Heng Chee Meng anti-scam 3-point checklist
1. Is the deal too good to be true?
If answer is No, ends here.
If answer is Yes, go to Q2.
2. Why so good deal come to find me?
If can't answer, ends here.
If can find answer, it is likely to be Q3.
3. What does the person want from me after giving me such good deal? Am I willing to trade that?
If answer is No, ends here.
If answer is Yes, you should find by this time the answer to Q1 is NO.
Thursday, February 27, 2014
Thursday, February 6, 2014
How to win friends and influence people -- Dale Ca
How to win friends and influence people -- Dale Carnegie
[HANDLING PEOPLE]
1. Don't criticise, condemn or complain.
2. Give honest and sincere appreciation.
3. Arouse in the other person an eager want.
[MAKE PEOPLE LIKE YOU]
4. Become genuinely interested in other people.
5. Smile.
6. Remember that a person's name is to that person the sweetest and most important sound in any language.
7. Be a good listener, encourage others to talk about themselves.
8. Talk in terms of the other person's interest.
9. Make the other people feel important.
[WIN THE PEOPLE TO YOUR WAY OF THINKING]
10. The only way to get the best of an argument is to avoid it.
11. Show respect for the other person's opinions. Never say, "You're wrong."
12. If you are wrong, admit it quickly and emphatically.
13. Begin in a friendly way.
14. Get the other person saying "yes", "yes" immediately.
15. Let the other person do a great deal of the talking.
16. Let the other person feel that the idea is his or hers.
17. Try honestly to see things from the other person's point of view.
18. Be sympathetic with the other person's ideas and desires.
19. Appeal to the nobler motives.
20. Dramatize your ideas.
21. Throw down a challenge (to inspire the desire to excel).
[CHANGE PEOPLE WITHOUT GIVING OFFENSE OR AROUSING RESENTMENT]
22. Begin with praise and honest appreciation.
23. Call attention to people's mistakes indirectly.
24. Talk about your own mistakes before criticizing the other person.
25. Ask questions instead of giving direct orders.
26. Let the other person save face.
27. Praise the slightest improvement and every improvement.
28. Give the other person a fine reputation to live up to.
29. Use encouragement. Make the fault seem easy to correct.
30. Make the other person happy about doing the thing you suggest.
[HANDLING PEOPLE]
1. Don't criticise, condemn or complain.
2. Give honest and sincere appreciation.
3. Arouse in the other person an eager want.
[MAKE PEOPLE LIKE YOU]
4. Become genuinely interested in other people.
5. Smile.
6. Remember that a person's name is to that person the sweetest and most important sound in any language.
7. Be a good listener, encourage others to talk about themselves.
8. Talk in terms of the other person's interest.
9. Make the other people feel important.
[WIN THE PEOPLE TO YOUR WAY OF THINKING]
10. The only way to get the best of an argument is to avoid it.
11. Show respect for the other person's opinions. Never say, "You're wrong."
12. If you are wrong, admit it quickly and emphatically.
13. Begin in a friendly way.
14. Get the other person saying "yes", "yes" immediately.
15. Let the other person do a great deal of the talking.
16. Let the other person feel that the idea is his or hers.
17. Try honestly to see things from the other person's point of view.
18. Be sympathetic with the other person's ideas and desires.
19. Appeal to the nobler motives.
20. Dramatize your ideas.
21. Throw down a challenge (to inspire the desire to excel).
[CHANGE PEOPLE WITHOUT GIVING OFFENSE OR AROUSING RESENTMENT]
22. Begin with praise and honest appreciation.
23. Call attention to people's mistakes indirectly.
24. Talk about your own mistakes before criticizing the other person.
25. Ask questions instead of giving direct orders.
26. Let the other person save face.
27. Praise the slightest improvement and every improvement.
28. Give the other person a fine reputation to live up to.
29. Use encouragement. Make the fault seem easy to correct.
30. Make the other person happy about doing the thing you suggest.
Sunday, January 5, 2014
说到心坎里的肺腑之言
初级的快乐是肉体的快乐，那是饱、暖、物、欲。
中级的快乐是精神的快乐，那是诗词歌赋、琴棋书画、游走天下。
高级的快乐是灵魂的快乐，那是付出、奉献，让他人因为你的存在而快乐！
平庸的人只有一条命，叫性命；
优秀的人有两条命，即性命和生命；
卓越的人则有三条命，性命、生命和使命。它们分别代表着生存、生活和责任！
人与人的差距，表面上看是财富的差距，实际上是福报的差距；
表面上看是人脉的差距，实际上是人品的差距；
表面上看是气质的差距，实际上是涵养的差距；
表面上看是容貌的差距，实际上是心地的差距；
表面上看是人与人都差不多，内心境界却大不相同，心态决定命运。
男人只有穷一次，才知道哪个女人最爱你。
女人只有丑一次，才知道哪个男人不会离开你。
人只有落魄一次，才知道谁最真谁最在乎你。
陪伴，不是你有钱我才追随。
珍惜，不是你漂亮我才关注。
时间留下的，不是财富，不是美丽，是真诚。
中级的快乐是精神的快乐，那是诗词歌赋、琴棋书画、游走天下。
高级的快乐是灵魂的快乐，那是付出、奉献，让他人因为你的存在而快乐！
平庸的人只有一条命，叫性命；
优秀的人有两条命，即性命和生命；
卓越的人则有三条命，性命、生命和使命。它们分别代表着生存、生活和责任！
人与人的差距，表面上看是财富的差距，实际上是福报的差距；
表面上看是人脉的差距，实际上是人品的差距；
表面上看是气质的差距，实际上是涵养的差距；
表面上看是容貌的差距，实际上是心地的差距；
表面上看是人与人都差不多，内心境界却大不相同，心态决定命运。
男人只有穷一次，才知道哪个女人最爱你。
女人只有丑一次，才知道哪个男人不会离开你。
人只有落魄一次，才知道谁最真谁最在乎你。
陪伴，不是你有钱我才追随。
珍惜，不是你漂亮我才关注。
时间留下的，不是财富，不是美丽，是真诚。
Saturday, October 19, 2013
但�你20�就懂的18件事(18 things I hope you will learn before you're 20)
但�你20�就懂的18件事
(18 things I hope you will learn before you're 20)
作者：黑幼�、黑立言
出版社：�神
出版日期：2010.5/25
如果�本�能�年�的你，少走一�冤枉路，少一�挫折，早一�享受美好�光，我�非常�心。你已�懂得自己需要什�了。
1 每天有一段��的�光
(Spend sometime alone every day to recharge yourself)
�陌生人相互注�了一��―真是可遇不可求。雨中漫步―�著�，在行人稀少的道路上漫步，不管�人看了你�怎�想，你走你的。�音�―留一�落地�就好了。�上眼睛，�著音�走。
2 相信自己是一�有�力的人
(Believe that you have potential, to do anything)
玫琳��，要是你相信自己能做到，你就能做到；要是你相信自己做不到，你就做不到。每年去一�你�未去�的地方，我�以前做不到，你��在只要管理好打工的�就可以了。
3 把家人放在手心上
(Put your family as first priority)
幸福的家庭�氛是人生的基石。�家人需要�，就握住你�心的人的手，�柔的�弄��，�是多��密的感�，那就是幸福的感�。
4 不要��微���害到珍�的友�
(Don't let minor issues hurt your friendship)
我好�慕那些很年�就玩在一起的哥��，他�真的把握到了�一�。
5 �真��
(Fall in love, seriously)
��是一�子都不�淡忘的，�你遇到一�特�的眼神，你一定知道我指的是什�。
6 常常想到自己的福�
(Count your blessings)
我�都只�想到自己的��多不好，要是你今天就列��下自己得到的恩典，你����真不少。
7 得不到也是一�福�
(The blessings of not ....)
