Watch price to value, not performance
“Zak and I concentrate on the price to value ratio of the Partnership and ignore its performance as much as is practical, and we would encourage you to do the same.”
Business
Three competitive advantages in investing
“Broadly Bill Miller argued that there are three competitive advantages in investing: informational (I know a meaningful fact nobody else does); analytical (I have cut up the public information to arrive at a superior conclusion) and psychological (that is to say, behavioural).”
Fewer things happen than can happen
“So, what you are trying to do as an investor is exploit the fact that fewer things will happen than can happen.” — Bill Miller
A ratio for gauging a company's moat
“The robustness ratio is a framework we use to help think about the size of the moat around a company. It is the amount of money a customer saves compared to the amount earned by shareholders.”
Investment risk argues for higher robustness ratios
“You can’t lose money shopping at Costco, but you can investing. This would argue that robustness ratios need to be much higher in the investment industry than for normal businesses to compensate for the risks involved.”
A year without a destroyed idea is wasted
“‘Any year that you don’t destroy one of your best loved ideas is probably a wasted year’, Charles T. Munger.” — Charles T. Munger
Removing rules often makes systems work better
“The point is that, often, if one removes the rules, and instead ask people to think for themselves, the system works better.”
How bureaucracy burdens investment management
“Traditional investment management can become heavily burdened by bureaucracy, compliance and corrupted by marketing expediency.”
Rules do not require people to think
“The problem is that rules do not require people to think, and how are people to deserve trust if first they don’t think?”