Warren Buffett: Terrible mistake

“It’s a terrible mistake to kind of sleepwalk through your life, because unless Shirley MacLaine is right, it’s the only one you’re going to have…. When you’re in a position to make choices, I always tell the kids that come visit me, ‘Go to work for an organization you admire or an individual you admire.’… It’s a lot easier to behave well when things are going your way and you are enjoying your work and you’re thinking about things every day that are the kind of things that you like to think about.” –Warren Buffett.

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Warren Buffett: First-class management

“What we really like at Berkshire is buying good-sized to very large first-class businesses with first-class management and just sitting there. Because the nice thing about that is you don’t have go from flower to flower. You can just sit there and watch them produce more and more every year and give you capital and you can buy more businesses.”

—Warren Buffett.

Warren Buffett: We look to the business

“If we could guess successfully a high percentage of the time where the stock market was going to go, we would do nothing but play the S&P futures market. There wouldn’t be any reason to look at businesses and stocks. It’s just not our game. What we see when we look at the stock market is we see thousands and thousands and thousands of companies priced every day, and we ignore 99.9 percent of what we see, although we run our eyes over them. And then every now and then we see something that looks like it’s attractively priced to us, as a business. Forget about the word ‘stock.’ So when we buy a stock, we would be happy with that stock if they told us the market was going to close for a couple years. We look to the business.”

—Warren Buffett.

Warren Buffett: Foreign competition

“We don’t try to buy our businesses with thoughts much of world trends. We certainly think in terms of foreign competition. I mean, we do not want to buy into a business that has a very high labor content and that has a product that can be shipped in from abroad very easily…. You do not want to have something whose competitive position is going to erode over time.” —Warren Buffett.

Warren Buffett: Right CEO

“The job of the board of directors is to have the right CEO. I mean, if you’ve got the right CEO, 90 percent of it takes care of itself. If you were the director of Cap Cities and you had Tom Murphy as the CEO, case closed. It was all you needed. And if you have that CEO, I think you have an obligation on the board to make sure that there’s not overreaching by the CEO, because the CEO can have different interests. And I think the third thing that the board should do is they really should bring some independent judgment in on major acquisitions. Because there is a natural tendency for people with, usually, big egos, big motors, who get to be CEOs that like to do big things and to become bigger spending other people’s money…. So I think in those three respects, a good director will first make an affirmative decision [that] you’ve got a very good CEO — not the best in the whole world, not everybody can do that — but a very good CEO. That that CEO is not overreaching. And when significant deals come along, that they get a chance to weigh in, and that you really get a balanced discussion about the real economics of what you’re doing.” —Warren Buffett.

Warren Buffett: Fairly captive

“Money tends to be fairly captive, once it’s in a company. If you have a business that gets subnormal returns over time, there’s a big threshold in terms of either a takeover, or a proxy fight, or something like that to unleash the capital. So, money that’s tied up in an unprofitable business, or a sub-profitable business, is likely to stay tied up for a good period of time. Eventually something will probably correct it. But capitalism does not operate so efficiently as to move capital around promptly when it’s misallocated.”

—Warren Buffett.