The Tao of Warren Buffett

Wednesday, December 27, 2006
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I bought a really fun book at the airport, to read on the way home – The Tao of Warren Buffett. This book is full of the words of wisdom from the mouth of Warren Buffett – that is, his words on business, not politics, as those words are far less brilliant.

I’ll start out with this quote: “Accounting is the language of business.” I ponder, as Buffett does, how people can pretend to understand the game and keep score when they can’t even read the scorecard. Well, of course, they can’t keep score at all, as Buffett reminds us. They turn their head, throw darts, and call it “investment.” Here is some more Buffett Tao:

- Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.

- For some reason people take their cues from price action rather than from values. Price is what you pay. Value is what you get.

- No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.

- The stock market is a no-called-strike game. You don’t have to swing at everything – you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, “Swing, you bum!”

- As far as I’m concerned, the stock market doesn’t exist. It’s only there as a reference to see if anybody is offering to do anything foolish.”

- Of the seven deadly sins, envy is the silliest, because if you have it, you don’t feel better. You feel worse. I’ve had some good times with gluttony……we won’t get into lust.

And finally, a quote that sums up the value investor, anti-Wall Street bullish hysteria perfectly: “We believe that according the name investors to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic.”

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