A friend of mine sent me this photocopy of an article written by Warren Buffett in 1984: The Superinvestors of Graham-and-Doddsville (thanks @CurtisChesney). In it, Buffett highlights some of the results and process of some of his like-minded contemporaries. Note: all of this written 6 years before this chart of BRK.A going bonkers versus the S&P here: http://bit.ly/WuZnvM).
It’s a great look into some investing themes that don’t change. He says, on page 11, speaking about value investing “it is extraordinary to me that the idea of buying dollar bills for 40 cents takes immediately with people or it doesn’t take at all.” I think it is something to remember when confronted with paying 90 to 100…to 105 cents for a dollar bill.
And again on page 12, speaking about Stan Perlmeter: “But every time Perlmeter buys a stock it’s because he’s getting more for his money than he’s paying. that’s the only thing he’s thinking about. He’s not looking at quarterly earnings projections, he’s not looking at next year’s earnings, he’s not thinking about what day of the week it is, he doesn’t care what investment research from any place says, he’s not interested in price momentum, volume or anything. He’s simply asking: What is the business worth?”
And I can’t speak enough about Margin of Safety. The less margin, the greater the risk. Go read it.