defining what your game is where you’re
going to have an edge is enormous ly
important you want to get as comfortable
with that as you are with English
language it’s made me a lot of money you
don’t need tons of IQ in this business
Juanes or get a mentor
[Music]
so today let’s learn from one of the
best Warren Buffett and how to become a
okay let’s kick it off with rule number
one define your circle of competence Ted
Williams wrote a book called the science
of hitting and entity at a picture of
himself at bat and the strike zone
broken into
I think seventy seven squares then he
said if he waited for the pitch that was
really the sweet spot he would bat four
hundred and if he had to swing at
something on the lure corner he would
probably back to thirty five and an
investing I’m in a know called strike
business which is the best business you
can be in I can look at a thousand
different companies and I don’t have to
be right on every one of them or even
fifty of them so I can take the ball I
want to hit and the trick in investing
is just to sit there and watch the pitch
after pitch go by and wait for the one
right in your sweet spot and the people
are yelling swing you bum ignore them
there’s a temptation for people to act
far too frequently and stocks simply
because they’re so liquid over the years
you develop a lot of filters but I do
know when I call my circle comma so I
stay within that circle and I don’t
worry about things that are outside that
circle defining what your game is where
you’re going to have an edge it is
enormous ly important rule number two
understand accounting people ask me what
they should take in business school and
and and or even if they don’t go to
business school what they need to know
before getting in business and I tell
them you know you have to you have to
understand accounting it’s the language
of it would be it’s like being in a
foreign country without knowing the
language if you’re in business and you
don’t understand the accounting so it it
you you want to get as comfortable with
that as you are with the English
language it it’s made me a lot of money
because I I listen to what Ray Dean had
to say fifty three or four years ago and
have been able to understand what
I was seeing on pieces of paper what
that told me about businesses and the
limitations of what it told me about
businesses also if you want to have
confidence like Warren Buffett and
others check out my 250 for confidence
series it’s free the link is in the
description below it’s important
associated with people who are better
than yourself rule number three be a
thinker all right what do you consider
the most important quality for an
investment manager
it’s the temperamental quality not an
intellectual quality you don’t need tons
of IQ in this business I mean you have
to have enough IQ to get from here to
downtown or mall but but you do not have
to be able to play three-dimensional
chess or be in the top leagues in terms
of bridge playing or something of the
sort you need a stable personality you
need a temperament that neither derive
great pleasure from being with the crowd
or against the crowd because this is not
a business where you take polls it’s a
business where you think and then Graham
would say that you’re not right or wrong
because a thousand people agree with you
and you’re not right or wrong because a
thousand people disagree with you you’re
right because your facts in your
reasoning or right rule number four
maintain a good reputation leadership at
Berkshire really consists of taking a
bunch of people who in a baseball
analogy would be four hundred hitters
and just handing them the bat and just
telling them to get up the plate and
take a big swing there’s very little to
it beyond that one thing I do is I send
them a letter the only thing I tell them
and this letter which went out January
20th 2003 it says it’s been two and a
half years since my last memo how many
big companies have you have the managers
out there been two and a half years as
they’ve heard from the Home Office but
two and a half years since my last memo
here are a couple things to keep in mind
and number one and this is number one
every time though this doesn’t change it
won’t change two years from now or four
years from now or six years number one
we can afford to lose money even a lot
of money we cannot afford to lose
reputation even a shred of reputation
let’s be sure that everything we do in
business can be reported on the
page of a national newspaper in an
article written by an unfriendly but
intelligent reporter in many areas
including acquisitions Berkshires
results of benefited from its reputation
and we don’t want to do anything that in
any way can tarnish him last year
Berkshire was ranked by fortune as the
fourth most admired company in the world
this year we were third in the United
States they just published it
it took us 37 years to get there but we
could lose it in 37 minutes and that’s
the message I mean we you know we can
lose money it doesn’t get on nicer to
make money but we’ve got we’ll figure
out ways to make money but we can’t lose
it
we can’t lose a shredder reputation
