The Essays of Warren Buffett by Warren Buffett & Lawrence Cunningham

Introduction

Governance

CEO의 역할과 지배구조

“Special attention must be paid to selecting a CEO because of three major differences Buffett identifies between CEOs and other employees.”

1. Standards for measuring a CEO’s performance are inadequate or easy to manipulate.
2. No one is senior to the CEO, so no senior person’s performance can be measured.
3. A board of directors cannot serve that senior role since relations between CEOs and boards are conventionally congenial.

CEO 및 매니지먼트와 주주의 이익을 일치시키기 위해 스톡옵션이나 이사회 권한 강화 등이 거론되지만, 모두 쉽지 않음.

“The best solution, Buffett instructs, is to take great care in identifying CEOs who will perform capably regardless of weak structural restraints.”

A simple set of commands for the CEOs at Berkshire

“To run their business as if

1. They are its sole owner
2. It is the only asset they hold
3. They can never sell or merge it for fifty years”

Investing

Against efficient market dogma

“The risk that matters is not beta or volatility, but the possibility of loss or injury from an investment.”

Absurdity of Beta

“Buffett points out the absurdity of beta by observing that “a stock that dropped very sharply compared to the market becomes ‘riskier’ at the lower price than it was at the higher price” — that is how beta measures risk.”

“The fashion of beta, according to Buffett, suffers from inattention to “a fundamental principle: It is better to be approximately right than precisely wrong.””

Long-term investment

“Long-term investment success depends not on studying betas and maintaining a diversified portfolio, but on recognizing that as an investor, one is the owner of a business. Reconfiguring a portfolio by buying and selling stocks to accommodate the desired beta-risk profile defeats long-term investment success.”

“Such “flitting from flower to flower” imposes huge transaction costs in the forms of spreads, fees, and commission, not to mention taxes. Buffett jokes that calling someone who trades actively in the market an investor “is like calling someone who repeatedly engages in one-night stands a romantic.””

“Instead of “don’t put all your eggs in one basket,” we get (…) “Put all your eggs in one basket — and watch that basket.”

Price and value

“Graham held that price is what you pay and value is what you get. These two things are rarely identical, but most people rarely notice any difference.”

“Mr. Market is moody, prone to manic swings from joy to despair. Sometimes he offers prices way higher than value; sometimes he offers prices way lower than value. The more manic-depressive he is, the greater the spread between price and value.”

Margin of safety

“This principle holds that one should not make an investment in a security unless there is a sufficient basis for believing that the price being paid is substantially lower than the value being delivered.”

“While modern finance theory enthusiasts cite market efficiency to deny there is a difference between price and value, Buffett and Graham regard it as all the difference in the world.”

“That difference also shows that the term “value investing” is a redundancy. (…) Strategies that do not employ this comparison of price and value do not amount to investing at all, but to speculation — the hope that price will rise, rather than the conviction that the price being paid is lower than the value being obtained.”

Circle of competence

“This commonsense rule instructs investors to consider investments only concerning businesses they are capable of understanding with a modicum of effort.”

Alternatives

Derivatives

“While proponents also believe that derivatives tend to reduce overall systemic risk, Buffett presciently observed that they may have the opposite effect. They are hard to value, valuations can change rapidly and they create linkages and interdependencies among financial institutions. Buffett cautioned that the combination of these factors could mean that, should a single event cause challenges in one sector, that could spread rapidly to others with a domino effect bringing devastating systemic consequences. Such was the case with the crisis of 2008.”

Common Stock

Long-term owners

“On the day Berkshire listed on the NYSE in 1988, he told “I will consider you an enormous success if the next trade in this stock is about two years from now.”

“A significant portion of corporate earnings are dissipated through frictional costs associated with trading.”

Desirable stock price

“Unlike many CEOs, who desire their company’s stock to trade at the highest possible prices in the market, Buffett prefers Berkshire stock to trade at or around in its intrinsic value. Such linkage means that business results during one period will benefit the people who owned the company during that period. Maintaining the linkage requires a shareholder group with a collective long-term, business-oriented investment philosophy, rather than a short-term, market-oriented strategy.”

