is profoundly American and nothing else. Warren has a vision, very well-thought, of how things in life and in the world work. He built this vision on something more than common sense and something more than business and financial principles. He deeply goes beyond that. He built it on facts nor on opinions, facts that are valuable. Facts supported by reliable datas that he carefully analyses. Constantly, open minded. Ready to change his mind and stay up-dated through continuos education across decades of experience. Experience in more than one field of business, and in more than one field of Life.

That’s his happiness, his passion, the way he wants to spend most of his day. The way he wants to live. Monies? Just his score. The main drive is the passion for business, the faith in America and the faith in the generosity of the people that believed in this country. I think those are the most important things you have to feel to share with him and be a natural part of yourself. Otherwise I don’t think Warren can be for you the same kind of hero he is for me.

In fact, I do believe in what Warren calls “The American Tailwind”. If you had put 1 dollar on the S&P 500 77 years ago, his investing life-time window, you’d have had today more than 5.000 dollars. Just betting on the entire American Business. With no decisions to make, no stocks to pick or anything. That’s a hurricane, more than a tailwind. When they ask me about my first or basic investing strategy my answer is: I do believe in America. I believe in the American Business. I believe in its numbers and even more I believe in the people of every color, origin, religion that with their generosity and willingness to work hard made this country the great promise it still is today. I don’t bet against them. I don’t bet against corporate America.I proudly invest and buy the best and more profitable pieces of the greatest economy in the world.

 

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Last posts

“Graham and Doddsville” (big trouble again now)

I apologize to my american friends for this week i promised to write something about Buffett in Italy, and it’ll be in italian, language of which i’m not a native speaker either because my first language was the strange dialect of the southern town in Italy in which I was born. But, is what it is..Having said that, cominciamo. Ho notato come Buffett in Italia possa essere male interpretato quando mi hanno fatto vedere un video in cui un ragazzo dice “non puoi fare quello che fa Buffett, o non puoi essere come Warren Buffett..”. In un certo senso bella scoperta, ma quando spiega i motivi li trovo tutti sbagliati. Per cui mi sento in dovere, nello spirito di questo sito e del suo titolo, di scrivere qualcosa a riguardo.

Buffett, per chi sa ascoltarlo e capirlo, insegna uno spirito piu’ che un metodo o una formula. Infatti entrambi non esistono, nè metodo (è cambiato nel corso dei decenni e si è evoluto e parecchio..nè formula, mai esistita ed inesistente). Se leggete e bene e a fondo il discorso del maggio 1986 che festeggia l’anniversario della pubblicazione di “Security Analysis” di Graham e Dodd, tutto vi apparirà piu’ chiaro. E’ semplice: vi invita ad essere residenti di una città che Buffett chiama “Graham and Doddsville” cioè a fare “vostri” dei principi e consigli di cui molto parlo in questo sito che sono semplici e funzionano e sono basati molto spesso su qualità di disciplina e razionalità (e una forte cornice emotiva) che molti “pundits” saputelli ignorano. Leggono un libro e ti dicono : “questo non lo puoi replicare”. Infatti ! Se ascolti veramente Buffett puoi fare di meglio. Se ti sforzi (e non è facile) ad ottenere le qualità per un visto nella città di “Graham and Doddsville” e hai 100.000 dollari da gestire e non 10 miliardi di dollari..in percentuale puoi fare molto meglio. Puoi raddoppiare piu’ agilmente 100.000 dollari, quasi impossibile rispetto a 10.000 milioni, molto piu’ difficili da allocare intelligentemente. Puoi acquistare aziende, anche attraverso il medium delle azioni, che Buffett non puo’ nemmeno considerare perchè troppo piccole. Profittevoli, ma che per la loro dimensione non sposterebbero un cosi’ grande portafoglio. Quindi puoi, anzi devi e puoi fare meglio di Buffett se sai applicare il principio di analisi che è lo stesso che lui ha imparato da Ben Graham, da David Dodd, e che seguendo loro (e anche Munger e Philip Fisher) ha fatto proprio. E’ quello che Buffett comincio’ a fare nel maggio del 1952, con 101.000 dollari di parenti e amici e 100 dollari suoi.