想一想有多少企�家�有考取台大，有多少成功的人�有出�留�？老是想得到和�人一�的�西，不如想想那些得不到的，你究竟��了什�？
8 失�的祝福
(Learn from failures)
你可以失�，但不要忘��失�中�取教�，怪不得有的人後��得很成功。
9 ��定�如指掌，才知道如何突破
(First know the limits, then find ways to break through)
成功常�生在�制外，但通常都�生在懂得�用的人身上。
10 �美�人重要感
(Praise others)
�意��到�人�美你，多美妙。有人��美是�言中的�石，每�人也都有想�得肯定的渴望。
11 欣��人打��物的表情
(Enjoy others happiness)
把�美�作一份�得的�物。那件�物是那�微不足道，但你真的�了一番功夫。
12 不要批��人
(Don't criticize others)
因�批�有可能��到��的自尊，�失去�人由衷的合作。你看，要是�年�的�候就能做到�多好。
13 沈默有�是最好的回答
(Silence is sometimes the best response)
如果人生能�重�，我一定要�少批�，希望你不要到我�年�才���秘�。
14 把�力�成新�有趣的探�
(Treat pressures as adventures)
�今�����烈，�化��快，未�只�更快、更�烈，不具��些能力�怎��呢？
15 重要的事先做
(Do the important things first)
有些事情��明�，但我�每天偏偏���碎的事占�行程表。艾森豪���，急的事情很少是重要的。
16 �度��，充��忱
(Be passionate and proactive)
年�人��入社�可能以���能力最重要。《天下��》曾做��查，��大多�的老�最希望新�人�具�的是��的工作�度。
17 �通����，一路��到底
(Saying the right way can be more important than saying the right thing)
�住，�比��重要，怎��比�什�重要。
18 �身��
(Life long learning)
松下幸之助�一��踏��徒�成�十�人的公司董事�，他�自己的成功�因於�身��。看看你周�的朋友，如果��校��後就不再��了，要�快影�他�。
(18 things I hope you will learn before you're 20)
作者：黑幼�、黑立言
出版社：�神
出版日期：2010.5/25
如果�本�能�年�的你，少走一�冤枉路，少一�挫折，早一�享受美好�光，我�非常�心。你已�懂得自己需要什�了。
1 每天有一段��的�光
(Spend sometime alone every day to recharge yourself)
�陌生人相互注�了一��―真是可遇不可求。雨中漫步―�著�，在行人稀少的道路上漫步，不管�人看了你�怎�想，你走你的。�音�―留一�落地�就好了。�上眼睛，�著音�走。
2 相信自己是一�有�力的人
(Believe that you have potential, to do anything)
玫琳��，要是你相信自己能做到，你就能做到；要是你相信自己做不到，你就做不到。每年去一�你�未去�的地方，我�以前做不到，你��在只要管理好打工的�就可以了。
3 把家人放在手心上
(Put your family as first priority)
幸福的家庭�氛是人生的基石。�家人需要�，就握住你�心的人的手，�柔的�弄��，�是多��密的感�，那就是幸福的感�。
4 不要��微���害到珍�的友�
(Don't let minor issues hurt your friendship)
我好�慕那些很年�就玩在一起的哥��，他�真的把握到了�一�。
5 �真��
(Fall in love, seriously)
��是一�子都不�淡忘的，�你遇到一�特�的眼神，你一定知道我指的是什�。
6 常常想到自己的福�
(Count your blessings)
我�都只�想到自己的��多不好，要是你今天就列��下自己得到的恩典，你����真不少。
7 得不到也是一�福�
(The blessings of not ....)
想一想有多少企�家�有考取台大，有多少成功的人�有出�留�？老是想得到和�人一�的�西，不如想想那些得不到的，你究竟��了什�？
8 失�的祝福
(Learn from failures)
你可以失�，但不要忘��失�中�取教�，怪不得有的人後��得很成功。
9 ��定�如指掌，才知道如何突破
(First know the limits, then find ways to break through)
成功常�生在�制外，但通常都�生在懂得�用的人身上。
10 �美�人重要感
(Praise others)
�意��到�人�美你，多美妙。有人��美是�言中的�石，每�人也都有想�得肯定的渴望。
11 欣��人打��物的表情
(Enjoy others happiness)
把�美�作一份�得的�物。那件�物是那�微不足道，但你真的�了一番功夫。
12 不要批��人
(Don't criticize others)
因�批�有可能��到��的自尊，�失去�人由衷的合作。你看，要是�年�的�候就能做到�多好。
13 沈默有�是最好的回答
(Silence is sometimes the best response)
如果人生能�重�，我一定要�少批�，希望你不要到我�年�才���秘�。
14 把�力�成新�有趣的探�
(Treat pressures as adventures)
�今�����烈，�化��快，未�只�更快、更�烈，不具��些能力�怎��呢？
15 重要的事先做
(Do the important things first)
有些事情��明�，但我�每天偏偏���碎的事占�行程表。艾森豪���，急的事情很少是重要的。
16 �度��，充��忱
(Be passionate and proactive)
年�人��入社�可能以���能力最重要。《天下��》曾做��查，��大多�的老�最希望新�人�具�的是��的工作�度。
17 �通����，一路��到底
(Saying the right way can be more important than saying the right thing)
�住，�比��重要，怎��比�什�重要。
18 �身��
(Life long learning)
松下幸之助�一��踏��徒�成�十�人的公司董事�，他�自己的成功�因於�身��。看看你周�的朋友，如果��校��後就不再��了，要�快影�他�。
Sunday, October 13, 2013
Meditations - The Emperor's Handbook - by Marcus A
Meditations - The Emperor's Handbook - by Marcus Aurelius - translation by C Scot Hicks and David V Hicks
INTRODUCTION: (by translators, not Aurelius)
We need to be reminded more often than informed.
Work intelligently with what is given - not wasting time fantasizing about flawless people and perfect choices.
Marcus never did anything, not even the smallest thing, as if he considered it unimportant. He took a detailed interest in all matters.
Marcus regarded obstacles as opportunities for the exercise of reason.
Guard the mind from false opinions and harmful desires.
If we fail to exercise self-censorship and judgement, then we are the ad-man's dream, and our lives our not our own.
Good life begins in the mind, but one cannot realize the good life cut off from a good society.
BOOK TWO:
Remember how long you have procrastinated, and how consistently you have failed to put to good use your suspended sentence. Your days are numbered. Use them to throw open the windows of your soul to the sun.