Stock split & Class B stock

“Stock splits are common action in corporate America that Buffett points out disserve owner interests. Stock splits have three consequences: 1) they increase transaction costs by promoting high share turnover, 2) they attract shareholders with short-term, market oriented views who unduly focus on stock market prices; 3) as a result of both of those effects, they lead to prices that depart materially from intrinsic business value.”

“Wall Street engineers once tried to create securities that would purport to mimic Berkshire’s performance and that would be sold to people lacking an understanding of Berkshire, its business, and its investment philosophy.”

“In response, Berkshire effected a recapitalization by creating a new class of stock, called the Class B shares, and sold it to the public.”

버크셔 주식으로 움직이는 investment trust: “would have imposed costs on shareholders. If held by people who do not understand Berkshire’s business or philosophy, they would have caused spikes in Berkshire’s stock price, exacerbating deviations between price and value.”

• Value — price 괴리를 없애고, 중간 cost를 없애기 위해 Class B 발행

Capital Allocation

• Management = Long-term optimal capital allocation = creating more intrinsic value with given capital

Acquisitions

Acquisition의 조건

“Buying portions or all of businesses with excellent economic characteristics and run by managers Buffett and Munger like, trust, and admire”

“Buffett attributes high-premium takeovers outside those unusual categories to three motives of buying-managers: the thrill of an acquisition, the thrill of enhanced size, and excessive optimism about synergies.”

인수에 있어 버크셔의 엣지

“A high quality stock to pay with and a substantial amount of managerial autonomy to offer once a deal is done — both are rare in an acquiring company.”

Valuation

Intrinsic value

“the discounted value of the cash that can be taken out of a business during its remaining life. Though simple to state, calculating intrinsic value is neither easy or objective. It depends on estimation of both future cash flows and interest rate movements.”

Financial statement

“Useful financial statements must enable a user to answer three basic questions about a business: approximately how much a company is worth, its likely ability to meet its future obligations, and how good a job its mangers are doing in operating the business.”

Prologue: Owner-Related Business Principles

주식이 많이 트레이딩 되는 것이 좋지 않다

“The reasoning of managements that seek large trading activity in their shares puzzles us. In effect, such managements are saying that they want a good many of the existing clientele continually to desert them in favor of new ones.”

Owner-related principles

1. Although our form is corporate, our attitude is partnership. Charlie and I think of our shareholders as owner-partners, and of ourselves as managing partners.
2. Most of our directors have a significant portion of their net worth invested in the company. We eat our own cooking. (→ Skin in the game) (…) We want to make money only when our partners do and in exactly the same proportion. Moreover, when I do something dumb, I want you to be able to derive some solace from the fact that my financial suffering is proportional to yours.
3. Our long-term economic goal is to maximize Berksire’s average annual rate of gain in intrinsic business value on a per-share basis.
4. Our preferences would be to reach our goal by directly owning a diversified group of businesses that generate cash and consistently earn above-average returns on capital.
5. Consolidated reported earnings may reveal relatively little about our true economic performance.
6. Accounting consequences do not influence our operating or capital-allocation decisions.
7. We use debt sparingly. (…) This conservatism has penalized our results but it is the only behavior that leaves us comfortable, considering our fiduciary obligations to policyholders, lenders, and the many equity holders who have committed unusually large portions of their net worth to our care. (“To finish first, you must first finish.”)
8. A managerial “wish list” will not be filled at shareholder expense.
9. We feel noble intentions should be checked periodically against results.
10. We will issue common stock only when we receive as much in business value as we give.
11. Regardless of price, we have no interest at all in selling any good businesses that Berkshire owns.
12. We will be candid in our reporting to you. (…) In all of our communications, we try to make sure that no single shareholder gets an edge: We do not follow the usual practice of giving earnings “guidance” or other information of value to analysts or large shareholders.
13. Despite our policy of candor we will discuss our activities in marketable securities only to the extent legally required. Good investment ideas are rare, valuable and subject to competitive appropriation just as good product or business acquisition ideas are.
14. We would like each Berkshire shareholder to record a gain or loss in market value during his period of ownership that is proportional to the gain or loss in per-share intrinsic value recorded by the company during that holding period. (=As bad to be overvalued as to be undervalued approach)
15. We regularly compare the gain in Berkshire’s per-share book value to the performance of the S&P 500. Over time, we hope to outpace this yard stick. Otherwise, why do our investors need us? (…) We expect to outperform the S&P in lackluster years for the stock market and underperform then the market has a strong year.

