Same mistakes, only sooner
“‘If I had to live my life again, I’d make the same mistakes, only sooner’.” — Tallulah Bankhead
Business
Meet mistakes with non-judgmental forgiveness
“In our opinion, in dealing with mistakes the best state of mind is non-judgmental forgiveness.”
Learnt lessons earn a higher multiple than mistakes
“In investment terms, once lessons have been learnt, mistakes can be put on a price earnings ratio of one and the resultant, conditioned, good behaviour on a ratio of more than one.”
Rational markets would reward learning from mistakes
“If the market was rational and the company an organisation that learns, then the stock price should rise after a mistake.”
Finance is built for judgment, not forgiveness
“[The financial services industry] is structured to allow investors to be judgmental rather than forgiving.”
Life is mostly how you take it
“‘Life is ten percent what you make it and ninety percent how you take it.’” — William James
Blaming outputs leaves the real mistake unchecked
“Companies often misclassify their mistakes in terms of outputs rather than inputs, and in so doing allow the original mistake to go unchecked. Psychologists call this denial, and we all do it to some extent.”
Diversification trying to turn ignorance into assets
“Diversification used in this way tries to turn ignorance into an asset.”
Depersonalisation breeds disloyalty and commoditisation
“Depersonalisation inevitably leads to customer disloyalty and commoditisation, and that is not good for long term profitability, regardless of what the profits account reads today.”
Valuation ratios narrow outcomes too much
“There was also an over-reliance on price to value ratio type analysis, which can encourage a tighter range of outcomes than occurs in reality.”
Noticing mistakes is a rare advantage
“Understanding how the intellect can become corrupted is probably a life’s work, some mystics would argue many lives’ work. Noticing the mistakes is a huge advantage and so rarely done.”
Buffett's skills were learnt, not innate
“I am always relieved that Buffett’s skills had to be learnt and honed, they were not simply innate!”
Inverting situations clarifies the world
“One trick to help see the world more clearly is to invert situations. A newspaper headline claiming that one third of the population wants something, also tells you that two-thirds don’t!”
Writing only with something meaningful to say
“Our six-monthly writing may be as irrational as monthly reporting, but at what frequency does letter writing become rational? Presumably when one has something meaningful to say.”
Price volatility is not investment risk
“In our opinion, transient, historic, stock price quotation volatility is not the same as investment risk. Indeed, quite the opposite.”
Misanalysis is the biggest investing risk
“In our opinion, the biggest risk in investing is the risk of misanalysis.”
Research decides results, not their timing
“The quality of our research-based decisions overwhelmingly determines whether we will do well in the long run. But it has almost no influence over the timing of these results.”
One relationship through good and bad years
“Our aim is have the same relationship with partners during periods of poor performance as we do during the good times.”
Disagreeing with an activity is no reason to divest
“We do not necessarily divest our shares in companies because we disagree with a particular activity of that company. Heaven forbid – there would be nothing left to invest in!”
Shareholders inside influence more than sellers
“In our experience being inside a company is far more likely to influence behaviour than being outside. After all, shares come with votes!”