because you don’t get it back and you
can I said 37 minutes but you can lose
it a lot faster than that you can lose
it in five minutes in rule number five
the last one before a very special bonus
clip is invest in productive assets the
real test of whether you would like it
as an investment is whether you would be
happy if it never got quoted again and
just in terms of what the asset did for
you but that doesn’t I would say this
about gold if you took all the gold in
the world
it would it would roughly make a cube 67
feet on a side so if you took all the
gold in the world we could have a cube
that went down there 67 feet 67 feet
high and that would be the whole thing
now for that same cube of gold it would
be worth at today’s market prices about
seven trillion dollars that’s probably
about a third of the value of all the
stocks in the United States so you have
a choice of owning a third of all the
stocks in the United States or you’re
gonna have a choice of owning a little
block of gold which can’t do anything
but kind of shine there and make you
feel like Midas or Croesus or something
of the sort
now for seven trillion dollars there are
roughly a billion farm acres of farmland
in the United States they’re valued at
about two and a half trillion dollars
it’s about half the continental United
States this farmland you could have all
the farmland in the United States you
could have about seven Exxon Mobil’s
and you could have a trillion dollars of
walking-around money
and if you offered me the choice of
looking at some 67 foot cube of gold and
looking at it all day you know font
fondling it occasionally you know and
then saying you know do something for me
and it says I don’t do anything I just
stand here and look pretty and and the
alternative to that was they have all
the farmland of the country everything
cotton corn soybeans seven Exxon Mobil’s
just think of that and a trillion
dollars of walking-around money I you
know maybe call me crazy but haha I’ll
take the farmland that the Exxon Mobil’s
I’ve got a special bonus cup from Warren
Buffett on how to stick to your area of
expertise that I really think you could
enjoy but before that it’s time for the
three point landing questions let’s go
from just watching a video to taking
action here we go number one
what productive assets are you going to
start investing in number two how will
you improve your understanding of
accounting this week and number three
what’s the reputation you want to be
known I don’t need to be in Washington
to figure out what the Washington Post
newspaper is worth and I don’t need to
be in New York to figure out what some
other company is work that’s it’s it’s
simply it’s an intellectual process and
unless the most static there is in that
election process really the better off
you are what is the intellectual process
the intellectual processes is defining
your level defining your area of
competence and valuing businesses and
then within that area of competence
finding whatever sells at the cheapest
price in relation to value and there are
all kinds of things I’m not competent to
value
there are a few that I’m competent to
value okay have you ever bought a
technology company no I really haven’t
in 30 years of investing not one I
haven’t understood any of my so you
haven’t ever boned for example IBM
whenever on IBM marv a company I made a
sensational company but I haven’t known
IBM and so here is this technological
revolution going on and you’re not gonna
participate past me is that all right
with you it’s okay with me I don’t have
to make money in every game I mean I
don’t know what cocoa beans are gonna do
I don’t know I there all kinds of things
I don’t know about and that may be too
bad but you know why should I know all
about them having worked that hard on
them in securities business you
literally every day have thousands of
the major American corporations offered
you at a price and a price that changes
daily and you don’t have to make any
decisions you have to make that nothing
is forced upon you so you there are no
called strikes in the business the
pitcher just stands there and throws
balls at you and if you’re playing real
baseball and it’s between the knees and
the shoulders you either swing or you
got a strike call I need to get too many
calls I knew you’re out in the
securities business you sit there and
they throw us steal a 25 and they throw
general motors at 68 and you don’t have
to swing at any of them they may be
wonderful pitches to swing at but if you
don’t know enough you don’t have to
swing and you can sit there and watch
thousands of pitches and finally you get
one right there where you want it
something that you understand and then
you swing and see if I might swing for
six months I might not swing for two
if you want more warren buffett check
out the top ten rules video I made on
him the link is right there next to me I
think you’ll enjoy it continue to
believe and I’ll see you there don’t
leave walk through life and don’t don’t
say it’s all gonna be great you know
I’ll do this and I’ll do that you know
I’m just marking time going to be older that
