Munger as architect, Buffett as contractor
“In reality, Charlie was the ‘architect’ of the present Berkshire, and I acted as the ‘general contractor’ to carry out the day-by-day construction of his vision.”
Business
A partner who never mentioned the blunders
“Even when [Charlie] knew he was right, he gave me the reins, and when I blundered he never – never –reminded me of my mistake.”
Owners deserve bad news from the CEO
“We cherish [shareholders'] presence and believe they are entitled to hear every year both the good and bad news, delivered directly from their CEO and not from an investor-relations officer or communications consultant forever serving up optimism and syrupy mush.”
American investors only had to sit quietly
“America has been a terrific country for investors. All they have needed to do is sit quietly, listening to no one.”
Markets vote short term, weigh long term
“As Ben Graham taught me, ‘In the short run the market acts as a voting machine; in the long run it becomes a weighing machine.’” — Ben Graham
Picking lasting winners is harder than it seems
“Within capitalism, some businesses will flourish for a very long time while others will prove to be sinkholes. It’s harder than you would think to predict which will be the winners and losers.”
Rare businesses that reinvest at high returns
“At Berkshire, we particularly favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies – and simply sitting tight – can deliver wealth almost beyond measure.”
Sincerity and empathy are easily faked
“People are not that easy to read. Sincerity and empathy can easily be faked.”
Commingled money still belongs to shareholders
“We never forget that, though your money is comingled with ours, it does not belong to us.”
Technology enables instant worldwide panics
“Speed of communication and the wonders of technology facilitate instant worldwide paralysis, and we have come a long way since smoke signals. Such instant panics won’t happen often – but they will happen.”
The market casino now sits in homes
“For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants.”
Wall Street thrives on feverish activity
“Wall Street – to use the term in its figurative sense – would like its customers to make money, but what truly causes its denizens’ juices to flow is feverish activity.”
Berkshire's one unchanging investment rule
“One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital.”
Prepared for paralysis without predicting it
“We did not predict the time of an economic paralysis but we were always prepared for one.”
Caution as insurance on a fireproof building
“In most years – indeed in most decades – [extreme fiscal conservatism] will likely prove to be unneeded behavior – akin to an insurance policy on a fortress-like building thought to be fireproof.”
Currency forecasting ability cannot be found or hired
“Neither Greg nor I believe we can forecast market prices of major currencies. We also don’t believe we can hire anyone with this ability.”
Building positions at scale is like turning a battleship
“Given Berkshire’s present size, building positions through open-market purchases takes a lot of patience and an extended period of ‘friendly’ prices. The process is like turning a battleship.”
Spending beyond depreciation just to stand still hurts owners
“BNSF must annually spend more than its depreciation charge to simply maintain its present level of business. This reality is bad for owners, whatever the industry in which they have invested, but it is particularly disadvantageous in capital-intensive industries.”
Railroads are noticed only when missing
“Railroads don’t get much attention when they are working but, were they unavailable, the void would be noticed immediately throughout America.”
Surviving surprises without throwing good money after bad
“Berkshire can sustain financial surprises but we will not knowingly throw good money after bad.”
Underwriters cannot be optimists at the office
“The most important lesson is that our underwriters can be thin, fat, male, female, young, old, foreign or domestic. But they can’t be optimists at the office, however desirable that quality may generally be in life.”