50 Letters, 750,000% Returns
"I'd be a bum on the street with a tin cup if the markets were always efficient."
"For the great majority of investors, who can – and should – invest with a multi-decade horizon, quotational declines are unimportant. Their focus should remain fixed on attaining significant gains in purchasing power over their investing lifetime."For them, a diversified equity portfolio, bought over time, will prove far less risky than Dollar-based securities [ie, cash and bonds]. If the investor, instead, fears price volatility, erroneously viewing it as a measure of risk, he may, ironically, end up doing some very risky things."Recall, if you will, the pundits who six years ago bemoaned falling stock prices and advised investing in 'safe' Treasury bills or bank certificates of deposit. People who heeded this sermon are now earning a pittance on sums they had previously expected would finance a pleasant retirement."
"Zero. This is the third time that Warren and I have seen our holdings in Berkshire Hathaway go down, top tick to bottom tick, by 50%. I think it's in the nature of long-term shareholding of the normal vicissitudes, in worldly outcomes, and in markets that the long-term holder has his quoted value of his stocks go down by, say, 50%. In fact, you can argue that if you're not willing to react with equanimity to a market price decline of 50% two or three times a century you're not fit to be a common shareholder, and you deserve the mediocre result you're going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations." [ Emphasis ours]
"Although our form is corporate, our attitude is partnership."
"I can only tell you that the secret has been out for 50 years, ever since Ben Graham and David Dodd wrote Security Analysis...yet I have seen no trend toward value investing in the 35 years that I've practised it. There seems to be some perverse human characteristic that likes to make easy things difficult."There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham and Dodd will continue to prosper."