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Marty Whitman
“Based on my own personal experience – both as an investor in recent years and an expert witness in years past – rarely do more than three or four variables really count. Everything else is noise.”
Phil Fisher
"To make big money on investments it is unnecessary to get some answer to every investment that might be considered. What is necessary is to get the right answer a large proportion of the very small number of times actual purchases are made.”
J Paul Getty
"Get-rich-quick schemes just don't work. If they did, then everyone on the face of the earth would be a millionaire. This holds as true for stock market dealings as it does for any other form of business activity"
Howard Marks
“Every company has 100 things about them you could study and learn. But you have to understand the differences between data and knowledge, and between knowledge and wisdom. Warren Buffett is remarkable in his ability to cut right through.
He sees very clearly the three or four or five critical factors that determine whether a company succeeds or fails. It’s not about encyclopedic knowledge, it’s about zeroing in on what truly matters and assessing that. There’s no substitute for that in this business."
Warren Buffett
"If I were teaching a course on investments, there would be simply one valuation study after another with the students, trying to identify the key variables in that particular business, and evaluating how predictable they were first, because that is the first step. If something is not very predictable, forget it.
You know, you don’t have to be right about every company. You have to make a few good decisions in your lifetime. But then when you find — the important thing is to know when you find one where you really do know the key variables — which ones are important — and you do think you’ve got a fix on them."
Charlie Munger
"If you want a single formula(for successful investing), you should go back to graduate school. They'll give you lots of formulas that won't work."
I am trying to emulate my life after my great grandfather. When he died they said about him, "nobody envied the success so fairly won and wisely used."
It’s a simple philosophy. Wouldn’t Wall Street have worked better if more people had tried to imitate my great grandfather?
Li Lu:
Don’t be afraid to go slow. In the long term, slow is fast.
Investing is a long term endeavor. The most important thing is to do what you love, keep a good habit, and a calm mindset. Physical health is obviously very important as without it, you won’t be able to compound for a long time. The other important thing to keep in mind is to minimize the pressure, especially from LPs. This means only partner with people who share the same philosophy.
"Finding an edge really only comes from a right frame of mind and years of continuous study. But when you find those insights along the road of study, you need to have the guts and courage to back up the truck and ignore the opinions of everyone else. To be a better investor, you have to stand on your own. You just can't copy other people's insights. Sooner or later, the position turns against you.
If you don't have any insights into the business, when it goes from $100 to $50 you aren't going to know if it will back to $100 or $200. So this is really difficult, but on the other hand, the rewards are huge. Warren says that if you only come up with 10 good investments in your 40 year career, you will be extraordinarily rich. That's really what it is. This shows how different value investing is than any other subject.
So how do you really understand and gain that great insight? Pick one business. Any business. And truly understand it. I tell my interns to work through this exercise - imagine a distant relative passes away and you find out that you have inherited 100% of a business they owned. What are you going to do about it? That is the mentality to take when looking at any business.
I strongly encourage you to start and understand 1 business, inside out. That is better than any training possible. It does not have to be a great business, it could be any business. You need to be able to get a feel for how you would do as a 100% owner. If you can do that, you will have a tremendous leg up against the competition.
Most people don't take that first concept correctly and it is quite sad. People view it as a piece of paper and just trade because it is easy to trade. But if it was a business you inherited, you would not be trading. You would really seek out knowledge on how it should be run, how it works. If you start with that, you will eventually know how much that business is worth."
At Himalaya Capital, Li asks his analyst one simple question when analyzing a company: Can you tell what the worst-case scenario is for the business during the next 10 years? In other words, if sometime over the next 10 years everything that could go wrong does go wrong, what will the economics of the business look like?
He also suggested one way to find out whether you understand a business or not – speaking to someone who’s very knowledgeable about the business but has the opposite view about its future. If you can prove you know more than him, then you can say the business is within your circle of competence.
Andrew Carnegie
"Concentrate all your thought and energy upon the performance of your duties. Put all your eggs into one basket and then watch that basket, do not scatter your shot. The man who is director in a half dozen railroads and three or four manufacturing companies, or who tries at one and the same time to work a farm, a factory, a line of street cars, a political party and a store, rarely amounts to much. He may be concerned in the management of more than one business enterprise, but they should all be of the one kind, which he understands. The great successes of life are made by concentration."
Lao Tzu
"To know that you do not know is the best. To think you know when you do not is a disease. Recognizing this disease as a disease is to be free of it."
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