Read of the day: 5 Lessons From Buffett & Munger

Good post here from Market Folly on some lessons from Warren Buffett and Charlie Munger.   The lessons don’t include Buffett’s main two lessons (don’t lose money & don’t lose money), but contains some other good insights:

Via Munger:

1. Carefully watch what other investors are doing
2.  “Look at the cannibals” – look at businesses buying back huge amounts of stock
3. Carefully study spin-offs

Via Buffett:

1. Avoid leverage
2. Be patient

See the full post at Market Folly.  


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Very Serious Sam

    “1. Carefully watch what other investors are doing”

    I’ve learned from you, Cullen, that I’m a saver, not an investor :)

  • Cullen Roche

    Ha, yes. Well, Buffett and Munger are true investors in different ways. So yes, it’s very important to make that distinction!

  • Conventional Wisdumb

    They forgot: “Being Politically Connected at the highest level has the highest payoffs of any investment for a large cap business!”

    Also, “Engender envy in the wealth of others not your own.”

  • PleaseBeMoreDetailed

    What is not spoken of by many is that Warren Buffett & his partner, Charlie Munger, are bail-out/welfare Kings of the highest magnitude.

    I am not saying this in a mean spirited manner, but stating it as verifiable fact.

    Buffett would have lost an estimated 14 billion dollars on a personal level had the TARP/TALF programs not been enacted, and both Buffett and Munger have benefited greatly at the expense of U.S. taxpayers as the U.S. Treasury & Federal Reserve have provided support to socialize the losses of financial/banking entities that both Buffett and Munger have continued to own large stakes in since the financial crisis of 2008 first manifested itself.

    These two are not the shining examples nor symbols of prudent investment and free markets that the bobble heads of the financial and main stream media make them out to be, folks.

    Charlie Munger even had the hutzpa to chide the U.S. taxpayers and tell them to “suck it up” when the subject of socializing banking sector losses came up at a conference he attended, and Warren Buffett wrote an op/ed piece in the New York Times thanking “Uncle Sam” for the bailouts.

    My, how far we’ve fallen as a society in economy and cultural terms.

    Even the Oilgarchs have an unprecedented expectation of entitlement.

  • BHB

    “carefully watch what other investors are doing”. I truly thought the market was overvalued last year. Other investors weren’t putting money into equity funds but rather bond funds. Now bullish sentiment (earlier article) and large equity inflows may be a red flag as other investors are jumping in. As Marks, Grantham, Klarman etc. have said: now is a time for caution.

  • Anon

    Or just have plenty of cash & cash equivalents when everyone is desparate and badly in need of capital

  • http://None Midas II

    The Oligarchs originated entitlement. Remember the railroad builders? Talk about socialization!

  • Gary_UK

    They missed out:

    Get in the front of the queue for govt bailouts when we f&&k up.

    Leaches, fraudsters.

  • Gary_UK

    Excellent, my point was well made by many others.

    Good to see some PragCap readers not drinking the cool-aid.

  • Hans

    Midas, are we better off with these railroad kings or not?

  • Nils

    It also helps a lot to start out rich.