"The things that really destroy people are 5- or 6-sigma events -- things that really aren't supposed to happen. Financial markets don't do very well at modeling this. It works until it doesn't." tilsonfunds.com/motley_berkshi…
Warren Buffett: "Charlie emphasized quality much more than I did initially. It makes more sense to buy a wonderful business at a fair price. We've changed over the years in this direction. It's not hard to watch businesses over 50 years and learn where the big money can be made."
Charlie Munger: "There are two kinds of businesses: The first earns 12%, and you can take it out at the end of the year. The second earns 12%, but all the excess cash must be reinvested -- there's never any cash. We hate that [second] kind of business."
BRK loves to reinvest or invest cash in the portfolio or on acquisitions. They pay no dividend. Buybacks are rare. What BRK wants is a reinvestment or new investment that generates new value rather than being required to maintain value that already exists. google.com/amp/s/25iq.com…
"We’re not going to put huge amounts of new capital into a lousy business. There are all kinds of wonderful new inventions that give you nothing as owners except the opportunity to spend a lot more money in a business that’s still going to be lousy." Munger
"To decide whether to retain the capital, we ask: do we create more than $1 of value for every dollar we retain? If we decide to retain and invest the capital, then we ask, what is the risk? The cost of a deal is relative to the cost of the second best deal.” WB