Take the time to concentrate your mind in the acquisition of some new and useful knowledge - and stop it from flittering about.
Nothing is more pathetic than feverishly circling the earth and "probing into its depths", to guess what other people are thinking, while all the time failing to realize that one only needs to attend to the inner spirit, and to serve it with unswerving devotion.
Even the slightest act should have some end in mind.
BOOK THREE:
Purge your mind of aimless and idle thoughts. Show the world a simple and kindly man, a good neighbor, indifferent to sensual pleasures and luxuries, untouched by jealousy, envy, and mistrust.
Neither popularity, nor wealth, nor power, nor the pleasures of the flesh should compete in your affection for the good that flows from reason and neighborliness.
If it's to the advantage of your reasonable self, seize hold of it. If it's merely to the advantage of your animal self, admit it and don't pretend it's more than that.
Take no detours from the high road of reason and social responsibility.
Nothing produces greatness of mind like the habit of examining methodically and honestly everything we enounter in this life, and of determining its place in the order of things, its intended use, its value to the whole universe, and its worth to man in his role as citizen.
Pursue the matter at hand along the straight path of reason, advancing with intensity, vigor, and grace, and without being distracted along the way.
Just as surgeons keep their scalpels handy, keep your principles with you at all times, ready to delve into anything.
Stop jumping off the track. (You don't have time to do uncrucial things you've collected for your old age.) Throw off vain hope and sprint to the finish. Come to your own aid while there's still time.
BOOK FOUR:
Never act without purpose and resolve, or without the means to finish the job.
Nowhere is there a vacation home more private and peaceful than in one's own mind.
Take this vacation and charge your spirit, but not beyond what is necessary to send you back to your work free of anxiety and full of vigor and good cheer.
Nothing outside the mind can disturb it. Trouble comes from the mind's opinion of what lies outside it.
Once reason goes to work for you, what more can you need?
To be happy, limit your activities to a few. Do what is necessary and no more. Remove not only unnecessary actions, but also the superfluous ideas that inspire needless acts.
The man who fails to understand what goes on in the world is a fugitive running from the law.
Change is never bad nor good. Judgement about change is not helpful.
How lucky that I am not broken by what has happened. Bad luck borne nobly is good luck.
BOOK FIVE:
Were you born for enjoyment? Look at the plants, ants, spiders and bees, all busy at their work, welding the world. Why should you hesitate to do your part?
If it is good to say or do something, then it is even better to be criticized for having said or done it.
Be like a vine that bears its fruit and asks for nothing more than the pleasure of producing grapes. A dog hunts, a bee makes honey, and one man helps another.
What does not hurt the community cannot hurt the individual. Every time you think you've been wronged, apply this rule: If the community isn't hurt by it, then neither am I. But what if the community is hurt? Then don't be angry with the person who caused the injury. Just help him to see his mistake.
BOOK SIX:
Factual descriptions allow you to see things for what they are. Whenever something makes ambitious claims for itself, lay those claims bare by stripping away all the fancy dress and exposing the naked facts. When you flatter yourself that you are engaged in some worthy enterprise, then you are most easily deceived.
Prove to me that I am mistaken, and I will gladly change. Harm comes from persisting in error and clinging to ignorance.
Think of the virtues and talents of those around you. The sight of these splendid qualities in our friends - keep them always in mind.
The happiness of those who want to be popular depends on others. The happiness of those who seek pleasure fluctuates with moods outside their control. But the happiness of the wise grows out of their own free acts.
You always own the option of having no opinion. Things you can't control are not asking to be judged by you. Leave them alone.
Learn to concentrate on what those around you are saying. Enter as deeply as possible into the mind of each speaker.
BOOK SEVEN:
The measure of a man is the worth of the things he cares about.
Those who are affected by outward circumstance will always find something to complain about.
Every moment provides us with opportunities to exercise the virtues of neighborliness and thought. Nothing is new or unmanageable. Everything is familiar and serviceable.
To live each day as if it were your last - without speeding up or slowing down or pretending to be other than what you are - this is perfection of character.
How ridiculous not to avoid wronging others, which I have the power to do, while wishing to avoid being wronged by others whose actions are beyond my control.
When you have done something well and someone else has benefited from it, why do you crave yet a third reward - to be thanked or to be repaid?
BOOK EIGHT:
Refuse to approve ideas that are false or foggy. Direct your energies only to the common good.
Don't go looking for equality in individual cases. Make your comparisons by examining large samples and total outcomes.
No one should ever hear you complaining about palace life. No one - not even your own ears.
No man feels any regret for failing to indulge in a pleasure. Pleasure, therefore, is neither useful nor good.
Be happy if each act you perform contributes to a fulfulling and complete life. No one can prevent you from doing this. What if some outside circumstance stands in my way? Not even that can stop you from acting justly, wisely, and reasonably. By welcoming the obstacle and by calmly adapting your action to it, you will be able to do something else in harmony with your goals.
If you're troubled by something outside yourself, it isn't the thing itself that bothers you, but your opinion of it. You have the power to immediately revoke this opinion.
Men exist for the sake of one another. Teach them to be better or put up with them.
BOOK NINE:
Deceit, hypocrisy, luxury, and pride: flee this plague. The corruption of your mind and soul is a plague far more deadly than any pollution.
You're more likely to find a clod of dirt detached from the earth than a man entirely cut off from mankind.
Whether in sickness or in any other circumstance, let no difficulty or hardship cause you to abandon philosophy or to tune it to the gossip of the foolish and uneducated.
When somebody's behavior offends you, find fault instead with yourself for failing to anticipate his offensive behavior. Your ability to reason should have told you that he would misbehave.
Having done a good deed, what more do you want? To be paid? Do the eyes demand payment for seeing, or the feet fees for walking?
BOOK TEN:
The high-minded place reason above fame, death, and the like.
Stop all this theorizing about what a good man should be. Be it!
Either you go on living here at the center of things, or you withdraw from active life and move away, or you die and your work is done. There is no other choice but these.
What is the very best you can say or do with the material you have to work with? Whatever that is, you can say or do it. Make no excuse by claiming that something prevents you.
BOOK ELEVEN:
The rational mind looks at and delves into itself, molds itself to its own liking, and enjoys the fruit it bears. (Unlike the fruits of plants, which are harvested by others.)
The rational mind is honest and modest at the same time as prizing itself above everything else.
Have I acted unselfishly? Then I have benefited. Hold fast to this thought, and keep up the good work.
No situation is better suited for the practice of philosophy than the one you're in now.
A man cuts himself off from others, not realizing that he is cutting himself off from the whole of civilized society.
Frequent separation makes it increasingly difficult for the severed part to rejoin the whole and regain its original vigor. The branch that is grafted on after being broken off belongs to the tree but doesn't share its thoughts.
Stand guard in both respects: be tough-minded in thought and action while being gentle to those who oppose or annoy you.
It is as much a weakness to become harsh as it is to shrink from action and relent out of fear. Both abandon their posts: the one who panics, the other who is estranged from a natural brother and friend.
The soul remains a perfect sphere when it neither pushes out after something nor shrinks back into itself.