going to have an edge is enormous ly
important you want to get as comfortable
with that as you are with English
language it’s made me a lot of money you
don’t need tons of IQ in this business
Juanes or get a mentor
[Music]
so today let’s learn from one of the
best Warren Buffett and how to become a
okay let’s kick it off with rule number
one define your circle of competence Ted
Williams wrote a book called the science
of hitting and entity at a picture of
himself at bat and the strike zone
broken into
I think seventy seven squares then he
said if he waited for the pitch that was
really the sweet spot he would bat four
hundred and if he had to swing at
something on the lure corner he would
probably back to thirty five and an
investing I’m in a know called strike
business which is the best business you
can be in I can look at a thousand
different companies and I don’t have to
be right on every one of them or even
fifty of them so I can take the ball I
want to hit and the trick in investing
is just to sit there and watch the pitch
after pitch go by and wait for the one
right in your sweet spot and the people
are yelling swing you bum ignore them
there’s a temptation for people to act
far too frequently and stocks simply
because they’re so liquid over the years
you develop a lot of filters but I do
know when I call my circle comma so I
stay within that circle and I don’t
worry about things that are outside that
circle defining what your game is where
you’re going to have an edge it is
enormous ly important rule number two
understand accounting people ask me what
they should take in business school and
and and or even if they don’t go to
business school what they need to know
before getting in business and I tell
them you know you have to you have to
understand accounting it’s the language
of it would be it’s like being in a
foreign country without knowing the
language if you’re in business and you
don’t understand the accounting so it it
you you want to get as comfortable with
that as you are with the English
language it it’s made me a lot of money
because I I listen to what Ray Dean had
to say fifty three or four years ago and
have been able to understand what
I was seeing on pieces of paper what
that told me about businesses and the
limitations of what it told me about
businesses also if you want to have
confidence like Warren Buffett and
others check out my 250 for confidence
series it’s free the link is in the
description below it’s important
associated with people who are better
than yourself rule number three be a
thinker all right what do you consider
the most important quality for an
investment manager
it’s the temperamental quality not an
intellectual quality you don’t need tons
of IQ in this business I mean you have
to have enough IQ to get from here to
downtown or mall but but you do not have
to be able to play three-dimensional
chess or be in the top leagues in terms
of bridge playing or something of the
sort you need a stable personality you
need a temperament that neither derive
great pleasure from being with the crowd
or against the crowd because this is not
a business where you take polls it’s a
business where you think and then Graham
would say that you’re not right or wrong
because a thousand people agree with you
and you’re not right or wrong because a
thousand people disagree with you you’re
right because your facts in your
reasoning or right rule number four
maintain a good reputation leadership at
Berkshire really consists of taking a
bunch of people who in a baseball
analogy would be four hundred hitters
and just handing them the bat and just
telling them to get up the plate and
take a big swing there’s very little to
it beyond that one thing I do is I send
them a letter the only thing I tell them
and this letter which went out January
20th 2003 it says it’s been two and a
half years since my last memo how many
big companies have you have the managers
out there been two and a half years as
they’ve heard from the Home Office but
two and a half years since my last memo
here are a couple things to keep in mind
and number one and this is number one
every time though this doesn’t change it
won’t change two years from now or four
years from now or six years number one
we can afford to lose money even a lot
of money we cannot afford to lose
reputation even a shred of reputation
let’s be sure that everything we do in
business can be reported on the
page of a national newspaper in an
article written by an unfriendly but
intelligent reporter in many areas
including acquisitions Berkshires
results of benefited from its reputation
and we don’t want to do anything that in
any way can tarnish him last year
Berkshire was ranked by fortune as the
fourth most admired company in the world
this year we were third in the United
States they just published it
it took us 37 years to get there but we
could lose it in 37 minutes and that’s
the message I mean we you know we can
lose money it doesn’t get on nicer to
make money but we’ve got we’ll figure
out ways to make money but we can’t lose
it
we can’t lose a shredder reputation
because you don’t get it back and you
