I believe that Classics are called Classics because they are. I read WB's 1987 letter to BRK's shareholders today.
- Mr. Market can act crazy, so it's important to wait for the right opportunities
- The best businesses are those which don't have to change themselves too much over a multi-year time frame
- It's better to be prepared with a loaded gun while hunting rare elephants - liquidity more important than opportunity cost
- He wasted his time (while at the partnership) by hunting for mediocre or bad businesses at cheap prices. His preference has become excellent businesses managed by good managers
- They are not macroeconomic analysts, or technical analysts or security analysts - they are business analysts. If they don't understand it, they won't go ahead
- There is no need to churn a portfolio based on a target price being reached. As long as a well bought business (marketable securities) is run well by good managers and is making a satisfactory return on equity, is churning out good quality earnings and is not overvalued - there is no need to sell out. Example: In 1987, GEICO, Cap Cities and the Washington Post Co. had a cost price of USD 560 Mn and a Market Value of USD 2 Bn. The Earnings were approx USD 100 Mn which is a 5% yield on market value of holdings; but I believe that his philosophy was that as long as things dont get wildly overpriced, the holding wont be sold
