Bogle on Speculation
"The thing that has always bothered me about gold is it has no value-creating unit. Underlying common stocks are earnings and dividends. Underlying bond returns are interest coupons. Underlying gold returns are nothing. There's nothing -- there's no there there. So it's a complete speculation on price." - John Bogle
Buffett: The Long Run Trumps Quick Returns
"If somebody bought Berkshire Hathaway in 1965 and they held it, they made a great investment — and their broker would have starved to death." - Warren Buffett
John Bogle: The Clash of the Cultures
"The issue that concerns me is, simply put, today's ascendance of speculation over investment in our financial markets; or, if you will, the ascendance of the culture of science -- of instant measurement and quantification -- over the culture of the humanities of steady reason and rationality." - John Bogle
Tom Russo: First Mover Advantage and the "Capacity to Suffer"
"The three prongs that I look for when investing in a business are: the fifty cent dollar bill, the capacity to reinvest in great brands and the 'capacity to suffer.' The 'capacity to suffer' is key because often the initial spending to build on these great brands in new markets has no initial return." - Tom Russo
Charlie Munger On "Rapid Trading By The Computer Geniuses"
"...take the rapid trading by the computer geniuses with the computer algorithms. Those people have all the social utility of a bunch of rats admitted to a granary. I never would have allowed the rats to get in the granary. I don't want the brilliant young men of America doting their lives at being rats in somebody else's granary. That's not my idea of the right way to run the republic. And if you let me write the laws, it wouldn't happen. But of course, nobody's going to do that." - Charlie Munger
Buffett & Munger on Gold
"...I think civilized people don't buy gold, they invest in productive businesses." - Charlie Munger
"...if you have patience, a decent pain threshold, an ability to withstand herd mentality, perhaps one credit of college level math, and a reputation for common sense, then go for it. In my opinion, you hold enough cards and will beat most professionals (which is sadly, but realistically, a relatively modest hurdle) and may even do very well indeed." - Jeremy Grantham
Why Buffett Wants IBM's Shares "To Languish"
"If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day's supply.
Charlie and I don't expect to win many of you over to our way of thinking – we've observed enough human behavior to know the futility of that – but we do want you to be aware of our personal calculus." - Warren Buffett
Buffett on Productive Assets Like Businesses, Farms, & Real Estate
"Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See's peanut brittle." - Warren Buffett
"Berkshire's goal will be to increase its ownership of first-class businesses. Our first choice will be to own them in their entirety -- but we will also be owners by way of holding sizable amounts of marketable stocks. I believe that over any extended period of time this category of investing will prove to be the runaway winner among the three* we've examined. More important, it will be by far the safest." - Warren Buffett
Happy New Year,
* The three are currency-based investments (i.e. money-market funds, bonds, mortgages, deposits etc.), nonproductive assets (i.e. gold), and productive assets (i.e. businesses or shares of businesses, farms, and real estate).
Quotes of 2011