How false and beneath contempt is the man who says, "Let me be perfectly frank with you." What is he up to? There is no need to dress up the truth. It will be evident in your words, written on your face, ringing in your voice, flashing from your eyes.
To live an exemplary life, remain indifferent to the things that are themselves indifferent. Nothing can oblige us to form an opinion of it. Things don't force themselves upon us.
No one can be blamed for seeking his own good.
Ask of everything: Where did it come from? Of what is it made? Into what is it changing? What will it be after it has changed?
It isn't what others do that troubles you. You are bothered by your opinions of what they do. Rid yourself of those opinions, and your troubles will go away. Remind yourself that you aren't disgraced by what others do.
Shun temptations of the mind by saying to yourself:
- This is an idle speculation
- This isn't what I really think
- This will lower my estimation of myself
Except in the case of those things they hold in common, most people cannot agree on a definition of what is good. For this reason, it makes sense to aim at the common good, the well-being of society as a whole. He who strives to achieve this aim in life will be consistent in his behavior and therefore one and the same person throughout his life.
You can't master the arts of reading and writing until you've studied them. This applies even more to those who would master the art of living.
BOOK TWELVE:
I marvel at how men love themselves more than others, while at the same time caring more about what others think of them than what they think of themselves.
Be a boxer, not a gladiator, in the way you act on your principles. The gladiator takes up his sword, only to put it down again. But the boxer is never without his fist and has only to clench it.
Only a fool or stranger on this planet will be surprised by anything in his life.
If it's not right, don't do it. If it's not true, don't say it.
Whatever causes you to be upset has always happened and will always happen, and even now is happening everywhere.
INTRODUCTION: (by translators, not Aurelius)
We need to be reminded more often than informed.
Work intelligently with what is given - not wasting time fantasizing about flawless people and perfect choices.
Marcus never did anything, not even the smallest thing, as if he considered it unimportant. He took a detailed interest in all matters.
Marcus regarded obstacles as opportunities for the exercise of reason.
Guard the mind from false opinions and harmful desires.
If we fail to exercise self-censorship and judgement, then we are the ad-man's dream, and our lives our not our own.
Good life begins in the mind, but one cannot realize the good life cut off from a good society.
BOOK TWO:
Remember how long you have procrastinated, and how consistently you have failed to put to good use your suspended sentence. Your days are numbered. Use them to throw open the windows of your soul to the sun.
Take the time to concentrate your mind in the acquisition of some new and useful knowledge - and stop it from flittering about.
Nothing is more pathetic than feverishly circling the earth and "probing into its depths", to guess what other people are thinking, while all the time failing to realize that one only needs to attend to the inner spirit, and to serve it with unswerving devotion.
Even the slightest act should have some end in mind.
BOOK THREE:
Purge your mind of aimless and idle thoughts. Show the world a simple and kindly man, a good neighbor, indifferent to sensual pleasures and luxuries, untouched by jealousy, envy, and mistrust.
Neither popularity, nor wealth, nor power, nor the pleasures of the flesh should compete in your affection for the good that flows from reason and neighborliness.
If it's to the advantage of your reasonable self, seize hold of it. If it's merely to the advantage of your animal self, admit it and don't pretend it's more than that.
Take no detours from the high road of reason and social responsibility.
Nothing produces greatness of mind like the habit of examining methodically and honestly everything we enounter in this life, and of determining its place in the order of things, its intended use, its value to the whole universe, and its worth to man in his role as citizen.
Pursue the matter at hand along the straight path of reason, advancing with intensity, vigor, and grace, and without being distracted along the way.
Just as surgeons keep their scalpels handy, keep your principles with you at all times, ready to delve into anything.
Stop jumping off the track. (You don't have time to do uncrucial things you've collected for your old age.) Throw off vain hope and sprint to the finish. Come to your own aid while there's still time.
BOOK FOUR:
Never act without purpose and resolve, or without the means to finish the job.
Nowhere is there a vacation home more private and peaceful than in one's own mind.
Take this vacation and charge your spirit, but not beyond what is necessary to send you back to your work free of anxiety and full of vigor and good cheer.
Nothing outside the mind can disturb it. Trouble comes from the mind's opinion of what lies outside it.
Once reason goes to work for you, what more can you need?
To be happy, limit your activities to a few. Do what is necessary and no more. Remove not only unnecessary actions, but also the superfluous ideas that inspire needless acts.
The man who fails to understand what goes on in the world is a fugitive running from the law.
Change is never bad nor good. Judgement about change is not helpful.
How lucky that I am not broken by what has happened. Bad luck borne nobly is good luck.
BOOK FIVE:
Were you born for enjoyment? Look at the plants, ants, spiders and bees, all busy at their work, welding the world. Why should you hesitate to do your part?
If it is good to say or do something, then it is even better to be criticized for having said or done it.
Be like a vine that bears its fruit and asks for nothing more than the pleasure of producing grapes. A dog hunts, a bee makes honey, and one man helps another.
What does not hurt the community cannot hurt the individual. Every time you think you've been wronged, apply this rule: If the community isn't hurt by it, then neither am I. But what if the community is hurt? Then don't be angry with the person who caused the injury. Just help him to see his mistake.
BOOK SIX:
Factual descriptions allow you to see things for what they are. Whenever something makes ambitious claims for itself, lay those claims bare by stripping away all the fancy dress and exposing the naked facts. When you flatter yourself that you are engaged in some worthy enterprise, then you are most easily deceived.
Prove to me that I am mistaken, and I will gladly change. Harm comes from persisting in error and clinging to ignorance.
Think of the virtues and talents of those around you. The sight of these splendid qualities in our friends - keep them always in mind.
The happiness of those who want to be popular depends on others. The happiness of those who seek pleasure fluctuates with moods outside their control. But the happiness of the wise grows out of their own free acts.
You always own the option of having no opinion. Things you can't control are not asking to be judged by you. Leave them alone.
Learn to concentrate on what those around you are saying. Enter as deeply as possible into the mind of each speaker.
BOOK SEVEN:
The measure of a man is the worth of the things he cares about.
Those who are affected by outward circumstance will always find something to complain about.
Every moment provides us with opportunities to exercise the virtues of neighborliness and thought. Nothing is new or unmanageable. Everything is familiar and serviceable.
To live each day as if it were your last - without speeding up or slowing down or pretending to be other than what you are - this is perfection of character.
How ridiculous not to avoid wronging others, which I have the power to do, while wishing to avoid being wronged by others whose actions are beyond my control.
When you have done something well and someone else has benefited from it, why do you crave yet a third reward - to be thanked or to be repaid?
BOOK EIGHT:
Refuse to approve ideas that are false or foggy. Direct your energies only to the common good.
Don't go looking for equality in individual cases. Make your comparisons by examining large samples and total outcomes.
No one should ever hear you complaining about palace life. No one - not even your own ears.
No man feels any regret for failing to indulge in a pleasure. Pleasure, therefore, is neither useful nor good.
Be happy if each act you perform contributes to a fulfulling and complete life. No one can prevent you from doing this. What if some outside circumstance stands in my way? Not even that can stop you from acting justly, wisely, and reasonably. By welcoming the obstacle and by calmly adapting your action to it, you will be able to do something else in harmony with your goals.
