I'd use the analogy of a professional baseball player. If you think about what would motivate someone to put so much time and energy into doing something as repetitive as playing baseball, you could probably boil it down to three things. It could be they just like the process of playing the game, because they're [...]
We pay attention to what I'd call technical exhaustion points, where the trading experience indicates that market enthusiasm is so overdone that there's a high likelihood of a reversal. We also keep on top of our companies, industries, and trends to gauge how well the market is understanding the story. We won't put up big [...]
To compound returns at a high rate over a long time, it's going to happen because a relatively small number of your stocks go up massively. If we're right on the longterm trends, our bias is to stay with a trade for many years to allow that to happen. We try to avoid getting itchy [...]
Over the next 10 years it’s far more likely that the huge amount of capital owned by the rest of the world will grow by investing somewhere other than the U.S., whether it’s in infrastructure in China or the Middle East, or to develop consumer markets in places like India.
One of the keys to Warren Buffett’s early success was investing in high return on capital consumer businesses that were relatively immature when he bought them and that grew enormously along with the U.S., the largest economy in the world. He owned companies like Gillette, Wells Fargo, and Washington Post Co. over a period in [...]
I have a problem with the concept of circle of competence as defined by many value investors, who won’t invest in energy, won’t invest in commodities, won’t invest outside the U.S. This business requires constant learning, even sometimes abandoning precepts about industries and geographies that no longer apply. If you’re not willing or able to [...]
I’d argue that literally every investor today has to be a global investor to understand what’s going on certainly in markets like energy and commodities, but also to take advantage of where we think the best opportunities are going to be.
In my experience, it's been more important to be involved with a powerful trend with accelerating potential returns than to get too hung up on valuation. That's not at all to say valuation doesn't matter, but there have been many times when I've been right about the trend but didn't buy a leader because it [...]
If you're looking, as we are, for extraordinary returns from companies whose stocks can go up 10 × rather than 2 × it's far more likely to happen because the company's earnings turn out to be so much better than anyone expected than because you found a temporary 50-cent dollar.