All posts filed under “Notes

Change, Cash and Balance

I have always understood that the world changes a lot. Just because you’re doing well now doesn’t mean you should be set in your ways. It’s my habit that I am very careful with my cash flow. That I means I have the extra capital to get into another industry whenever I want to. Cash flow is the most important thing. I have this principle: in the development phase, don’t forget about stability. When there’s stability, don’t forget about development. Such a balance is very important.

– Li Ka-Shing

Curiosity

People who are curious are going to be better investors and better stewards of others’ money. If there’s no curiosity, you’re basically doing something that’s already been done by someone else.

– Henry Kravis

Magnitude Beats Frequency

As an investor, success can be defined by how much you make when you are right, less how much you lose when you are wrong. This means how often you are right or wrong does not matter very much in the end. Magnitude beats frequency.

– Josh Wolfe

Everything Is Cyclical

I think it’s essential to remember that just about everything is cyclical. There’s little I’m certain of, but these things are true: Cycles always prevail eventually. Nothing goes in one direction forever. Trees don’t grow to the sky. Few things go to zero. And there’s little that’s as dangerous for investor health as insistence on extrapolating today’s events into the future.

– Howard Marks

Being Prepared

Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. If you took our top 15 decisions out, we’d have a pretty average record.

– Charlie Munger

Diversification

If you can identify six wonderful businesses, that is all the diversification you need. And you will make a lot of money. And I can guarantee that going into the seventh one instead of putting more money into your first one is going to be a terrible mistake. Very few people have gotten rich on their seventh best idea. So I would say for anyone working with normal capital who really knows the businesses they have gone into, six is plenty, and I would probably have half of it in what I like best.

– Warren Buffett