If you're troubled by something outside yourself, it isn't the thing itself that bothers you, but your opinion of it. You have the power to immediately revoke this opinion.
Men exist for the sake of one another. Teach them to be better or put up with them.
BOOK NINE:
Deceit, hypocrisy, luxury, and pride: flee this plague. The corruption of your mind and soul is a plague far more deadly than any pollution.
You're more likely to find a clod of dirt detached from the earth than a man entirely cut off from mankind.
Whether in sickness or in any other circumstance, let no difficulty or hardship cause you to abandon philosophy or to tune it to the gossip of the foolish and uneducated.
When somebody's behavior offends you, find fault instead with yourself for failing to anticipate his offensive behavior. Your ability to reason should have told you that he would misbehave.
Having done a good deed, what more do you want? To be paid? Do the eyes demand payment for seeing, or the feet fees for walking?
BOOK TEN:
The high-minded place reason above fame, death, and the like.
Stop all this theorizing about what a good man should be. Be it!
Either you go on living here at the center of things, or you withdraw from active life and move away, or you die and your work is done. There is no other choice but these.
What is the very best you can say or do with the material you have to work with? Whatever that is, you can say or do it. Make no excuse by claiming that something prevents you.
BOOK ELEVEN:
The rational mind looks at and delves into itself, molds itself to its own liking, and enjoys the fruit it bears. (Unlike the fruits of plants, which are harvested by others.)
The rational mind is honest and modest at the same time as prizing itself above everything else.
Have I acted unselfishly? Then I have benefited. Hold fast to this thought, and keep up the good work.
No situation is better suited for the practice of philosophy than the one you're in now.
A man cuts himself off from others, not realizing that he is cutting himself off from the whole of civilized society.
Frequent separation makes it increasingly difficult for the severed part to rejoin the whole and regain its original vigor. The branch that is grafted on after being broken off belongs to the tree but doesn't share its thoughts.
Stand guard in both respects: be tough-minded in thought and action while being gentle to those who oppose or annoy you.
It is as much a weakness to become harsh as it is to shrink from action and relent out of fear. Both abandon their posts: the one who panics, the other who is estranged from a natural brother and friend.
The soul remains a perfect sphere when it neither pushes out after something nor shrinks back into itself.
How false and beneath contempt is the man who says, "Let me be perfectly frank with you." What is he up to? There is no need to dress up the truth. It will be evident in your words, written on your face, ringing in your voice, flashing from your eyes.
To live an exemplary life, remain indifferent to the things that are themselves indifferent. Nothing can oblige us to form an opinion of it. Things don't force themselves upon us.
No one can be blamed for seeking his own good.
Ask of everything: Where did it come from? Of what is it made? Into what is it changing? What will it be after it has changed?
It isn't what others do that troubles you. You are bothered by your opinions of what they do. Rid yourself of those opinions, and your troubles will go away. Remind yourself that you aren't disgraced by what others do.
Shun temptations of the mind by saying to yourself:
- This is an idle speculation
- This isn't what I really think
- This will lower my estimation of myself
Except in the case of those things they hold in common, most people cannot agree on a definition of what is good. For this reason, it makes sense to aim at the common good, the well-being of society as a whole. He who strives to achieve this aim in life will be consistent in his behavior and therefore one and the same person throughout his life.
You can't master the arts of reading and writing until you've studied them. This applies even more to those who would master the art of living.
BOOK TWELVE:
I marvel at how men love themselves more than others, while at the same time caring more about what others think of them than what they think of themselves.
Be a boxer, not a gladiator, in the way you act on your principles. The gladiator takes up his sword, only to put it down again. But the boxer is never without his fist and has only to clench it.
Only a fool or stranger on this planet will be surprised by anything in his life.
If it's not right, don't do it. If it's not true, don't say it.
Whatever causes you to be upset has always happened and will always happen, and even now is happening everywhere.
Sunday, September 15, 2013
The evolution of Warren Buffett's investment philosophy
The evolution of Warren Buffett's investment philosophy
--- by Eric Sprague
Introduction
Warren Buffett has been writing the Berkshire Hathaway (BRK.A)(BRK.B) letters to shareholders since 1965 and signing them as Chairman since 1970. Going through these letters and other sources, we can see how Buffett communicates his evolving investment thoughts over time.
Starting out as a Ben Graham disciple, Buffett looked for cigar butt investments in which he didnft pay much relative to net tangible assets. Over time this changed, especially after things like the successful Seefs acquisition with Charlie Munger. Still, it is wrong to say that Buffett moved on from Graham. Ever since reading Graham at age nineteen, Buffett has always used a great deal of what Graham taught him.
Buffett has said that one of his biggest mistakes was buying Berkshire Hathaway. This is because it was just a gbargain priceh textile company. Like many commodity businesses with excess supply, it had bad economics.
In the 1967 letter Buffett says he is pleased about acquiring National Indemnity Company and National Fire and Marine. We now know that insurance companies like National Indemnity propelled the growth that turned Berkshire Hathaway into the company we see today. Even back in 1967 Buffett could see the limited earning potential of the textile business. In the same letter he states that the 1967 earnings of subsidiaries were substantially higher than the earnings attributable to a bigger capital investment in the textile business.
Berkshire Under the Return on Shareholdersf Equity Yardstick [1969 to 1982]
The Berkshire letters from 1969 to 1982 emphasize return on shareholdersf equity. Using this yardstick, it doesnft take Buffett long to see that the textile purchase was a mistake.
In the 1969 letter Buffett reveals that four years prior they had sought to invest outside the textile industry to get more consistent earning power.
The 1978 letter explains that the textile industry shows how companies producing similar goods in capital intensive businesses earn inadequate returns in the long run.
The 1979 letter repeats the fact that the textile business brings in cash at a low rate compared to capital employed. It notes that easier businesses may be the way to go despite the fact that they are more expensive. It goes on to explain that the Graham-like purchase of the Waumbec Mills was another mistake.
Cutting back on the textile business was one of the keys to success for Buffett. His 1980 letter explains that the number of looms at New Bedford have been reduced. His reasoning is that even when things went well the looms didnft generate a good return. In the same letter he says their preference is for businesses that generate cash as opposed to consuming it. He differentiates between earnings and true cash that doesnft have any strings attached.
Buffett is always thinking about return on equity but his 1982 letter explains why accounting rules limit its use as a yardstick at Berkshire. He explains that they prefer to look at geconomich earnings which include all undistributed earnings but accounting rules only let them include dividends in certain cases.
The Last Days for Textile Operations at Berkshire [1983 to 1985]
Starting in 1983, the letters use book value as a proxy for intrinsic value.
We see Buffett communicating different thoughts with respect to net tangible assets and goodwill in the 1983 letter:
"My own thinking has changed drastically from 35 years ago when I was taught to favor tangible assets and to shun businesses whose value depended largely upon economic Goodwill. This bias caused me to make many important business mistakes of omission, although relatively few of commission."
