Source: The Hindu Businessline.
Magic kiss?What is Buffett's view about `businesses with poor economics selling at what seem to be bargain prices'? Turnarounds seldom turn, he'd say. "Poor businesses remain poor businesses regardless of the price you pay for them. The price of the stock may change, but the underlying character of the business tends to remain the same." Isn't there the power of the magic kiss that a dynamic CEO can offer? "95 per cent of the frogs they kiss remain frogs — and the 5 per cent that do turn around probably weren't frogs to begin with." The authors note that after kissing a few frogs in his life, Buffett concluded that they don't taste very good!
A section titled `analysts, advisers, brokers — follies to avoid' begins with this diktat: "Never ask a barber if you need a haircut." The rule holds true for a host of other professionals too, such as `investment bankers, management advisers, lawyers, auto mechanics, lawn-care consultants, and the like.'
What type of business should you invest in? "A business that even a fool can run, because someday a fool will." If that jolts you, here's another insight: "With enough inside information and a million dollars, you can go broke in a year." And yet another: "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." With more of such amusing, inspiring, shocking and irresistible quotes is packed The Tao of Warren Buffett, by Mary Buffett and David Clark, from Scribner (www.simonsays.com). The book dips into the insights of the iconic investor, the oracle of Omaha, `to help guide you to billionaire wealth and enlightened business management.'
To Buffettologists, the aphorisms in the book can be `akin to the teachings of a Taoist master,' notes the intro. `The more the student contemplates them, the more they reveal.' The first rule reads, `Never lose money.' The larger the money you lose, the greater the impact on your ability to earn money in the future, reminds the book. Another rule exhorts: "Never be afraid to ask for too much when selling or offer too little when buying." On this, the authors offer an important explanation: "Once negotiations begin, you can come down in your selling price or up in your buying price. But it's impossible to do the opposite." Of practical relevance is Buffett's declaration — "You can't make a good deal with a bad person." Reason: "People with integrity are predisposed to perform; people without integrity are predisposed not to perform." Thankfully, "the world is filled with enough good and honest people that doing business with the dishonest ones is pure foolishness." A related moral is that `it is easier to stay out of trouble than it is to get out of trouble.'
You may perhaps know that money does not buy happiness. Buffett adds a corollary: "Happiness does not buy you money." Another money-related rule concedes that money can, to some extent, let you be in more interesting environments. "But it can't change how many people love you or how healthy you are." One source of misery with the riches is the worry about passing it on to the next generation. No, don't, Buffett would advise. Because, according to him, "Children who inherit great wealth tend to do nothing with their lives." A country prospers better if society is a meritocracy, with people earning what they get, he believes.
To Buffettologists, the aphorisms in the book can be `akin to the teachings of a Taoist master,' notes the intro. `The more the student contemplates them, the more they reveal.' The first rule reads, `Never lose money.' The larger the money you lose, the greater the impact on your ability to earn money in the future, reminds the book. Another rule exhorts: "Never be afraid to ask for too much when selling or offer too little when buying." On this, the authors offer an important explanation: "Once negotiations begin, you can come down in your selling price or up in your buying price. But it's impossible to do the opposite." Of practical relevance is Buffett's declaration — "You can't make a good deal with a bad person." Reason: "People with integrity are predisposed to perform; people without integrity are predisposed not to perform." Thankfully, "the world is filled with enough good and honest people that doing business with the dishonest ones is pure foolishness." A related moral is that `it is easier to stay out of trouble than it is to get out of trouble.'
You may perhaps know that money does not buy happiness. Buffett adds a corollary: "Happiness does not buy you money." Another money-related rule concedes that money can, to some extent, let you be in more interesting environments. "But it can't change how many people love you or how healthy you are." One source of misery with the riches is the worry about passing it on to the next generation. No, don't, Buffett would advise. Because, according to him, "Children who inherit great wealth tend to do nothing with their lives." A country prospers better if society is a meritocracy, with people earning what they get, he believes.
Magic kiss?What is Buffett's view about `businesses with poor economics selling at what seem to be bargain prices'? Turnarounds seldom turn, he'd say. "Poor businesses remain poor businesses regardless of the price you pay for them. The price of the stock may change, but the underlying character of the business tends to remain the same." Isn't there the power of the magic kiss that a dynamic CEO can offer? "95 per cent of the frogs they kiss remain frogs — and the 5 per cent that do turn around probably weren't frogs to begin with." The authors note that after kissing a few frogs in his life, Buffett concluded that they don't taste very good!
A section titled `analysts, advisers, brokers — follies to avoid' begins with this diktat: "Never ask a barber if you need a haircut." The rule holds true for a host of other professionals too, such as `investment bankers, management advisers, lawyers, auto mechanics, lawn-care consultants, and the like.'
Fun read.
Take forecasts with a pinch of salt, counsels the book, because `forecasts usually tell us more of the forecaster than of the forecast.' Remember: "Forecasters don't have a crystal ball that they can see into the future with, but they do have mortgages that need servicing and children who need to go to college." Every profession is ultimately a conspiracy against the laity, rue the authors. "No one ever asks why, if they are so smart, do they need other people's money to get rich? Maybe they need your money because the game doesn't have anything to do with you making money off investments." An apt quote of Woody Allen stares from the pages: "A stockbroker is someone who invests other people's money until it's all gone."
Take forecasts with a pinch of salt, counsels the book, because `forecasts usually tell us more of the forecaster than of the forecast.' Remember: "Forecasters don't have a crystal ball that they can see into the future with, but they do have mortgages that need servicing and children who need to go to college." Every profession is ultimately a conspiracy against the laity, rue the authors. "No one ever asks why, if they are so smart, do they need other people's money to get rich? Maybe they need your money because the game doesn't have anything to do with you making money off investments." An apt quote of Woody Allen stares from the pages: "A stockbroker is someone who invests other people's money until it's all gone."
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