Warren Buffett's Letter to Shareholders, (1980 年巴菲特致股東信)

Warren Buffett's Letter to Shareholders, (1980 年巴菲特致股東信)

If a fine business is selling in the market place for far less than intrinsic value, what more certain or more profitable utilization of capital can there be than significant enlargement of the interests of all owners at that bargain price? The competitive nature of corporate acquisition activity almost guarantees the payment of a full-frequently more than full price when a company buys the entire ownership of another enterprise. But the auction nature of security market often allows finely-run companies the opportunity to purchase portions of their own business at a price under 50% of that needed to acquire the same earning power through the negotiated acquisition of another enterprise.

You can’t be all things to all men, Warren Buffett's Letter to Shareholders, (1979 年巴菲特致股東信)

You can’t be all things to all men, Warrant Buffett’s Letter to Shareholders, (1979 年巴菲特致股東信)

In large part, companies obtain the shareholder constituency that they seek and deserve. If they focus their thinking and communications on short-term results or short-term stock market consequences they will, in large part, attract shareholders who focus on the same factors. And if they are cynical in their treatment of investors, eventually that cynicism is highly likely to be returned by the investment community.

Phil Fisher, a respected investor and author, once likened the policies of the corporation in attracting shareholders to those of a restaurant attracting potential customers. A restaurant could seek a given clientele-patrons of fast foods, elegant dining, oriental food, etc.-and eventually obtain an appropriate group of devotees. If the job were expertly done, that clientele, pleased with the service, menu, and price level offered, would return consistently. But the restaurant could not change its character constantly and end up with a happy and stable clientele. If the business vacillated between French cuisine and takeout chicken, the result would be a revolving door of confused and dissatisfied customers.

So it is with corporations and the shareholder constituency they seek. You can’t be all things to all men, simultaneously seeking different owners whose primary interests run from high current yield to long-term capital growth to stock market pyrotechnics, etc.

Warren Buffett's Letter to Shareholders, (1978 年巴菲特致股東信)

Warren Buffett's Letter to Shareholders, (1978 年巴菲特致股東信)

We are not concerned with whether the market quickly revalues upward securities that we believe are selling at bargain prices. In fact, we prefer just the opposite since, in most years, we expect to have funds available to be a net buyer of securities. And consistent attractive purchasing is likely to prove to be of more eventual benefit to us than any selling opportunities provided by a short-term run up in stock prices to levels at which we are unwilling to continue buying.

Warren Buffett's Letter to Shareholders (1977年巴菲特致股東信)

Most of our large stock positions are going to be held for many years and the scorecard on our investment decisions will be provided by business results over that period, and not by prices on any given day.

Just as it would be foolish to focus unduly on short-term prospects when acquiring an entire company, we think it equally unsound to become mesmerized by prospective near term earnings or recent trends in earnings when purchasing small pieces of a company; i.e., marketable common stock.

Warren Buffett's View, 避開只有價格, 沒有價值的公司

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, 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. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

Outstanding business with outstanding managements (Buffett’s Letter to Shareholders, 1989 年巴菲特致股東信)

In Fact, when we won portions of outstanding business with outstanding managements, our favorite holding period is forever.  We are just the opposite of those who hurry to sell and book profits when companies perform well but who tenaciously hang on the businesses that disappoint. Peter lynch aptly likens such behavior to cutting the flowers and watering the weeds.

We continue to concentrate our investment in a very few companies that we try to understand well. There are only a handful of businesses about which we have strong long-term convictions. Therefore, when we find such a business, we want to participate in a meaningful way.

The Rip Van Winkle Style of Investing (1989 年巴菲特致股東信)

 Because of the way the tax law works, the Rip Van Winkle style of investing that we favor-if successful-had an important mathematical edge over a more frenzied approach. Let’s look at an extreme comparison.

Imagine that Berkshires had only $1, which we put in a security that double by yearend and was then sold. Imagine further that we used the after-tax proceeds t repeat this process in each of the next 19 years, scoring a double each time. At the end of 20 years, the 34% capital gains tax that we would have paid on the profits from each sale would have delivered about $13,000 to the government and we would be left with about $25,250. Not bad. If , however, we made a single fantastic investment that itself doubled 20 times during the 20 years, our dollar would grow to $1,048,576. Were we then to cash out, we would pay a 34% tax of roughly $356,500 and be left with about $692,000.

We have not, we should stress, adopted our strategy favoring long-term investment commitments because of these mathematics.