The Essays of Warren Buffett: Lessons for Corporate America, Third Edition

Charlie and I favor repurchases when two conditions are met: first, a company has ample funds to take care of the operational and liquidity needs of its business; second, its stock is selling at a material discount to the company’s intrinsic business value, conservatively calculated.

Wall Street welcomed this invention with

Once such an everybody’s-doing-it attitude takes hold, ethical misgivings vanish.

He still travels coach and quotes Ben Franklin

(“How much,” says the client, “is two plus two?” Replies the cooperative accountant, “What number did you have in mind?”)

Ben Graham told a story 40 years ago that illustrates why investment professionals behave as they do: An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. “You’re qualified for residence,” said St. Peter, “but, as you can see, the compound reserved for oil men is packed. There’s no way to squeeze you in.” After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, “Oil discovered in hell.” Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to that rumor after all.”

In investing, just as in baseball, to put runs on the scoreboard one must watch the playing field, not the scoreboard.

Was Ben Franklin right when he included the following folk wisdom in Poor Richard’s Almanac: “It is hard for an empty sack to stand upright.”

Do that enough, says John Medlin, the retired head of Wachovia Corp., and “you are running a chain letter in reverse.”

“Practice doesn’t make perfect; practice makes permanent.”