• 버크셔는 진짜 특이한 회사다. 자본주의의 꽃인 회사로 불리고, 워렌 버핏은 자본주의의 상징적인 존재이지만, 원칙과 행동은 거의 커뮤니티 혹은 공산주의자 같은 느낌이다.
• ‘버핏처럼 투자하라’ 류의 책을 읽지 말고 그냥 버크셔 주식을 사면 되는 거 아닌가?
• Ultimate corporate hedge 같은 느낌이다. 정말 탄탄하게 성장해줄 것 같은 느낌.

I. Governance

A. Full and Fair Disclosure

CEO의 성장 예측은 위험하다

“Charlie and I think it is both deceptive and dangerous for CEOs to predict growth rates for their companies. (…) because too often these predictions lead to trouble.”

• 내부적으로 목표가 있는 건 좋음.
• 하지만 시장에 무리한 예상을 공개하고 그걸 맞추려고 하면 무리하거나 사기를 치게됨. 예를 들어 많은 기업이 연 15% 성장을 한다고 공개하는데, 역사적으로 보면 이게 말이 안됨.

“They corrode CEO behavior. Over the years, Charlie and I have observed many instances in which CEOs engaged in uneconomic operating maneuvers so that could meet earnings targets they had announced.”

B. Boards and Managers

이사의 조건

“The current cry is for “independent” directors. It is certainly true that it is desirable to have directors who think and speak independently — but they must also be business-savvy, interested and shareholder oriented.”

“In our view, based on our considerable boardroom experiences, the least independent directors are likely to be those who receive an important fraction of their annual income from the fees they receive for board service.”

뛰어난 매니저

“We’ve read management treatises that specify exactly how many people should report to any one executive, but they make little sense to us. When you have able managers of high character running businesses about which they are passionate, you can have a dozen or more reporting to you and still have time for an afternoon nap.”

“We intend to continue our practice of working only with people whom we like and admire. This policy not only maximizes our chances for good results, it also ensures us an extraordinarily good time.”

At GEICO: “Charlie and I haven’t taught Tony a thing but we have created an environment that allows him to apply all of his talents to what’s important. He does not have to devote his time or energy to board meetings, press interviews, presentations by investment bankers or talks with financial analysts.”

• 환경을 만들어주는 것. 목표를 제시하고, 어떻게 할지는 자유를 주는 것. 무엇을 해야할지는 스스로 선택하게 하는 것.
• 리서치팀도 이렇게 운영하면 좋겠다. 우리의 목표는 루다의 Expected life conversation을 늘리는 것.

C. The Anxieties of Business Change

“A good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row. Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”

D. Social Compacts

E. An Owner-Based Approach to Corporate Charity

F. A Principled Approach to Executive Pay

Returns on capital이 기준이 되어야 한다

“When returns on capital are ordinary, an earn-more-by-putting-up-more record is no great managerial achievement.”

Stock option

• 그냥 아무렇게나 한다고 “same boat”가 되지 않는다.
• 자본을 더 투입해서 매출이 늘어나는 걸로 보상을 주면 안된다. 잘 짜야 하는데 대부분 그렇게 하지 않는다. 차라리 인센티브를 주는 게 낫다.

