Since we have a thread on Nice Trading Quote, I thought it might be nice to have the same on the Investing side of things.
Here's a great one from the legendary investor to kick off this thread.
Nice Investing Quote
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fretinapaul
- Posts: 13
- Joined: Tue May 21, 2013 11:32 am
Very nice quote. Whatever said in the quote is 100% true..
Buffett on projections and forecasts: -
I have no use whatsoever for projections or forecasts. They create an illusion of apparent precision. The more meticulous they are, the more concerned you should be. We never look at projections, but we care very much about, and look very deeply at, track records. If a company has a lousy track record, but a very bright future, we will miss the opportunity...
I do not understand why any buyer of a business looks at a bunch of projections put together by a seller or his agent. You can almost say that it's naive to think that those projections have any utility whatsoever. We're just not interested.
If we don't have some idea ourselves of what the future is, to sit there and listen to some other guy who's trying to sell us the business or get a commission on it tell us what the future's going to be—like I say, it's very naive.
I have no use whatsoever for projections or forecasts. They create an illusion of apparent precision. The more meticulous they are, the more concerned you should be. We never look at projections, but we care very much about, and look very deeply at, track records. If a company has a lousy track record, but a very bright future, we will miss the opportunity...
I do not understand why any buyer of a business looks at a bunch of projections put together by a seller or his agent. You can almost say that it's naive to think that those projections have any utility whatsoever. We're just not interested.
If we don't have some idea ourselves of what the future is, to sit there and listen to some other guy who's trying to sell us the business or get a commission on it tell us what the future's going to be—like I say, it's very naive.
In hindsight, that was so true of the dotcom boom from about 1998 to 2002..The valuations that was put on some businesses was crazy based on "what they could be". A lot of money was made and lost during this periodEuler wrote:Buffett on projections and forecasts: -
I have no use whatsoever for projections or forecasts. They create an illusion of apparent precision. The more meticulous they are, the more concerned you should be. We never look at projections, but we care very much about, and look very deeply at, track records. If a company has a lousy track record, but a very bright future, we will miss the opportunity...
I do not understand why any buyer of a business looks at a bunch of projections put together by a seller or his agent. You can almost say that it's naive to think that those projections have any utility whatsoever. We're just not interested.
If we don't have some idea ourselves of what the future is, to sit there and listen to some other guy who's trying to sell us the business or get a commission on it tell us what the future's going to be—like I say, it's very naive.
I was making a few notes in my diary about a few wise quotes/excerpts from a great interview given by Charlie Munger. Thought I'd share it here as well:
http://www.youtube.com/watch?v=wXBjwxAP0es
On Traders:
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On Gold:
Charlie was asked a question relating to gold that a hedge fund manager (David Einhorn) would usually sell gold, but because he doesn't trust the FED (with monetary easing) he would buy gold.
His response:
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On Volcker rule:
http://en.wikipedia.org/wiki/Volcker_Rule
Charlie was asked question on Volcker rule that Michael Lewis said that the Volcker rule was not enough and we need to have stricter rules, to which he wittingly replied:
On Algorithmic Traders:
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On Liquidity:
On Hedge Funds:
http://www.youtube.com/watch?v=wXBjwxAP0es
On Traders:
I think Charlie used the term 'investor' rather loosely here and what he really meant was 'day trader'.Well I think the ordinary investor who actively is trading with the help of the ordinary stock broker is going to get a result which is way worse than the market provides. I think the people that listen to CNN, do-it-yourself investors, averaged out are going to be losers.
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On Gold:
Charlie was asked a question relating to gold that a hedge fund manager (David Einhorn) would usually sell gold, but because he doesn't trust the FED (with monetary easing) he would buy gold.
His response:
The latter part of that sentence was my favorite quote.I think gold is a great thing to sow in to your garments if you're a Jewish family in Vienna in 1939, but I think civilized people don’t buy gold, they invest in productive businesses.
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On Volcker rule:
http://en.wikipedia.org/wiki/Volcker_Rule
Charlie was asked question on Volcker rule that Michael Lewis said that the Volcker rule was not enough and we need to have stricter rules, to which he wittingly replied:
------------------------------------------------------------------------------------------------------------------I totally agree with Michael Lewis, and if it was up to me I would make Michael Lewis look like a piker.
On Algorithmic Traders:
He favored a Tobin Tax http://en.wikipedia.org/wiki/Tobin_taxTake the rapid trading by the computer geniuses with the computer algorithms. Those people have all the social utility of a bunch of rats admitted to a grainery. I never would've allowed the rats to get in the grainery. I wouldn't allow anybody to make money out of short term trading. I think if we change the incentives, a lot of the regrettable behavior would go away.
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On Liquidity:
------------------------------------------------------------------------------------------------------------------I always felt that it did more harm than good to have this enormous liquidity in stock markets, and other security markets cause it makes those markets a perfect casino for gamblers. And if you had the right tax incentives those gamblers couldn't win on the short term trading. I don't think we need all this liquidity and all this gambling frenzy, but then again I'm a distinct minority.
On Hedge Funds:
I would not allow people to run Hedge Funds and report their pay as long-term capital gains. What good is it doing the civilization to have people "clipping" money through computer algorithms that work a lot like legalized front-running of orders.
Investing is all about laying cash out now to get cash back in the future. The timing, certainty and amount of this are what you need to evaluate… If you need a spreadsheet or a calculator to get to an answer, you should probably pass. The number should scream at you from the paper.
- Warren Buffett
The one thing I will tell you is the worst investment you can have is cash... Cash is going to become worth less over time. But good businesses are going to become worth more over time… We always keep enough cash around so I feel very comfortable and don’t worry about sleeping at night. But it’s not because I like cash as an investment. You always want to have enough so that nobody else can determine your future essentially.
- Warren Buffett
A good friend of mine, Julian Snyder, wrote a book for traders called The Way of the Hunter Warrior. Recently I asked him about the use of such a metaphor for trading, and he conceded that it's total nonsense in the light of what he now knows. "You have to trade without ego, and any contest elevates ego," he said.
I like to think of trading as sailing. Here you harness the forces that are there. You take into account the wind direction and velocity, the currents, and your destination. You've got your charts to guide you and you constantly adjust to nature's forces, sometimes pointing into the wind, sometimes running before the wind, sometimes tacking, but always in partnership with your boat, your crew, the wind, and the currents. Sure, storms can come up, but you can always let down the sail and anchor and wait out the storm. You work with the forces that are there, the forces that are much bigger than you, but you enjoy the journey, the day, the sport, and you're confident you can get to your destination, your port, your safe harbor.
Ruth Barrons Roosevelt
What a fantastic analogy
I've posted the full article in the Gold threadA turkey is fed for a thousand days by a butcher; every day confirms to its staff of analysts that butchers love turkeys “with increased statistical confidence.” The butcher will keep feeding the turkey until a few days before thanksgiving. Then comes that day when it is really not a very good idea to be a turkey. So, with the butcher surprising it, the turkey will have a revision of belief—right when its confidence in the statement that the butcher loves turkeys is maximal … the key here is such a surprise will be a Black Swan event; but just for the turkey, not for the butcher.
I don't know who said this but I've been reading Walter Schloss lately and came across this in one of his lectures titled Why we Invest the way we do:
Love it!A stock well bought is half sold.