can I said 37 minutes but you can lose
it a lot faster than that you can lose
it in five minutes in rule number five
the last one before a very special bonus
clip is invest in productive assets the
real test of whether you would like it
as an investment is whether you would be
happy if it never got quoted again and
just in terms of what the asset did for
you but that doesn’t I would say this
about gold if you took all the gold in
the world
it would it would roughly make a cube 67
feet on a side so if you took all the
gold in the world we could have a cube
that went down there 67 feet 67 feet
high and that would be the whole thing
now for that same cube of gold it would
be worth at today’s market prices about
seven trillion dollars that’s probably
about a third of the value of all the
stocks in the United States so you have
a choice of owning a third of all the
stocks in the United States or you’re
gonna have a choice of owning a little
block of gold which can’t do anything
but kind of shine there and make you
feel like Midas or Croesus or something
of the sort
now for seven trillion dollars there are
roughly a billion farm acres of farmland
in the United States they’re valued at
about two and a half trillion dollars
it’s about half the continental United
States this farmland you could have all
the farmland in the United States you
could have about seven Exxon Mobil’s
and you could have a trillion dollars of
walking-around money
and if you offered me the choice of
looking at some 67 foot cube of gold and
looking at it all day you know font
fondling it occasionally you know and
then saying you know do something for me
and it says I don’t do anything I just
stand here and look pretty and and the
alternative to that was they have all
the farmland of the country everything
cotton corn soybeans seven Exxon Mobil’s
just think of that and a trillion
dollars of walking-around money I you
know maybe call me crazy but haha I’ll
take the farmland that the Exxon Mobil’s
I’ve got a special bonus cup from Warren
Buffett on how to stick to your area of
expertise that I really think you could
enjoy but before that it’s time for the
three point landing questions let’s go
from just watching a video to taking
action here we go number one
what productive assets are you going to
start investing in number two how will
you improve your understanding of
accounting this week and number three
what’s the reputation you want to be
known I don’t need to be in Washington
to figure out what the Washington Post
newspaper is worth and I don’t need to
be in New York to figure out what some
other company is work that’s it’s it’s
simply it’s an intellectual process and
unless the most static there is in that
election process really the better off
you are what is the intellectual process
the intellectual processes is defining
your level defining your area of
competence and valuing businesses and
then within that area of competence
finding whatever sells at the cheapest
price in relation to value and there are
all kinds of things I’m not competent to
value
there are a few that I’m competent to
value okay have you ever bought a
technology company no I really haven’t
in 30 years of investing not one I
haven’t understood any of my so you
haven’t ever boned for example IBM
whenever on IBM marv a company I made a
sensational company but I haven’t known
IBM and so here is this technological
revolution going on and you’re not gonna
participate past me is that all right
with you it’s okay with me I don’t have
to make money in every game I mean I
don’t know what cocoa beans are gonna do
I don’t know I there all kinds of things
I don’t know about and that may be too
bad but you know why should I know all
about them having worked that hard on
them in securities business you
literally every day have thousands of
the major American corporations offered
you at a price and a price that changes
daily and you don’t have to make any
decisions you have to make that nothing
is forced upon you so you there are no
called strikes in the business the
pitcher just stands there and throws
balls at you and if you’re playing real
baseball and it’s between the knees and
the shoulders you either swing or you
got a strike call I need to get too many
calls I knew you’re out in the
securities business you sit there and
they throw us steal a 25 and they throw
general motors at 68 and you don’t have
to swing at any of them they may be
wonderful pitches to swing at but if you
don’t know enough you don’t have to
swing and you can sit there and watch
thousands of pitches and finally you get
one right there where you want it
something that you understand and then
you swing and see if I might swing for
six months I might not swing for two
if you want more warren buffett check
out the top ten rules video I made on
him the link is right there next to me I
think you’ll enjoy it continue to
believe and I’ll see you there don’t
leave walk through life and don’t don’t
say it’s all gonna be great you know
I’ll do this and I’ll do that you know
I’m just marking time going to be older that
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