Our cash balance is purely a residual of whether we're finding enough to invest in.
We don't look at gold as a commodity, but as a form of insurance against what Peter Bernstein calls extreme outcomes. In most circumstances in which worldwide equity markets would go down and not just for a week or two the price of gold would go up, providing a partial offset to the hits we'd [...]
The knock on funds as diversified as ours is that they're index-huggers, which given the geographic breadth of where we invest, is not at all the case for us. I know the argument that you should only own your best 30 or 40 ideas, but I've never proven over time that I actually know in [...]
We basically focus on what a somewhat knowledgeable buyer, expecting a reasonable return, would be willing to pay in cash for the entire business. We put a lot of emphasis on comparable transaction and market values, crosschecked against valuation measures like enterprise value to EBIT. We'll generally only invest when the EV/EBIT multiple is in [...]
One [of my more common mistakes] would be ignoring the potential impact of leverage. I know the effect goes both ways, but say you do a sum-of-the-parts analysis and think the assets of a company are worth $100. If the company has $70 of debt, overstating the asset value by only $10 makes the equity [...]
In general, there aren’t many countries in which we wouldn’t invest. But if a country is too economically or politically troubled or the rule of law doesn’t really prevail, we pass. The main country in which we won’t invest today is Russia. There’s still too much risk for foreign (or even local) investors that you’ll [...]
If you are a value investor, you're a long-term investor. If you are a long-term investor, you're not trying to keep up with a benchmark on a short-term basis. To do that, you accept in advance that every now and then you will lag behind, which is another way of saying you will suffer. That's [...]
When I started out in 1979, both in the U.S. and Europe, there were many Ben Graham-type stocks to uncover after the dismal stock performance of the 1970s. As we grew and markets changed, we've moved more to the Buffett approach, but not without trepidation. If one is wrong in judging a company to have [...]
Whenever Ben Graham was asked what he thought would happen to the economy or to company X's or Y's profits, he always used to deadpan, “The future is uncertain.” That's precisely why there's a need for a margin of safety in investing, which is more relevant today than ever.