G. Risk, Reputation and Climate Change

H. Corporate Culture

II. Investing

A. Farms, Real Estate and Stock

Fundamentals of investing

1. You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well.
2. Focus on the future productivity of the asset you are considering.
3. If you instead focus on the prospective price change of a contemplated purchase, you are speculating.
4. I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard.
5. Forming macro opinions of listening to the macro or market predictions of others is a waste of time.

Fluctuation

“It should be an enormous advantage for investors in stocks to have those wildly fluctuating valuations placed on their holdings.”

• 엄청 싸면 더 사면 되고, 엄청 비싸면 팔면 되니까.

“Owners of stocks, however, too often let the capricious and often irrational behavior of their fellow owners cause them to behave irrationally as well.”

B. Mr. Market

“He doesn’t mind being ignored. (..) Transactions are strictly at your opinion. Under these conditions, the more manic-depressive his behavior, the better for you.”

“If you aren’t certain that you understand and can value your business far better than Mr. Market you don’t belong in the game.”

“Investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace.”

“In the short run, the market is a voting machine but in the long run it is a weighing machine.”

C. Arbitrage

D. Debunking Standard Dogma (Efficient Market Theory)

“Under beta-based theory, a stock that has dropped very sharply compared to the market becomes “riskier” at the lower price than it was at the higher price.”

제대로 된 Risk 계산 방법

1. The certainty with which the long-term economic characteristics of the business can be evaluated
2. The certainty with which management can be evaluated
3. The certainty with which management can be counted on to channel the reward from the business to the shareholders
4. The purchase price of the business
5. The levels of taxation and inflation

IT주에 잘 투자하지 않는 이유

“Why should Charlie and I now think we can predict the future of other rapidly-evolving businesses? (…) Why search for a needle buried in a haystack when one is sitting in plain sight?”

Diversification

“If you are a know-something investor, able to understand business economics and to find five to ten sensibly priced companies that possess important long-term competitive advantages, conventional diversification makes no sense to you.”

“Another situation requiring wide diversification, when an investor who dest not understand the economics of specific businesses nevertheless believes it in his interest to be a long-term owner of American industry.”

E. “Value” Investing: A Redundancy

Great business

1. We can understand
2. Favorable long-term prospects
3. Operated by honest and competent people
4. Available at a very attractive price

Value investing

“Typically, it connotes the purchase of stocks having attributes such as a low ratio of price to book value, a low price-earnings ratio, or a high dividend yield. Unfortunately, such characteristics, even if they appear in combination, are far from determinative.”

F. Intelligent Investing

집중 투자가 뭐 어때서

“To suggest that this investor should sell off portions of his most successful investments simply because they have come to dominate his portfolio is akin to suggesting that the Bulls trade Michael Jordan because he has become so important to them.”

선택

“You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundries, however, is vital.”

유지

”If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”

G. Cigar Butts and the Institutional Imperative

쉬운 문제를 풀자

“After 25 years of buying and supervising a great variety of businesses, Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them.

H. Life, Debt and Swoons

버핏이 돈을 지키는 마인드셋

“We have promised total security, whatever comes: financial panics, stock-exchange closures or even domestic nuclear, chemical or biological attacks.”

“Whatever comes, Berkshire will have the net worth, the earnings streams and the liquidity to handle the problem with ease. Any other approach is dangerous.”

“Over the years, a number of very smart people have learned the hard way that a long string of impressive numbers multiplied by a single zero always equals zero.”

• 이런 마인드로 돈을 지키는 거라면

Leverage

“Leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices.”

“More money has been lost reaching for yield than at the point of a gun.”

버크셔 주식도 수개월~수년간 -50~60%를 찍은 적이 있음: “This table offers the strongest argument I can muster against ever using borrowed money to own stocks.”

III. Alternatives

A. Surveying the Field

• 어떤 게 있나 알아보자: money-market funds, bonds, mortgages, bank deposits..