"Keynes identified my problem: 'The difficulty lies not in the new ideas but in escaping from the old ones.' My escape was long delayed, in part because most of what I had been taught by the same teacher had been (and continues to be) so extraordinarily valuable. Ultimately, business experience, direct and vicarious, produced my present strong preference for businesses that possess large amounts of enduring Goodwill and that utilize a minimum of tangible assets."
Learning a great deal from the 1972 Seefs acquisition, Buffett talks about its significance in the appendix of the 1983 letter. Having a 1972 price of 25 million with just 8 million in net tangible assets, it was not a Graham type purchase. It shows that businesses are worth a lot more than net tangible assets when they can produce earnings on assets considerably higher than market rates of return. The difference between net tangible assets and the price paid for the company is goodwill. He explains that accounting goodwill (the difference between the price paid and net tangible assets) disappears after 40 years because of amortization but economic goodwill can actually increase over this time period.
Revealing the closure of the textile operation in the 1985 letter is a key milestone. Buffett notes that they got into the insurance business in 1967 using textile earnings and cash freed up from decreased textile investments in inventories, receivables and fixed assets. He repeats the fact that the domestic textile industry is in a commodity business with excess capacity. The textile closure provides a great lesson about book value. Equipment with a book value of $866,000 sold for just $163,122. Looms that were purchased for $5,000 each in 1981 could not be sold for $50 each.
Mature Berkshire Hathaway [1986 to Present]
The 1989 letter points out that time is the friend of the wonderful business and the enemy of the mediocre business. It commits serious real estate to explain the gbargain-purchaseh folly. Buying a lousy business because of a great price can be a big mistake if there are no future hiccups that let the buyer unload. We are reminded of bargains that did not work out like the Berkshire textiles and the Hochschild Kohn department store.
Buffett makes it clear what he has learned: "I could give you other personal examples of 'bargain-purchase' folly but I'm sure you get the picture: It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Charlie understood this early; I was a slow learner. But now, when buying companies or common stocks, we look for first-class businesses accompanied by first-class managements."
Buffett also talks about management more than Graham and we see this in the 1989 letter. He talks about the fact that even brilliant managers tend to fail when theyfre at a business with bad economics.
In the 1991 letter Buffett shows the way he thinks about businesses and franchises plus the importance of management: "An economic franchise arises from a product or service that: (1) is needed or desired; (2) is thought by its customers to have no close substitute and; (3) is not subject to price regulation. The existence of all three conditions will be demonstrated by a company's ability to regularly price its product or service aggressively and thereby to earn high rates of return on capital. Moreover, franchises can tolerate mis-management. Inept managers may diminish a franchise's profitability, but they cannot inflict mortal damage.
In contrast, "a business" earns exceptional profits only if it is the low-cost operator or if supply of its product or service is tight. Tightness in supply usually does not last long. With superior management, a company may maintain its status as a low-cost operator for a much longer time, but even then unceasingly faces the possibility of competitive attack. And a business, unlike a franchise, can be killed by poor management."
Buffett is somewhere between Graham and Phil Fisher when it comes to his thoughts on management. In other words, he places more importance on management than Graham but less importance on it than Fisher, especially when dealing with franchises that can be held for the long term.
The 1991 letter goes on to talk about the significance of the Seefs acquisition. It is a company with tremendous pricing power and it requires very little in the way of incremental capital. It went from an operating base of $7 million at the time of the acquisition to an operating base of $25 million in 1991. During this time it had pre-tax profits of $410 million against incremental capital of just $18 million. Seefs taught Munger and Buffett a great deal about the excellent value of companies that have significant pricing power.
Repeating himself in the 1992 letter, Buffett says past mistakes caused him to revise his strategy to buy good businesses at fair prices as opposed to fair businesses at good prices.
Talking about Coca-Cola (KO) in the 1993 letter, Buffett shows the power of compounding while repeating Grahamfs insight that the market is a voting machine in the short run but a weighing machine in the long run:
"Let me add a lesson from history: Coke went public in 1919 at $40 per share. By the end of 1920 the market, coldly reevaluating Coke's future prospects, had battered the stock down by more than 50%, to $19.50. At yearend [sic] 1993, that single share, with dividends reinvested, was worth more than $2.1 million. As Ben Graham said: 'In the short-run, the market is a voting machine - reflecting a voter-registration test that requires only money, not intelligence or emotional stability - but in the long-run, the market is a weighing machine.'"
Buffett goes on to explain that value investing and growth investing are joined at the hip - growth is a component in the value calculation. He also states that the term "value investing" is redundant. The airline industry is cited as an example where growth doesn't necessarily have a positive impact on value.
In the 1996 letter Buffett says that if you aren't willing to own a stock for ten years then don't even think about owning it for ten minutes. This doesn't reconcile with Graham's cigar butt approach where he would sell stocks shortly after a hiccup in which they became fully valued.
The 1999 letter is written at a time when Buffett communicates that there aren't a lot of attractive opportunities out there. He says it is better to own a comfortable business at a questionable price than a questionable business at a comfortable price.
The 2004 letter repeats the fact that the 1967 purchase of National Indemnity was the propellant of Berkshire's growth. He says that if it wasnft for that acquisition then Berkshire would be lucky to be worth half of its value.
Per the 2007 letter, long-term competitive advantage in a stable industry is what Buffett seeks - even if it comes without organic growth. He repeats the fact that See's is a dream company even though its organic growth has limits - it still gets most of its revenue from a small number of states.
The International Business Machines (IBM) purchase is revealed in the 2011 letter. Answering a question at a recent shareholder meeting, Buffett mentioned that some investors will be able to do well with technology companies. Using IBM as an example, Buffett goes on to explain that long term investors of companies that are buying back shares should be happy when prices languish. He reminds readers that chapter 8 of Grahamfs The Intelligent Investor changed the way he viewed fluctuations in stock prices.
Benjamin Graham
Buffett has said that Graham wrote the best investment book in existence:
"I read the first edition of this book early in 1950, when I was nineteen. I thought then that it was by far the best book about investing ever written. I still think it is."
Graham shaped Buffettfs investment framework with concepts like Mr. Market (mentioned in the 1987 and 1993 letters) and the margin of safety concept. When talking about common stocks in the 1992 letter, Buffett mentions that they insist on a margin of safety in the purchase price. This concept is repeated in other letters - it is a permanent fixture in Buffettfs investment philosophy.
Charlie Munger
Munger was more outspoken than Buffettfs about some of the limits of Grahamfs approach:
Some of Graham's precepts did not impress him at all. "I thought a lot of them were just madness," he said. "They ignored relevant facts."
Specifically, said Munger, "Ben Graham had blind spots. He had too low an appreciation of the fact that some businesses were worth paying big premiums for."
It wasnft easy for Buffett to change his thinking about bargains - only someone special like Munger could make that happen:
"Charlie shoved me in the direction of not just buying bargains, as Ben Graham had taught me. This was the real impact he had on me. It took a powerful force to move me on from Graham's limiting view. It was the power of Charlie's mind. He expanded my horizons."
