Book of Wise Investors

“We believe that according the name investors to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic.”

Perhaps to some older generations, investing = gambling for them. That’s what you learn from in Hollywood anyway, looking at bickering screens of stock prices and talking to some people on phones at the same time. It is a mistake and a tragedy to assume that investing in stocks or any other things is equated to gambling, especially from both dramas and movies, when stories of people ended up bankrupt by playing with stock market are…

“Someone is sitting in the shade today because someone planted a tree a long time ago.”

This verse is by the Sage of Omaha but is actually similar in words and meanings to an old Chinese saying.

Advances in science and engineering depend very much on concepts and knowledge generated by previous pioneers in the respective fields. Albert Einstein once learned Newtonian Mechanics before coming up with the ideas in General and Special theory of relativity that revolutionizes the whole of Physics.

When an inventor set out to invent a certain thing, he don’t start to go about the process…

“When ideas fail, words come in very handy.”

This is actually originally by Goethe. You can see very good illustrations of this verse in the words of Lehman Brothers CEO.

The real meanings behind these words are that if your decisions result in not achieving required outcome, then there are many explanations in your head about why things don’t turn out as originally intended and it is not your fault.

When ideas fail, recognize that the ideas are not good enough or not very complete. Recognize that some concepts and data are left off your radar when making decisions regarding…

“You have to think for yourself. It always amazes me how high IQ people mindlessly imitate; I never get good ideas talking to other people. “

One does have to learn and model the success strategies of others successful in your field but beyond that, you still have to think for yourself.

The reason why giants like Lehman Brothers, Merrill Lynch, Citibank, Bear Sterns, Freddie Mac and Fannie Mae, Goldman Sachs, Bank of America and AIG collapsed, (if not of bailouts for some) is simply because the talented people working there are smart not to say something that opposes the…

“There is a huge difference between the business that grows and requires lots of capital to do so and the business that grows and doesn’t require capital.”

When you hear mutual fund companies advising to buy and hold so that can reap the almost guaranteed returns from stock markets 40 years down the road, what they did not tell you is that their so called professional money managers actively engage in short term trading so that fund A can beat fund B in annual returns.

When should you really buy and hold on for a long time, almost forever?

It…

“There is nothing like writing to force you to think and get your thoughts straight.”

This is by far my favorite quote of Warren Buffett and by far the greatest insight from him.

Buffett has a habit of filling up at least one A4 page of paper with reasons why he wants to invest billions in this company. Thomas Edison has a habit of documenting his thoughts to help him to think, to increase his persistence.

The fact is that if you cannot articulate clearly in own words about something, that means you did not really think about…

“You want to learn from experience, but you want to learn from other people’s experience when you can.”

Which is wiser?

Screw up everything and then learn from own mistakes or observe both the failure and success stories of business and investments of others and learn from their mistakes.

While experience is a better teacher than books and professors with first class honors, it can get very expensive if you are only learning from own mistakes.

If you learn that people get burnt when buy shares during a bubble period, you don’t do the same thing yourself so as to…