Cash 가치의 위험성

“Even in the U.S., the dollar has fallen a staggering 86% in value since 1965. (…) It takes no less than $7 to buy what $1 did a that time.”

• U.S. Treasury가 평균 연 5.7%였는데 좋아보이지만, 세금과 인플레이션 생각하면 제로임.

금

• 금은 아무것도 생산하지 않는데 왜 삼? 농장 사면 아웃풋이 계속 늘어나는데?

“Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper, people will be willing to exchange a couple of minutes of their daily labor for Coca-Cola or some See’s peanut brittle.”

• 주식이 가장 안전하다

B. Junk Bonds and the Dagger Thesis

가격이 떨어지는 게 좋다

“The most common cause of low prices is pessimism — sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. IT’s optimism that is the enemy of the rational buyer.”

• 앞으로 주식의 net buyer라면 가격이 떨어지는 게 좋다.

Optionality

• 넓게 아는 것이 옵션을 만든다

Woody Allen: The advantage of open-mindedness, “I can’t understand why more people aren’t bi-sexual because it doubles your chances for a date on Saturday night.”

Debt

“The disciples of debt assured us that this collapse wouldn’t happen: Huge debt, we were told, would cause operating managers to focus their efforts as never before, much as a dagger mounted on the steering wheel of a car could be expected to make its driver proceed with intensified care. (…) But another certain consequence would be a deadly accident if the car hit even the tiniest pothole or sliver of ice.”

• 과거에 괜찮았다고 앞으로도 괜찮은 게 아니다.
• 확률적 세계관: 과거에 일어난 것이 반드시 일어난 것이 아니고, 반대도 마찬가지.

Junk bond

“Dagger-selling investment bankers pointed to the “scholarly” research of academics, which reported that over the years the higher interest rates received from low-grade bonds had more than compensated for their higher rate of default. Thus, said the friendly salesmen, a diversified portfolio of junk bonds would produce greater net returns than would a portfolio of high-grade bonds. (If history books were the key to riches, the Forbes 400 would consist of librarians.)”

“There was a flaw in the salesmen’s logic. (…) An assumption was being made that the universe of newly-minted junk bonds was identical to the universe of low-grade fallen angels and that, therefore, the default experience of the latter group was meaningful in predicting the default experience of the new issues. (That was an error similar to checking the historical death rate from Kool-Aid before drinking the version served at Jonestown.)” → 나심 탈레브 블랙 스완, true mean 개념과 매우 유사함.

“Mountains of junk bonds were sold by those who didn’t care to those who didn’t think — and there was no shortage of either.”

정크 본드 시장이 무너지고 나면 살펴봄: “We are, however, willing to look at the field, now that it is in disarray.”

C. Zero-Coupon Bonds and Ski Masks

모든 제도와 방법론은 컨텍스트와 밸런스에 따라 달라진다

“But as happens in Wall Street all too often, what the wise do in the beginning, fools do in the end.”

“No financial instrument is evil per se; it’s just that some variations have far more potential for mischief than others.”

• 예시: Zero coupon, derivatives

D. Preferred Stock

버핏과 항공사와의 관계

“I liked and admired Ed Colodny, the company’s then-CEO, and Is till do. But my analysis of USAir’s business was both superficial and wrong. I was so beguiled by the company’s long history of profitable operations, and by the protection that ownership of a senior security seemingly offered me, that I overlooked the crucial point: USAir’s reveues would increasingly feel the effects of an unregulated, fiercely competitive market whereas its cost structure was a holdover from the days wen regulation protected profits.”

E. Derivatives

파생상품의 위험성

“Under certain circumstances, though, an exogenous event that causes the receivable from Company A to go bad will also affect those from Companies B through Z. History teaches us that a crisis often causes problems to correlate in a manner undreamed of in more tranquil times.”

“When a “chain reaction” threat exists within an industry, it pays to minimize links of any kind. That’s how we conduct our reinsurance business, and it’s one reason we are exiting derivatives.”