In a 1994 USC speech, Munger makes some key points. He talks about the importance of Ben Graham's approach of valuing the whole enterprise and then taking the stock price and multiplying it by the number of shares. He notes that one of the best teachings of Graham is the "Mr. Market" concept. Still, Munger goes into some of the shortcomings of Graham like not wanting to talk to management. He then talks about the fact that companies at two or three times book value can still be great bargains based on quantitative measures not emphasized by Graham. He notes that Berkshire made the big money out of high quality businesses. There is a quote that stands out:
"Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return \ even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you'll end up with a fine result.
So the trick is getting into better businesses. And that involves all of these advantages of scale that you could consider momentum effects."
Later in the speech Munger talks about the effect of taxes. Specifically, buying something which compounds for many years and then paying one tax at the end. This is a concept Buffett understands well - Berkshire has been holding Coca-Cola stock for years.
Closing Thoughts
Ben Graham created the framework for Buffettfs investment philosophy. Through Buffettfs own experiences along with the influence of Charlie Munger and others, this framework grew over time.
--- by Eric Sprague
Introduction
Warren Buffett has been writing the Berkshire Hathaway (BRK.A)(BRK.B) letters to shareholders since 1965 and signing them as Chairman since 1970. Going through these letters and other sources, we can see how Buffett communicates his evolving investment thoughts over time.
Starting out as a Ben Graham disciple, Buffett looked for cigar butt investments in which he didnft pay much relative to net tangible assets. Over time this changed, especially after things like the successful Seefs acquisition with Charlie Munger. Still, it is wrong to say that Buffett moved on from Graham. Ever since reading Graham at age nineteen, Buffett has always used a great deal of what Graham taught him.
Buffett has said that one of his biggest mistakes was buying Berkshire Hathaway. This is because it was just a gbargain priceh textile company. Like many commodity businesses with excess supply, it had bad economics.
In the 1967 letter Buffett says he is pleased about acquiring National Indemnity Company and National Fire and Marine. We now know that insurance companies like National Indemnity propelled the growth that turned Berkshire Hathaway into the company we see today. Even back in 1967 Buffett could see the limited earning potential of the textile business. In the same letter he states that the 1967 earnings of subsidiaries were substantially higher than the earnings attributable to a bigger capital investment in the textile business.
Berkshire Under the Return on Shareholdersf Equity Yardstick [1969 to 1982]
The Berkshire letters from 1969 to 1982 emphasize return on shareholdersf equity. Using this yardstick, it doesnft take Buffett long to see that the textile purchase was a mistake.
In the 1969 letter Buffett reveals that four years prior they had sought to invest outside the textile industry to get more consistent earning power.
The 1978 letter explains that the textile industry shows how companies producing similar goods in capital intensive businesses earn inadequate returns in the long run.
The 1979 letter repeats the fact that the textile business brings in cash at a low rate compared to capital employed. It notes that easier businesses may be the way to go despite the fact that they are more expensive. It goes on to explain that the Graham-like purchase of the Waumbec Mills was another mistake.
Cutting back on the textile business was one of the keys to success for Buffett. His 1980 letter explains that the number of looms at New Bedford have been reduced. His reasoning is that even when things went well the looms didnft generate a good return. In the same letter he says their preference is for businesses that generate cash as opposed to consuming it. He differentiates between earnings and true cash that doesnft have any strings attached.
Buffett is always thinking about return on equity but his 1982 letter explains why accounting rules limit its use as a yardstick at Berkshire. He explains that they prefer to look at geconomich earnings which include all undistributed earnings but accounting rules only let them include dividends in certain cases.
The Last Days for Textile Operations at Berkshire [1983 to 1985]
Starting in 1983, the letters use book value as a proxy for intrinsic value.
We see Buffett communicating different thoughts with respect to net tangible assets and goodwill in the 1983 letter:
"My own thinking has changed drastically from 35 years ago when I was taught to favor tangible assets and to shun businesses whose value depended largely upon economic Goodwill. This bias caused me to make many important business mistakes of omission, although relatively few of commission."
"Keynes identified my problem: 'The difficulty lies not in the new ideas but in escaping from the old ones.' My escape was long delayed, in part because most of what I had been taught by the same teacher had been (and continues to be) so extraordinarily valuable. Ultimately, business experience, direct and vicarious, produced my present strong preference for businesses that possess large amounts of enduring Goodwill and that utilize a minimum of tangible assets."
Learning a great deal from the 1972 Seefs acquisition, Buffett talks about its significance in the appendix of the 1983 letter. Having a 1972 price of 25 million with just 8 million in net tangible assets, it was not a Graham type purchase. It shows that businesses are worth a lot more than net tangible assets when they can produce earnings on assets considerably higher than market rates of return. The difference between net tangible assets and the price paid for the company is goodwill. He explains that accounting goodwill (the difference between the price paid and net tangible assets) disappears after 40 years because of amortization but economic goodwill can actually increase over this time period.
Revealing the closure of the textile operation in the 1985 letter is a key milestone. Buffett notes that they got into the insurance business in 1967 using textile earnings and cash freed up from decreased textile investments in inventories, receivables and fixed assets. He repeats the fact that the domestic textile industry is in a commodity business with excess capacity. The textile closure provides a great lesson about book value. Equipment with a book value of $866,000 sold for just $163,122. Looms that were purchased for $5,000 each in 1981 could not be sold for $50 each.
Mature Berkshire Hathaway [1986 to Present]
The 1989 letter points out that time is the friend of the wonderful business and the enemy of the mediocre business. It commits serious real estate to explain the gbargain-purchaseh folly. Buying a lousy business because of a great price can be a big mistake if there are no future hiccups that let the buyer unload. We are reminded of bargains that did not work out like the Berkshire textiles and the Hochschild Kohn department store.
Buffett makes it clear what he has learned: "I could give you other personal examples of 'bargain-purchase' folly but I'm sure you get the picture: It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Charlie understood this early; I was a slow learner. But now, when buying companies or common stocks, we look for first-class businesses accompanied by first-class managements."
Buffett also talks about management more than Graham and we see this in the 1989 letter. He talks about the fact that even brilliant managers tend to fail when theyfre at a business with bad economics.
In the 1991 letter Buffett shows the way he thinks about businesses and franchises plus the importance of management: "An economic franchise arises from a product or service that: (1) is needed or desired; (2) is thought by its customers to have no close substitute and; (3) is not subject to price regulation. The existence of all three conditions will be demonstrated by a company's ability to regularly price its product or service aggressively and thereby to earn high rates of return on capital. Moreover, franchises can tolerate mis-management. Inept managers may diminish a franchise's profitability, but they cannot inflict mortal damage.
In contrast, "a business" earns exceptional profits only if it is the low-cost operator or if supply of its product or service is tight. Tightness in supply usually does not last long. With superior management, a company may maintain its status as a low-cost operator for a much longer time, but even then unceasingly faces the possibility of competitive attack. And a business, unlike a franchise, can be killed by poor management."
Buffett is somewhere between Graham and Phil Fisher when it comes to his thoughts on management. In other words, he places more importance on management than Graham but less importance on it than Fisher, especially when dealing with franchises that can be held for the long term.
The 1991 letter goes on to talk about the significance of the Seefs acquisition. It is a company with tremendous pricing power and it requires very little in the way of incremental capital. It went from an operating base of $7 million at the time of the acquisition to an operating base of $25 million in 1991. During this time it had pre-tax profits of $410 million against incremental capital of just $18 million. Seefs taught Munger and Buffett a great deal about the excellent value of companies that have significant pricing power.
