The lesson of tailwinds over headwinds
“One of the lessons your management has learned - and, unfortunately, sometimes re-learned - is the importance of being in businesses where tailwinds prevail rather than headwinds.”
Investing
Warren Buffett's 1977 letter to Berkshire shareholders, one of the letters in Berkshire Hathaway Shareholder Letters, 1971–2025.
Losing business at foolish prices takes discipline
“Unusual managerial discipline will be required, as it runs counter to normal institutional behavior to let the other fellow take away business - even at foolish prices.”
Insurers sell only copyable promises
“Insurance companies offer standardized policies which can be copied by anyone. Their only products are promises.”
Business results, not prices, score investments
“Most of our large stock positions are going to be held for many years and the scorecard on our investment decisions will be provided by business results over that period, and not by prices on any given day.”
Stocks chosen like whole-business acquisitions
“We select our marketable equity securities in much the same way we would evaluate a business for acquisition in its entirety.”
Four tests for a business
“We want the business to be (1) one that we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people, and (4) available at a very attractive price.”
Lower prices on good holdings are welcome
“In fact, if [our equities'] business experience continues to satisfy us, we welcome lower market prices of stocks we own as an opportunity to acquire even more of a good thing at a better price.”
Markets sometimes deeply discount outstanding businesses
“Our experience has been that pro-rata portions of truly outstanding businesses sometimes sell in the securities markets at very large discounts from the prices they would command in negotiated transactions involving entire companies.”
Non-control can yield better management
“In effect, we can obtain a better management result through non-control than control. This is an unorthodox view, but one we believe to be sound.”