파생상품의 가치 평가의 어려움

“When two traders execute a transaction that has several, sometimes esoteric, variables and a far-off settlement date, their respective firms must subsequently value these contracts whenever they calculate their earnings. (…) You can bet that the valuation differences — and I’m personally familiar with several that were huge — tend to be tilted in a direction favoring higher earnings at each firm.”

파생상품과 정부 개입

“Sleeping around (잡다한 회사와 파생상품 관계를 맺는 것) can actually be useful for large derivatives dealers because it assures them government aid if trouble hits. In other words, only companies having problems that an infect the entire neighborhood are certain to become a concern of the state. …) Modest incompetence simply won’t do; it’s mindboggling screw-ups that are required.”

F. Foreign Currencies and Equities

G. Home Ownership: Practice and Policy

집을 사는 이유

“Home ownership is a wonderful thing. (…) But enjoyment and utility should be the primary motives for purchase, not profit or refi possibilities.”

H. Business Partnerships

IV. Common Stock

A. Beating Costs with Indexing

중간에서 돈 빼먹는 사람들

“Particularly expensive is the recent pandemic of profit arrangements under which Helpers receive large portions of the winnings when they are smart or lucky, and leave family members with all of the losses when the Helpers are dumb or unlucky.”

“For investors as a whole, returns decrease as motion increases.”

• 차선 바꾸는 것과 비슷
• 헤지펀드 vs Index fund 내기, 무용론?

“The bottom line: When trillions of dollars are managed by Wall Streeters charing high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.”

• 그런데 보통 돈이 많이 없는 사람만 이 조언을 따르고, 돈 많은 사람은 안 따른다고 함

“Human behavior won’t change. Wealthy individuals, pension funds, endowments and the like will continue to feel they deserve something “Extra” in investment advice.”

B. Attracting Quality Shareholders

“At what other organization — school, club, church, etc. — do leaders cheer when members leave? (However if there were a broker whose livelihood depended upon the membership turnover in such organizations, you could be sure that there would be at least one proponent of activity, as in: “There hasn’t been much going on in Christianity for a while; maybe we should switch to Buddhism next week.”)”

C. Stock Splits and the Invisible Foot

“In large part, we feel that high quality ownership can be attracted and maintained if we consistently communicate our business and ownership philosophy — along with no other conflicting messages — and then let self selection follow its course.”

• 커뮤니케이션이 중요하다. 결국 우리가 뭘 하려고 하는지를 정확하고 지속적으로 전달하는 것이 IR의 핵심

D. Berkshire’s Dual Class: Thwarting Clones

E. Buybacks and Rationality

역시 맥락이 중요하다

바이백이 합리적일 때도 있었지만.. “Now, repurchases are all the rage, but are all too often made for an unstated and, in our view, ignoble reason: to pump or support the stock price.”

가격이 떨어지는 게 좋다

“The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly, you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day’s supply.”

• ㅋㅋㅋㅋㅋㅋ

F. Dividends and Capital Allocation

• 배당하고 싶다

V. Acquisitions

A. Bad Motives and High Prices

B. Sensible Share Repurchases Versus Greenmail

C. Leveraged Buyouts

• LBO, PE..

D. Sound Acquisition Policies

E. On Selling One’s Business

버핏의 인수 자세

• No brokers involved

“There would be no chance that a deal would be announced and that the buyer would then back off or start suggesting adjustments (with apologies, of course, and with explanation that banks, lawyers, boards of directors, etc. were to be blamed)”

“It’s only fair to tell you that you would be no richer after the sale than now.”

“Our acquisitions usually develop as referrals from other managers who have sold to us in the past.”

투자은행이 준비하는 인수 매물 소개 책자: “What’s particularly entertaining in these books is the precision with which earnings are projected for many years ahead. If you ask the author-banker, however, what his own firm will earn next month, he will go into a protective crouch and tell you that business and markets are far too uncertain for him to venture a forecast.”

