Warren Buffett: Best use of cash

“I think the best use of cash, if you don’t have a good use for it in the business, if the stock is underpriced, is to repurchase it. And if it’s overpriced, you got no business buying in a single share. But a lot of companies do it.” 

—Warren Buffett (2004). 

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Warren Buffett: Wisdom 

“So, I urge you, if you’re trying to decide on the wisdom of repurchases, or of share issuances, that you don’t think in terms of book value. You don’t think in terms of specific P/Es. You don’t think in terms of any little model. But you think in terms of…. A) pick businesses you can understand and, then, think what you really would pay to be in those businesses. And…what counts over time is whether the repurchases are made at a discount from that figure.” 

—Warren Buffett (1996). 

Warren Buffett: Persuading

“The history that Charlie and I have had of persuading decent, intelligent people, who we thought were doing unintelligent things, to change their course of action has been poor…. So I would say that if you really think you’re in with people that have got a good business, but they’re going to keep doing dumb things with your money, you’ll probably do better to get out and get in with people who’ve got a good business and you think they’re going to do sensible things with it. I mean, you’ve got that option. Now, you also have the option of trying to persuade them to change their mind. But it’s just very, very difficult.”

—Warren Buffett. 

Warren Buffett: You can’t act every day

“There are no secrets in [the investing] business that only the priesthood knows…. It’s all out there in black and white. It’s a simple business…. It requires qualities of temperament way more than it requires qualities of intellect…You do need a certain temperament that enables you to think for yourself. And then you have to develop a framework — and I developed it from reading Ben Graham, I didn’t come up with it myself — very simple framework. And then you have to look for opportunities that fit within that framework as you go through life, and you can’t do something every day…You can learn every day, but you can’t act every day.”

—Warren Buffett. 

Warren Buffett: Three important aspects

“I don’t look at the primary message…of [Ben] Graham, really, as being…anything to do with formulas. In other words, there’s three important aspects to it…. One is your attitude toward the stock market. That’s covered in chapter eight of The Intelligent Investor. If you’ve got that attitude toward the market, you start ahead of 99 percent of all people who are operating in the market. So, you have an enormous advantage. Second principle is the margin of safety, which again, gives you an enormous edge, and actually has applicability far beyond just the investment world. And then the third is just looking at stocks as businesses, which gives you an entirely different view than most people that are in the market. And with those three sort of philosophical benchmarks, the exact — the evaluation technique you use is not really that important. Because you’re not going to go way off the track, whether you use Walter’s approach — Walter Schloss’s — or mine, or whatever.”

—Warren Buffett. 

Warren Buffett: Businesses

“We’re looking at quantitative and quality—we aren’t looking at the aspects of the stock, we’re looking at the aspects of a business. It’s very important to have that mindset, that we are buying businesses, whether we’re buying 100 shares of something or whether we’re buying the entire company. We always think of them as businesses.”

—Warren Buffett.