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Warren Buffett Just Wrote His Best Annual Letter

gatesnotes.com

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Re: Warren Buffett Just Wrote His Best Annual Letter

#61

Post by def_illiterate »

kriro wrote: post #32

Sounds like the successor will be a woman from the wording in the letter. First Mr. Buffett uses "he" and mentions that it's used to avoid strange sentences. When describing the ideal candidate it switches to "he or she" and and when talking about the fact that they have a successor it switches to "person". That pattern is pretty typical when talking about women but not wanting to give it away from my experience of p…

If it's the 30 year old secretary coordinating the shareholder meeting I'm quitting school and pulling a Chris McCandless.

Otherwise, going to be a very interesting thing to watch. Mr. Buffet's love of economic moats will likely help ensure that his successor will not be in a Ballmer-type position.

Re: Warren Buffett Just Wrote His Best Annual Letter

#62

Post by def_illiterate »

AndrewKemendo wrote: post #37

Our definition of coverage is pre-tax earnings/interest, not EBITDA/interest, a commonly used measure we view as seriously flawed. I would love to see a founder tell one of their investors this and watch their head explode.

Genuinely curious, wouldn't EBIT be a more conservative number than EBITDA? Not that it matters in tech, as I assume Depreciation and Amortization are almost nil.

Re: Warren Buffett Just Wrote His Best Annual Letter

#63

Post by rasur »

tootie wrote: post #39
slaxman wrote: post #19

I love Warren Buffet's quote on hiring: “Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.” Often we tend to focus too much on intelligence and too little on integrity. ht…

“I divide my officers into four classes as follows: The clever, the industrious, the lazy, and the stupid. Each officer always possesses two of these qualities. Those who are clever and industrious I appoint to the General Staff. Use can under certain circumstances be made of those who are stupid and lazy. The man who is clever and lazy qualifies for the highest leadership posts. He has the requisite nerves and the m…

He seems to miss out the combination of clever & stupid. ;)

(ok, industrious & lazy too, but...)

Re: Warren Buffett Just Wrote His Best Annual Letter

#64

Post by gweinberg »

lotsofmangos wrote: post #41
tootie wrote: post #39

Earlier quoted context omitted.

“I divide my officers into four classes as follows: The clever, the industrious, the lazy, and the stupid. Each officer always possesses two of these qualities. Those who are clever and industrious I appoint to the General Staff. Use can under certain circumstances be made of those who are stupid and lazy. The man who is clever and lazy qualifies for the highest leadership posts. He has the requisite nerves and the m…

Funny, I had read this quote attributed to Kurt von Hammerstein-Equord by Hans Magnus Enzensberger.

Probably the Matthew effect. When it doubt, attribute a quote to Kurt von Hammerstein-Equord.

Re: Warren Buffett Just Wrote His Best Annual Letter

#65

Post by tootie »

lotsofmangos wrote: post #41
tootie wrote: post #39

Earlier quoted context omitted.

“I divide my officers into four classes as follows: The clever, the industrious, the lazy, and the stupid. Each officer always possesses two of these qualities. Those who are clever and industrious I appoint to the General Staff. Use can under certain circumstances be made of those who are stupid and lazy. The man who is clever and lazy qualifies for the highest leadership posts. He has the requisite nerves and the m…

Funny, I had read this quote attributed to Kurt von Hammerstein-Equord by Hans Magnus Enzensberger.

Attribution is apparently not clear: http://quoteinvestigator.com/2014/02/28/clever-lazy/

Re: Warren Buffett Just Wrote His Best Annual Letter

#66

Post by Kalium »

slaxman wrote: post #19

I love Warren Buffet's quote on hiring: “Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you. You think about it; it’s true. If you hire somebody without [integrity], you really want them to be dumb and lazy.” Often we tend to focus too much on intelligence and too little on integrity. ht…

Looking for people with integrity is often a good way to be told to go away.

Re: Warren Buffett Just Wrote His Best Annual Letter

#67

Post by seunosewa »

foobarqux wrote: post #55
bostonpete wrote: post #42

Earlier quoted context omitted.

> Often we tend to focus too much on intelligence and > too little on integrity. Maybe because integrity is virtually impossible to objectively evaluate for a candidate who you've got limited time to assess (aside from some extreme examples perhaps). I guess you could incorporate some sort of formal integrity test [1] into your hiring process but my impression is that those are costly and controversial. Do companies…

Integrity also means different things to Warren Buffett than it does to other people. Ripping someone's face off in a business transaction is a desirable quality to Warren Buffett.

As long as you don't lie about what you're doing ...

Re: Warren Buffett Just Wrote His Best Annual Letter

#68

Post by hawkice »

AndrewKemendo wrote: post #50
MrBuddyCasino wrote: post #38

Earlier quoted context omitted.

Yes, that was indeed remarkable. The inflated valuations, the self-interest of those that get paid in those transactions - I'd love to read something as insightful as Mr. Buffet has written, only for the tech sector.

I don't think they are really comparable to be honest. If you look at the type of businesses that BH is involved in, it's things that have "book value," in other words tangible assets that can be inventoried, depreciate and are generally considered durable goods. In "Tech" the vast majority of assets are human capital and it is too "fickle" and companies are very easily supplanted for the really long game that BH pla…

Couldn't disagree more. His story about building BH into a powerhouse centered on valuing things at more than just book value (notably, See's Candy, which was one of their first amazing investments, which he was worried about purchasing for 3x net tangible assets, but notes that it was only because he wasn't yet skilled at Munger's investment style yet). One of the durable advantages he looks for is having a strong brand (as he says in the letter) -- Coke is not that atypical an investment for them.

His reason for being largely extremely-low-tech is that he loves to understand the businesses he invests in really, really well (probably his big competitive advantage), and by his own admission, he doesn't really understand tech.

Re: Warren Buffett Just Wrote His Best Annual Letter

#70

Post by ethbro »

foobarqux wrote: post #55
bostonpete wrote: post #42

Earlier quoted context omitted.

> Often we tend to focus too much on intelligence and > too little on integrity. Maybe because integrity is virtually impossible to objectively evaluate for a candidate who you've got limited time to assess (aside from some extreme examples perhaps). I guess you could incorporate some sort of formal integrity test [1] into your hiring process but my impression is that those are costly and controversial. Do companies…

Integrity also means different things to Warren Buffett than it does to other people. Ripping someone's face off in a business transaction is a desirable quality to Warren Buffett.

> Integrity also means different things to Warren Buffett than it does to other people. Ripping someone's face off in a business transaction is a desirable quality to Warren Buffett.

From the letter Gates was talking about (I've read about the 1st 1/3 of it over the last couple of days), integrity would be why Warren Buffett bought a major insurance company on a handshake and a one page document. No pre-audit. No financial review.

He trusted the guy.

In my opinion, that's the same definition of integrity everyone else uses.

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