Repeating himself in the 1992 letter, Buffett says past mistakes caused him to revise his strategy to buy good businesses at fair prices as opposed to fair businesses at good prices.
Talking about Coca-Cola (KO) in the 1993 letter, Buffett shows the power of compounding while repeating Grahamfs insight that the market is a voting machine in the short run but a weighing machine in the long run:
"Let me add a lesson from history: Coke went public in 1919 at $40 per share. By the end of 1920 the market, coldly reevaluating Coke's future prospects, had battered the stock down by more than 50%, to $19.50. At yearend [sic] 1993, that single share, with dividends reinvested, was worth more than $2.1 million. As Ben Graham said: 'In the short-run, the market is a voting machine - reflecting a voter-registration test that requires only money, not intelligence or emotional stability - but in the long-run, the market is a weighing machine.'"
Buffett goes on to explain that value investing and growth investing are joined at the hip - growth is a component in the value calculation. He also states that the term "value investing" is redundant. The airline industry is cited as an example where growth doesn't necessarily have a positive impact on value.
In the 1996 letter Buffett says that if you aren't willing to own a stock for ten years then don't even think about owning it for ten minutes. This doesn't reconcile with Graham's cigar butt approach where he would sell stocks shortly after a hiccup in which they became fully valued.
The 1999 letter is written at a time when Buffett communicates that there aren't a lot of attractive opportunities out there. He says it is better to own a comfortable business at a questionable price than a questionable business at a comfortable price.
The 2004 letter repeats the fact that the 1967 purchase of National Indemnity was the propellant of Berkshire's growth. He says that if it wasnft for that acquisition then Berkshire would be lucky to be worth half of its value.
Per the 2007 letter, long-term competitive advantage in a stable industry is what Buffett seeks - even if it comes without organic growth. He repeats the fact that See's is a dream company even though its organic growth has limits - it still gets most of its revenue from a small number of states.
The International Business Machines (IBM) purchase is revealed in the 2011 letter. Answering a question at a recent shareholder meeting, Buffett mentioned that some investors will be able to do well with technology companies. Using IBM as an example, Buffett goes on to explain that long term investors of companies that are buying back shares should be happy when prices languish. He reminds readers that chapter 8 of Grahamfs The Intelligent Investor changed the way he viewed fluctuations in stock prices.
Benjamin Graham
Buffett has said that Graham wrote the best investment book in existence:
"I read the first edition of this book early in 1950, when I was nineteen. I thought then that it was by far the best book about investing ever written. I still think it is."
Graham shaped Buffettfs investment framework with concepts like Mr. Market (mentioned in the 1987 and 1993 letters) and the margin of safety concept. When talking about common stocks in the 1992 letter, Buffett mentions that they insist on a margin of safety in the purchase price. This concept is repeated in other letters - it is a permanent fixture in Buffettfs investment philosophy.
Charlie Munger
Munger was more outspoken than Buffettfs about some of the limits of Grahamfs approach:
Some of Graham's precepts did not impress him at all. "I thought a lot of them were just madness," he said. "They ignored relevant facts."
Specifically, said Munger, "Ben Graham had blind spots. He had too low an appreciation of the fact that some businesses were worth paying big premiums for."
It wasnft easy for Buffett to change his thinking about bargains - only someone special like Munger could make that happen:
"Charlie shoved me in the direction of not just buying bargains, as Ben Graham had taught me. This was the real impact he had on me. It took a powerful force to move me on from Graham's limiting view. It was the power of Charlie's mind. He expanded my horizons."
In a 1994 USC speech, Munger makes some key points. He talks about the importance of Ben Graham's approach of valuing the whole enterprise and then taking the stock price and multiplying it by the number of shares. He notes that one of the best teachings of Graham is the "Mr. Market" concept. Still, Munger goes into some of the shortcomings of Graham like not wanting to talk to management. He then talks about the fact that companies at two or three times book value can still be great bargains based on quantitative measures not emphasized by Graham. He notes that Berkshire made the big money out of high quality businesses. There is a quote that stands out:
"Over the long term, it's hard for a stock to earn a much better return than the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you're not going to make much different than a six percent return \ even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive looking price, you'll end up with a fine result.
So the trick is getting into better businesses. And that involves all of these advantages of scale that you could consider momentum effects."
Later in the speech Munger talks about the effect of taxes. Specifically, buying something which compounds for many years and then paying one tax at the end. This is a concept Buffett understands well - Berkshire has been holding Coca-Cola stock for years.
Closing Thoughts
Ben Graham created the framework for Buffettfs investment philosophy. Through Buffettfs own experiences along with the influence of Charlie Munger and others, this framework grew over time.
Saturday, September 7, 2013
陈式太极短棍
陈式太极短棍
一、初势
二、袖里藏针
三、泰山盖顶
四、左右拦腰
五、鞭抽八骏
六、缠头裹脑
七、力托千斤
八、白猿扫果
九、斜劈饿鬼
十、倒卷肱
十一、劈山式
十二、抹眉拳
十三、倒捅虎穴
十四、棒点鸳鸯
十五、二郎�山
十六、穿针引线
十七、白猿插花
十八、引蛇出洞
十九、力压群雄
廿、拐李绞棍
廿一、白猿点果
廿二、玉女刺绣
廿三、黄�搅水
廿四、金鸡点头
廿五、乌��尾
廿六、白猿举旗
廿七、拨云望日
廿八、小鬼推磨
廿九、舞花缠身
卅、力劈华山
卅一、龙游八步
卅二、风摆荷叶
卅三、风卷残花
卅四、笑里�刀
卅五、倒滑孤舟
卅六、怪蟒翻身
卅七、风扫梅花
卅八、���鼠
卅九、白猿拖杆
四十、回头�杆
四十一、倒栽葱
四十二、神笔画虹
四十三、抹杀敌首
四十四、收势
一、初势
二、袖里藏针
三、泰山盖顶
四、左右拦腰
五、鞭抽八骏
六、缠头裹脑
七、力托千斤
八、白猿扫果
九、斜劈饿鬼
十、倒卷肱
十一、劈山式
十二、抹眉拳
十三、倒捅虎穴
十四、棒点鸳鸯
十五、二郎�山
十六、穿针引线
十七、白猿插花
十八、引蛇出洞
十九、力压群雄
廿、拐李绞棍
廿一、白猿点果
廿二、玉女刺绣
廿三、黄�搅水
廿四、金鸡点头
廿五、乌��尾
廿六、白猿举旗
廿七、拨云望日
廿八、小鬼推磨
廿九、舞花缠身
卅、力劈华山
卅一、龙游八步
卅二、风摆荷叶
卅三、风卷残花
卅四、笑里�刀
卅五、倒滑孤舟
卅六、怪蟒翻身
卅七、风扫梅花
卅八、���鼠
卅九、白猿拖杆
四十、回头�杆
四十一、倒栽葱
四十二、神笔画虹
四十三、抹杀敌首
四十四、收势
Subscribe to:
Posts (Atom)