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BULLS & BEARS: Start the new year with quotes on investing

January 2, 2006

Once again, I have selected a few quotes on the topic of business and investing to start the new year:

"There is nothing like higher prices to attract more buyers. In department stores you mark merchandise down to move it. On Wall Street you mark it up." -Michael Metz, Oppenheimer & Co. Inc. stock analyst

"Speculative bubbles frequently occur during periods of financial innovation and deregulation ... lax regulation is another common feature ... there is a tendency for business to be managed for the immediate gratification of speculators rather than the long-term interests of investors." - Edward Chancellor, author of "Devil Take the Hindmost"

"In my long life, I have never seen a management consultant's report that didn't end with the same advice-'This problem needs more management consulting services.'" - Charlie Munger, Berkshire Hathaway vice chairman

The remaining quotes were culled from the writings of Warren Buffett, chairman of Berkshire Hathaway:

"Anything can happen in stock markets and you ought to conduct your affairs so that if the most extraordinary events happen, that you're still around to play the next day."

"I'm rational. Plenty of people have higher IQs and plenty of people work more hours, but I'm rational about things. You have to be able to control yourself; you can't let your emotions get in the way of your mind. You simply have to behave according to what is rational rather than according to what is fashionable."

"I don't read economic forecasts. I don't read the funny papers."

"Most companies define 'record' earnings as a new high in earnings per share. Since businesses customarily add from year to year to their equity base, we find nothing particularly noteworthy in a management performance combining, say, a 10-percent increase in equity capital and a 5-percent increase in earnings per share. After all, even totally dormant savings accounts will produce steadily rising interest earnings each year because of compounding."

"Restructurings-that's a fancy word for mistakes."

"A great investment opportunity occurs when a marvelous business encounters a one-time huge but solvable problem."

"There's something about smart people explaining ideas to an orangutan that makes their decision-making better."

"The really good manager does not wake up in the morning and say, 'This is the day I'm going to cut costs,' anymore than he wakes up and decides to practice breathing."

"[Great managers are] like the chicken farmer who rolls an ostrich egg into the henhouse and says, 'Ladies, this is what the competition is doing.'"

"Good managers are so scarce I can't afford the luxury of letting them go just because they've added a year to their age."

"Can you really explain to a fish what it's like to walk on land? One day on land is worth a thousand years of talking about it, and one day of running a business has exactly the same kind of value."

"We don't go into companies with the thought of effecting a lot of change. That doesn't work any better in investments than it does in marriages."



Skarbeck is managing partner of Indianapolis-based Aldebaran Capital LLC, a money-management firm. Views expressed are his own. He can be reached at 818-7827 or ken@aldebarancapital.com.
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