Short term results matter, of course, but the Berkshire approach avoids any pressure to achieve them at the expense of strengthening long term competitive advantages

Simply by retaining and reinvesting earnings, managers can report annual earnings increases without so much as lifting a finger to improve real returns on capital. Stock options thus often rob shareholders of wealth and allocate the booty to executives

Executive performance should be measured by profitability, after profits are reduced by a charge for the capital employed in the relevant business or earnings retained by it

Investor should put a fairly large sums into two or three businesses he knows something about and whose management is trustworthy

Price is what you pay and value is what you get

Earnings retention is justified only when “capital retained produces incremental earnings equal to, or above, those generally available to investors.”

Share repurchase programs should occur only when the stock trades at a deep discount to intrinsic value

Stock splits have three consequences: they increase transaction cost by promoting high share turnover; they attract shReholders with short-term, market oriented views who unduly focus on stock market prices; and, as a result of both of those effect, they lead to prices that depart materially from intrinsic business value

Accounting goodwill is essentially the amount by which the purchase price of a business exceeds the fair value of the assets acquired (after deducting liabilities). Economic goodwill is the combination of intangible assets, like brand name recognition, that enable a business to produce earnings on tangible assets, like planf and equipment, in excess of average rates

If we have good long term, expectations, short term price changes are meaningless for us except to the extent they offer us an opportunity to increase our ownership at an attractive price

The outside board members should establish standards for the CEO’s performance and also periodically meet, without his being present, to evaluate his performance against those standards

If each of us hires people who are smaller than we are, we shall become a company if dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants-David Ogilvy

Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more peoductive than energy devoted to patching leaks

Just as I wouldn’t want you to implement your personal judgement by writing checks on my bank account for charities of your choice, i feel it inappropriate to write checks on your corporate bank account for charities of my choice

Owners are not well served by the sale of part of their business ar a bargain price, whether the sale is to outsiders or to insiders. Options should be priced at true business value

We can afford to lose money-even a lot of money. But we can’t afford to lose reputation-even a shred of reputation

The key to successful investing was the purchase of shares in good businesses when market prices were at a large discount from underlying business values

The market may ignore business success for a while but eventually confirm it. In fact, delayed recognition can be an advantage. It may give us the chance to buy more of a good thing at a bargain price

Only those who will be sellers of rquities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices

We believe that a policy of portfolio concentration may well decrease the risk of it raises, as it should, both the intensity with which an investor thinks about a business and the comfort level he must feel with its economic characteristics before buying into it

Factors upon evaluation:
The certainty with which long term economic characteristics of the business and management (both as to its ability to realize the full potential of the business and to wisely employ its cash flow) can be evaluated
The certainty with which management can be counted on to channel the reward from the business to the shareholders rather than to itself
The purchase price
The levels of taxation and inflation that will be experienced and that will determine the degree by which an investor’s purchasing power return is reduced from his gross return

Our goal is to find an outstanding business at a sensible price, not a mediocre business at a bargain price

You can’t produce a baby in one month by getting nine women pregnant

Watch out for companies who lost of focus in its expansion

Purchase ar a rational price, a part interest in an easily understandable business whose earnings are virtually certain to be materially higher 5/10/20 years from now

In a difficult business, no sooner is one problem solved than another surfaces- never is there just ine cockroach in the kitchen

We’ve never succeeded in making good deal with a bad person

Invest in productive assets, whether businesses, farms, or real estate

Debt now became something to be refinanced rather than repaid

You don’t have to make it back the way that you lost it

Home purchases should involve a down payment at least 10% and monthly payments that can be comfotablu handled by the borrower’s income

Returns decrease as motion increases

You should wish your earnings to be reinvested if they can be expected to earn high returns

Buying a dollar bills for $1.10 is not good business for those who stick around (share repurchase above the value)

Use cash rather than stock in acquisition

The value to all owners of the retained earnings of a business enterprise is determined by the effecriveness with which whose earnings are used, and not by the size of one’s ownership percentage

Businesses logically are worth more than the net tangible assets when they can be expected to produce earnings on such assets considerably in excess or market rates of return

GAAP requires goodwill to be amortized no longer than 40 years

Tax paying investors will realize a far greater sum from a single investment that compounds internally at a given rate than from a succession of investment compounding at the same rate