Business
“Anyone ignoring [circumstances that now exist] makes the same mistake that a baseball manager would were he to judge the future prospects of a 42-year-old center fielder on the basis of his lifetime batting average.”
“In most cases the remarkable performance of [the Sainted Seven] arises partially from an exceptional business franchise; in all cases an exceptional management is a vital factor. The contribution Charlie and I make is to leave these managers alone.”
“The limitations of the existing set, however, need not be inhibiting: CEOs are free to treat GAAP statements as a beginning rather than an end to their obligation to inform owners and creditors - and indeed they should.”
“The business world is simply too complex for a single set of rules to effectively describe economic reality for all enterprises, particularly those operating in a wide variety of businesses, such as Berkshire.”
“Further complicating the problem is the fact that many managements view GAAP not as a standard to be met, but as an obstacle to overcome.”
“Both the smoothing of earnings and the ‘big bath’ quarter are ‘white lie’ techniques employed by otherwise upright managements.”
“[Deceiving managers] know that many investors and creditors accept GAAP results as gospel. So these charlatans interpret the rules ‘imaginatively’ and record business transactions in ways that technically comply with GAAP but actually display an economic illusion to the world.”
“Few of the perpetrators have been punished; many have not even been censured. It has been far safer to steal large sums with a pen than small sums with a gun.”
“Our goal is to give you important information in a form that we would wish to get it if our roles were reversed.”
“Superb managers are too scarce a resource to be discarded simply because a cake gets crowded with candles.”
“[Newly-minted MBAs'] academic records always look terrific and the candidates always know just what to say; but too often they are short on personal commitment to the company and general business savvy.”
“Neither furniture retailing nor uniform manufacturing has inherently attractive economics. In these businesses, only exceptional managements can deliver high returns on invested capital.”
“The cornerstone for both enterprises is Mrs. B’s creed: ‘Sell cheap and tell the truth.’”
“[Most people purchasing jewelry] can judge neither quality nor price. For them only one rule makes sense: If you don’t know jewelry, know the jeweler.”
“One of the ironies of business is that many relatively-unprofitable industries that are plagued by inadequate prices habitually find themselves beat upon by irate customers even while other, hugely profitable industries are spared complaints, no matter how high their prices.”
“If voters insist that auto insurance be priced below cost, it eventually must be sold by government. Stockholders can subsidize policyholders for a short period, but only taxpayers can subsidize them over the long term.”
“At Berkshire, we simply will not write policies at rates that carry the expectation of economic loss. We encounter enough troubles when we expect a gain.”
“The supreme irony of business management is that it is far easier for an inadequate CEO to keep his job than it is for an inadequate subordinate.”
“At too many companies, the boss shoots the arrow of managerial performance and then hastily paints the bullseye around the spot where it lands.”
“At board meetings, criticism of the CEO’s performance is often viewed as the social equivalent of belching.”
“In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
“We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hang on to businesses that disappoint.”
“There are only a handful of businesses about which we have strong long-term convictions. Therefore, when we find such a business, we want to participate in a meaningful way.”
“We will become enthused about [long-term bonds] only when we become enthused about prospects for long-term stability in the purchasing power of money.”
“We do not trade on rumors or try to guess takeover candidates. We just read the newspapers, think about a few of the big propositions, and go by our own sense of probabilities.”
“We do not have, never have had, and never will have an opinion about where the stock market, interest rates, or business activity will be a year from now.”
“Observing correctly that the market was frequently efficient, [academics, professionals and managers] went on to conclude incorrectly that it was always efficient. The difference between these propositions is night and day.”
“In any sort of a contest - financial, mental, or physical - it’s an enormous advantage to have opponents who have been taught that it’s useless to even try.”
“An investor cannot obtain superior profits from stocks by simply committing to a specific investment category or style. He can earn them only by carefully evaluating facts and continuously exercising discipline.”
“Charlie and I are bothered as much by significant overvaluation as significant undervaluation. Both extremes will inevitably produce results for many shareholders that will differ sharply from Berkshire’s business results.”
“We don’t understand the CEO who wants lots of stock activity, for that can be achieved only if many of his owners are constantly exiting.”
“Charlie and I frequently get approached about acquisitions that don’t come close to meeting our tests: We’ve found that if you advertise an interest in buying collies, a lot of people will call hoping to sell you their cocker spaniels.”