Scott Fetzer를 인수하는데, 인수는 브로커 없이 했지만 계약관계 때문에 브로커에게 fee를 줘야하는 상황: “I guess the lead banker felt he should do something for his payment, so he graciously offered us a copy of the book on Scott Fetzer that his firm had prepared. With his customary tact, Charlie responded: “I’ll pay $2.5 million not to read it.”

• 주식과 비즈니스는 왜 다르게 평가하는가, 제품과 주식은 왜 다르게 평가하는가, 가격과 가치에 대해

F. The Buyer of Choice

버핏이 비즈니스를 평가하는 자세

“We don’t care about the bumps; what matters are the overall results. But the decisions of other people are sometimes affected by the near-term outlook, which can both spur sellers and temper the enthusiasm of purchasers who might otherwise compete with us.”

“We find it meaningful when an owner cares about whom he sells to.”

“When a business masterpiece has been created by a lifetime — or several lifetimes — of unstinting care and exceptional talent, it should be important to the owner what corporation is entrusted to carry on its history. Charlie and I believe Berkshire provides an almost unique home.”

• Business as an art with its care and attachment

VI. Valuation

A. Aesop and Inefficient Bush Theory

가치를 평가하는 방법

• a bird in the hand is worth two in the bush

1. How certain are you that there are indeed birds in the bush?
2. When will they emerge and how many will there be?
3. What is the risk-free interest rate?

“Using precise numbers is foolish; working with a range of possibilities is the better approach.”

불확실한 영역

“At Berkshire, we make no attempt to pick the few winners that will emerge from an ocean of unproven enterprises. We’re not smart enough to do that and we know it.”

B. Intrinsic Value, Book Value, and Market Price

C. Look-Through Earnings

D. Economic versus Accounting Goodwill

E. Owner Earnings and the Cash Flow Fallacy

F. Option Valuation

VII. Accounting

A. Satire

B. Standard Setting

C. Audit Committees

D. Adjusted Earnings

스톡옵션

“If options aren’t a form of compensation, what are they? If compensations isn’t an expense, what is it? And, if expenses shouldn’t go into the calculation of earnings, where in the world should they go?”

E. Pension Estimates and Retiree Benefits

F. Realized Events

G. Investments

VIII. Taxation

A. Distribution of the Corporate Tax Burden

• 세금이 소비자에게 전가되는 비즈니스도 있고, 회사가 흡수하는 경우도 있음

B. Taxation and Investment Philosophy

IX. History

A. The American Miracle

B. Productivity Growth

C. Tailwinds

X. Coda

A. Buffett on Berkshire Culture

재벌 구조

• 재벌구조도 잘 사용하면 장기적인 성장에 좋은 구조임

“At Berkshire, we can — without incurring taxes or much in the way of other costs — move huge sums from businesses that have limited opportunities for incremental investment to other sectors with greater promise. Moreover, we are free of historical biases created by lifelong association with a given industry and are not subject to pressures from colleagues having a vested interest in maintaining the status quo.”

• 재벌구조는 자본이동과 새로운 영역 진출에 유연한 구조
• 스캐터랩은 스핀오프가 맞는가, 아닌가?

버크셔 주가

“For those investors who plan to sell within a year or two after their purchase, I can offer no assurances, whatever the entry price. Movements of the general stock market during such abbreviated periods will likely be far more important in determining your results than the concomitant change in the intrinsic value of your Berkshire shares.”

“I believe the chance of any event causing Berkshire to experience financial problems is essentially zero.”

• 버크셔 주식의 장점: 안전함, 가격이 잘 오버밸류 되지 않음, 내재적 가치가 상승함

“We will never play financial Russian roulette with the funds you’ve entrusted to us, even if the metaphorical gun has 100 chambers and only one bullet.”

B. Munger on “The Berkshire System”

• 둘이 죽어도 버크셔 시스템의 펀더멘털한 장점은 유지될 것이다.

C. Methuselah’s Estate

Value investing

• Exceptional business: moat, management
• Reasonable price: future cash flow, margin of safety
• Long-term