il problema per tutti è fare veramente proprio lo spirito e l’aria di Graham and Doddsville. E ci vuole tempo, per cui bisogna iniziare il prima possibile. Non avete bisogno di conoscere o andare a cena con Tim Cook per sapere che apple è un meraviglioso business. Quando ho cominciato a comprarla io, prima di Buffett, stava li’ nei suoi numeri, Negli “economics”, nei conti, nel 10k e nei 10Q. Stava nell’abitare a Graham and Doddsville con la propria anima, non a casa di Tim Cook.

Libri in italiano su Buffett (ouch! Big trouble now)

Non pretendo averli letti tutti. Ma non ne consiglio nessuno. L’unico libro che consiglio su Buffett è “the Snowball” che è l’unica biografia autorizzata e “narrata” da lui stesso. E scritta benissimo ed in un magnifico stile dalla brava Alice Schroeder.  Voluminosa e dettagliata e ovviamente non tradotta in italiano. E qui direi inizia un punto cruciale. La lingua. Ho sentito anche qualche italiano tentare delle “delucidazioni” sul metodo Warren Buffett pretendendo di averlo capito attraverso magari la semplice lettura dell’omonimo libro disponibile in italiano…sinceramente condivido cio’ che ha detto Charlie Munger su quel libro: E’ informato, è dettagliato, intendiamoci è frutto di un lavoro non da poco di studio o ricerca, ma  “non e’ un grande contributo alla conoscenza”.

Insomma lo spirito ed i consigli di Warren e lo studio approfondito del suo approccio al mondo degli investimenti vanno ricercati altrove. E dove? Semplice: nelle sue dirette parole! In decenni di precise dichiarazioni che vanno analizzate e capite nella sua lingua senza traduzioni o intermediazioni. As simple as that. Decenni di consigli imparziali e di buon senso che funzionano. E sono semplici se assimilati, assorbiti parola per parola in Inglese, in decenni di ascolto. Io ho passato ore e ore a trascrivere a penna su quaderni e agende in corsivo perle fantastiche da ore e ore di “shareholders meetings”. Leggere in originale tra le righe delle sue “perle” e delle sue geniali “conclusioni” (e quelle di Munger, che Warren reputa uno dei suoi maestri)…e’ l’unica strada. Certo se conoscete l’inglese come Renzi o poco piu’ la vedo dura. Sceglietevi un altro eroe se dovete leggere Buffett in italiano e pure interpretato da altri. Doppio filtro, double trouble. Auguri!

“The more you learn…”

1.How much money this investment will produce in the future?    2. When ?     3.And at what risk? 

The first question must be intended like “the cash flow streaming or streams of cash flow that I can reasonably predict to collect in the future”. And immediately after this, I want to know when is this future. And this second question is related to the critical concept of “the time value of money” and also to “Net Present Value” of monies we predict to collect in the future from this investment. Because to invest is all about this: I put to work an amount of money today to bring me back more money tomorrow. As simple as that. Albeit people sometimes forget about this thinking about speculating, buying to resell as soon as possible assets that don’t produce anything and so on.

Just other two things to mention that usually scare some people but they are not complex to understand : interest rates at which you discount the amount of money you’re investing today, and the answer at the third of our 3 questions: at what risk and what is risk? 

Let’s say for now to stay simple that you have to have an answer in your mind to all three questions. So, you have to have 3 answers based upon facts, reliable datas and an estimate, a valuation of the subject in which you’re investing (a property, a company, a business). The quality and the precision of the answers is based in part upon science , but in part also upon art and above all : Experience. That’s why it is important to start as early as you can.(11 years old like Warren is a high standard to replicate, I know).  To be an intelligent investor takes a lot of time and learning. But guess what, good thing is that it is a field in which your knowledge accumulates. That’s great. Nothing that you learn today and everyday with discipline will be completely unuseful tomorrow. And that’s why it is really true that “the more you learn, the more you’ll earn!”

