1. Joel: My definition of value in-vesting is figuring out what something is worth and paying a lot less for it. I make a guarantee the first day of class every year that if you’re good at valuing companies, the market will agree with you. Very true. Obviously Warren Buffett believes very strongly in these principles.“Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now. Over time, you will find only a few companies that meet these standards - so when you see one that qualifies, you should buy a meaningful amount of stock. You must also resist the temptation to stray from your guidelines: If you aren't willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio's market value.” 1996 Letter to Berkshire Hathaway shareholders http://www.berkshirehathaway.com/letters/1996.html“Lethargy bordering on sloth remains the cornerstone of our investment style.” 1990 Letter to Berkshire Hathaway shareholders http://www.berkshirehathaway.com/letters/1990.html“We need to emphasize, however, that we do not sell holdings just because they have appreciated or because we have held them for a long time. (Of Wall Street maxims the most foolish may be "You can't go broke taking a profit.") We are quite content to hold any security indefinitely, so long as the prospective return on equity capital of the underlying business is satisfactory, management is competent and honest, and the market does not overvalue the business.” 1987 Letter to Berkshire Hathaway shareholders http://www.berkshirehathaway.com/letters/1987.html“We are not concerned with whether the market quickly revalues upward securities that we believe are selling at bargain prices. In fact, we prefer just the opposite since, in most years, we expect to have funds available to be a net buyer of securities. And consistent attractive purchasing is likely to prove to be of more eventual benefit to us than any selling opportunities provided by a short-term run up in stock prices to levels at which we are unwilling to continue buying.” 1978 Letter to Berkshire Hathaway shareholders http://www.berkshirehathaway.com/letters/1978.html“My favorite time frame for holding a stock is forever.” “Striking Out on Wall Street,” US News and World Report, June 20, 1994, p. 58“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” Fortune Magazine, August 8, 1983“If the business does well, the stock eventually follows.” “Behemoth on a Tear,” Business Week, October 3, 1994“As Ben said: “In the short run, the market is a voting machine but in the long run it is a weighing machine.” The speed at which a business’s success is recognized, furthermore, is not that important as long as the company’s intrinsic value is increasing at a satisfactory rate. 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.” 1987 Letter to Berkshire Hathaway Shareholders http://www.berkshirehathaway.com/letters/1987.html
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