The Essays of Warren Buffett: Lessons for Corporate America

A horse that can count to ten is a remarkable horse—not a remarkable mathematician.

calling someone who trades actively in the market an investor “is like calling someone who repeatedly engages in one-night stands a romantic.

So smile when you read a headline that says “Investors lose as market falls.” Edit it in your mind to “Disinvestors lose as market falls—but investors gain.” Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other. (As they say in golf matches: “Every putt makes someone happy.”)

as happens in Wall Street all too often, what the wise do in the beginning, fools do in the end.

Having firstrate people on the team is more important than designing hierarchies and clarifying who reports to whom

I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful

(Thomas J. Watson Sr. of IBM followed the same rule: “I’m no genius,” he said. “I’m smart in spots—but I stay around those spots.”)

The requisites for board membership should be business savvy, interest in the job, and owner-orientation.

this holding has proved extraordinarily profitable thanks to a move by your Chairman that combined luck and skill—110% luck, the balance skill.

say, a 2:1 ratio than it is to have far greater coverage provided by a single utility. A catastrophic event can render a single utility insolvent—witness what

thought then that decent, intelligent, and experienced managers would automatically make rational business decisions. But I learned over time that isn’t so. Instead, rationality frequently wilts when the institutional imperative comes into play. For example: (1) As if governed by Newton’s First Law of Motion, an institution will resist any change in its current direction; (2) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds; (3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and (4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.

Loss of focus is what most worries Charlie and me when we contemplate investing in businesses that in general look outstanding. All too often, we’ve seen value stagnate in the presence of hubris or of boredom that caused the attention of managers to wander.

You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very

What counts for most people in investing is not how much they know, but rather how realistically they define what they don't know.