Price doesn’t tell you much

So, if Value has to be found, what does price is there to say? For stocks price will not tell you that much about the company, the business, the going-on concern value. (That is the value we try to calculate or find for something that produces an inflow (and outflow) of cash. The “numbers” (accounting numbers) of the business will tell you that story you must be eager to learn and know about. That’s why Warren doesn’t look at the price before reading a 10Q or a 10K or a financial report in general of a company. He doesn’t want to be influenced by the price of the stock. In that moment it doesn’t matter. And it’s a critical concept to understand. You look at the price AFTER you have come to a conclusion about a Value, or more than a Value, of this particular company you want to buy. You want this conclusion based on a sound reasoning. You want this conclusion based on supportable evidence and investigation throughout the company, if possible. (But we’ll talk in the future about reputation, management, strenght of the brand and so on..) Let’s focus now about our “Value”. At the end of the day we are looking for just one Value. But there could be more than one..

More than a Value? Exactly right. It can exist more than a value, and professional brokers that come from the Real Estate world they know it very well. For a seasoned appraiser is easy to say that an “investment value” is different from a “market value” of a property. As an investor you don’t want to pay an investment property a price that is very good for the seller. You want to pay a price that is good for you buyer, and that you expect will increase with its value in the future. And here we are about the three fundamental key questions you have to ask yourself before every investment decisions you’re going to make. Those three key questions are..

(to be continued)

“Price is what you pay..”

“..Value is what you get”. Just yesterday evening I’ve been asked a question that’s critical: “How do you know when is the moment to buy a stock?” It’s a very good question, let’s try to answer.

When you buy a business you want to assess a Value for this business. If someone shows you a property, a house for example, you naturally do the same thing. And then you look at the price, right? And immediately after that, you try to make a comparison with what you think is the “right price” that it means for you are looking for what we can generally call a “Value”.

If someone makes you a proposal to buy a Company you should do the same. You better ask yourself which is the Value of this business. With stocks this is particularly true because you are buying pieces of a business. You are going to pay a price for every piece of this business and this price can be different from what you really get. From their real value. The price is known. The Value has to be found…

(..to be continued..”)

The American Tailwind

I would like a little bit to talk about America and why I found so useful for me to learn from Warren and so enjoyable to spread his word to others. Without a true natural passion for everything that was coming from the States since ever, I would have never known about Warren Buffett. He is so underestimate in Italy and in Europe in general, where his story and Berkshire’s one is not well-known or known at all. And this is valid even among investors or financial pros. Probably it’s because his story can be fully understood if you are tuned well with a soundtrack that is profoundly American and nothing else. Warren has a vision, very well-thought, of how things in life and in the world work. He built this vision on something more than common sense and something more than business and financial principles. He deeply goes beyond that. He built it on facts nor on opinions, facts that are valuable. Facts supported by reliable datas that he carefully analyses. Constantly, open minded. Ready to change his mind and stay up-dated through continuos education across decades of experience. Experience in more than one field of business, and in more than one field of Life.

That’s his happiness, his passion, the way he wants to spend most of his day. The way he wants to live. Monies? Just his score. The main drive is the passion for business, the faith in America and the faith in the generosity of the people that believed in this country. I think those are the most important things you have to feel to share with him and be a natural part of yourself. Otherwise I don’t think Warren can be for you the same kind of hero he is for me.

In fact, I do believe in what Warren calls “The American Tailwind”. If you had put 1 dollar on the S&P 500 77 years ago, his investing life-time window, you’d have had today more than 5.000 dollars. Just betting on the entire American Business. With no decisions to make, no stocks to pick or anything. That’s a hurricane, more than a tailwind. When they ask me about my first or basic investing strategy my answer is: I do believe in America. I believe in the American Business. I believe in its numbers and even more I believe in the people of every color, origin, religion that with their generosity and willingness to work hard made this country the great promise it still is today. I don’t bet against them. I don’t bet against corporate America.I proudly invest and buy the best and more profitable pieces of the greatest economy in the world.