Warren Buffett Wisdom: 26 lessons

CBinsights unpacks 26 lessons from  4 decades’ worth of Berkshire Hathaway’s shareholder letters here.

TABLE OF CONTENTS

•  Executive compensation
  • Executives should only eat what they kill
  • Don’t give your executives stock options as compensation
• Stock ownership
  • Buy stock as an owner, not a speculator
  • Don’t ignore the value of intangible assets
• Market volatility
  • Ignore short-term movements in stock prices
  • Be fearful when others are greedy, and greedy when others are fearful
  • Save your money in peacetime so you can buy more during war
• Investment strategy
  • Look for companies that reinvest their earnings into growth
  • Don’t invest in businesses that are too complex to fully understand
  • Invest in unsexy companies that build products people need
  • Stock buybacks are often the best use of corporate cash
• Value investing
  • Never invest because you think a company is a bargain
  • Don’t invest only because you expect a company to grow
  • Never use your own stock to make acquisitions
• Global economics
  • America is not in decline—it’s becoming more and more efficient
  • Current board of director incentives are broken and backwards
• Management
  • Embrace the virtue of sloth
  • Time is the friend of the wonderful business, the enemy of the mediocre
  • Complex financial instruments are dangerous liabilities
  • Investment banker incentives are usually not your incentives
• Company culture
  • Leaders should live the way they want their employees to live
  • Hire people who have no need to work again in their lives
  • Compensation committees have sent CEO pay out of control
• Debt
  • Never use borrowed money to buy stocks
  • Borrow money when it’s cheap
  • Raising debt is like playing Russian Roulette
• Links to every Berkshire Hathaway shareholder letter

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