The Warren Buffett CEO 3: Lou Simpson

5 basic principles for stock portfolio:

1) Think independently. “We try to be skeptical of conventional wisdom, and try to avoid the waves of irrational behavior and emotion that periodically engulf Wall Street.”

2) Invest in high-return businesses that are run for the shareholders. “Cash flow, which is more difficult to manipulate than reported earnings, is a useful additional yardstick.”

3) Pay only a reasonable price, even for an excellent business. “Even the world’s greatest business is not a good investment, if the price is too high.”

4) Invest for the long term. “Moving in and out of stocks frequently has two major disadvantages that will substantially diminish results: transaction costs and taxes. Capital will grow more rapidly if earnings compound with as few interruptions for commissions and tax bites as possible.”

5) Do not diversify excessively. “The more diversification, the more performance is likely to be average, at best.”

The Warren Buffett CEO 2: Tony Nicely

“We don’t want only to be the fairest organization that we could possibly be; we also want to be perceived as the fairest organization possible. I think that’s an even higher standard.”

“Honesty and integrity have to be set at the top of the list. But it not only has to be there, there has to be a perception that it’s there.”

Charlie Munger in Damn Right! 4

“We have gotten by trying to be consistently not stupid, instead of trying to be very intelligent. There must be some wisdom in the folk saying, ‘It’s the strong swimmers who drown.’”

“You start with the accounting figures. But that’s only the start. If you try and make judgments just based on accounting figures, you will make one terrible error after another. We’ve got to understand the accounting and the implications of the accounting and understand it thoroughly and also ask a lot of intelligent questions to enable us to judge what is really going on.”