Warren Buffett: Chasing Illusions: The Truth Behind Chain-Letter Stock Promotions

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In his 1968 Buffett Partnership Letter, Warren Buffett discusses the widespread financial phenomenon of chain-letter type stock promotions, where substantial amounts of money are made through various roles in the process. He describes how these activities rely on illusions created through accounting distortions and other means, leading to profitable outcomes. … Read More

Warren Buffett: Hogs, Hedge Funds & Human Flaws: The Game Behind Your Money

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In his 2016 Berkshire Hathaway Annual Letter, Warren Buffett explains that many investment professionals exploit human psychology to earn high fees, regardless of actual performance. This harms institutions like pension funds and enriches advisors. He uses an anecdote about selling livestock to illustrate how skilled storytellers, not necessarily experts, can … Read More

Warren Buffett: Toads and Princesses: Navigating the Risks of Optimistic Business Acquisitions

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In his 1981 Berkshire Hathaway Annual Letter, Warren Buffett explained why he doesn’t believe in making small commitments when it comes to total ownership or part ownership in businesses. He discusses three motivations—usually unspoken—to be, singly or in combination, the important ones in most high-premium takeovers. Here’s an excerpt from … Read More

Warren Buffett: Beyond the Numbers: Unveiling the True Value of Businesses with Intangible Assets

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In his 1983 Berkshire Hathaway Annual Letter, Warren Buffett explained why a profitable business might not be a wise acquisition. While good businesses are good places to seek acquisitions, focusing purely on operating performance without considering true acquisition cost can lead to misjudgments. Here’s an excerpt from the letter: We … Read More

Warren Buffett: The Best Investing Moves Get YAWNS, Not Applause

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In his 2008 Berkshire Hathaway Annual Letter, Warren Buffett emphasizes that seeking approval should not be the aim of investing. This mentality can be detrimental for several reasons: It clouds judgment: When seeking validation, investors might become less attuned to new information or critical analysis, potentially missing valuable opportunities or perpetuating flawed … Read More

Warren Buffett: Why Cash Trumps Stock in Acquisitions

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In his 1997 Berkshire Hathaway Annual Letter, Warren Buffett discusses his strong preference for using cash over issuing Berkshire stock in acquisitions, citing a historical pattern of stock-only mergers resulting in shareholders being worse off. The difficulty arises from the ownership of a remarkable collection of businesses, making it challenging … Read More

Warren Buffett: Forget Gold & Cash: Inflation-Proof Your Portfolio

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In his 2011 Berkshire Hathaway Annual Letter, Warren Buffett explained why he invests in productive assets (businesses, farms, real estate) over cash/currency or sterile assets (gold) during times of economic uncertainty. His reasons for preferring productive assets: Resilience against inflation: They can maintain their purchasing power by continuously producing goods and … Read More