Emory's Goizueta Business School and McCombs School of Business at UT Austin w/Mr. Buffett.

• Charlie and I operated mostly with 5 positions. If I were running 50-200 million, I would have 80% in 5 positions, with 25% for the largest. In 1964 I found a position I was willing to go heavier into, up to 40%. The position was American Express. In 1951 I put the bulk of my net worth into GEICO.
• Over the past 50-60 years, Charlie and I have never permanently lost more than 2% of our personal worth on a position. We’ve suffered quotational loss, 50% movements. That’s why you should never borrow money.
• Snickers has been the #1 candy bar for the past 40 years. If you gave me $1 billion to knock off Snickers, I can’t do it. That’s the test of a good business.
• To focus on what you don’t have is a terrible mistake. With the gifts all of us have, if you are unhappy, it’s your own fault.
• If you have a lot of people that would hide you, then you can feel pretty good about how you’ve lived your life. I know people on the Forbes 400 list whose children would not hide them. The most powerful force in the world is unconditional love. The more you try to give it away, the more you get it back. At an individual level, it’s important to make sure that for the people that count to you, you count to them.
• You like people who are generous, go out of their way, straight shooters.
• The philosophy either takes immediately or it doesn’t at all. The reason gets down to temperament. People want to make money fast, but it doesn’t happen that way.
• There is always some introduction of moral hazard when government decides to act in favor of the common good versus letting someone fail. I would be disinclined to second guess the Fed, they have more information and are trying to do what’s right.
• Tell me who your heroes are and I’ll tell you how you’ll turn out to be.
• What we are seeing is a huge repricing and evaluation of risk, correcting for problems of the past. I don’t know of good credit propositions that are going unfulfilled. There’s lots of cheap credit for sensible deals, which I don’t define as anything that happened over the last 12, 18 months. Comparatively, this is not a credit crunch. In 1982 the prime rate was 22%.
• We’ve made lots of mistakes, but they don’t bother me. We are in the business of making many decisions and there are bound to be mistakes.
• It just doesn’t pay to dwell on the bad things. Finding the right spouse is 90% of it. If you are lucky on health and lucky on your spouse, you are a long way home.
• I recommend an index fund for these sovereign wealth funds. It gives them exposure to the US market, but they won’t get taken by salespeople with bad deals.
• I don’t think there is much being overlooked now, but I’m forced to look at big things. In 1951, I used Moody’s and S&P manuals as my sources of information. I went through them page by page.
• It’s also important to avoid managers who use leverage. It’s the reason that investors with 160 IQs flame out.
• Behaving decent is a large part of it. I tried to be useful and visible. I gave him stock tips and kept up with him. Almost always good things come from good behavior. It’s good to have a willingness to pitch in when you aren’t going to get credit for it.
• I just naturally want to do things that make sense. I don’t care what other rich people are doing. I don’t want a 405 foot boat just because someone else has a 400 foot boat.
• My wife was responsible for bringing up the children. In my own life I did virtually no social functions or meetings that I didn’t want to do. I’ve not seen many males having to make tough choices. But women are the ones who have tough situations.

"Managing your career is like investing. The degree of difficulty does not count. So you can save yourself money and pain by getting on the right train."

Short sale Q&A from WSJ

Placing a BidOn a Short Sale
By June Fletcher
Question: We are first-time home buyers and found a beautiful house being sold as a short sale. It seems too good to be true, and our real estate agent referred to short sales as playing a game of roulette. Are the risks involved with a short sale too much to handle?

Notice that I didn't put falling in love on this list, since that's what you shouldn't do with this house. A short sale, which involves buying a house for less than the amount the seller owes the lender, can be time-consuming, frustrating, and --- if the lender refuses your offer -- ultimately unsuccessful. If the agent you've been using doesn't want to get involved, ask him or her to refer you to someone who specializes in this sort of work. You also need to hire an attorney experienced in this kind of transaction.
But when home values are dropping, like they are in many places today, and the owner hasn't built up much equity, that's not an option. So some lenders will accept less than the amount owed to avoid the hassle and expense of auctioning the house, providing the owner proves that he doesn't have other assets to make up what he owes.
Even with experienced people at your side, it pays to arm yourself with facts before you make an offer. Don't assume that the house is a bargain, since the owner may have bought the house at the peak of the housing cycle and may owe so much that he can only discount it to current market prices. Find out what comparable houses are selling for, whether a foreclosure notice has been filed for the property, who owns the loan or loans, and how much is owed -- you'll have to deal with them all.
The seller may eagerly accept your offer, but he isn't the final arbiter of the deal -- the note holders are. So make your offer contingent on the acceptance of the lender or lenders. Since the lenders want to know that you can back up your offer, include as much information as you can on your financial resources, as well as a preapproval letter from a lender.
Although the property may be advertised as-is, make sure the deal gives you the right to have and approve home and pest inspections by qualified professionals. Short sellers usually have given up maintaining their homes; you need to know what other expenses to expect.
Also, place a time limit on your offer -- since lenders will sometimes drag their feet, hoping to get a better deal. Short sales rarely take a short time to complete, but you shouldn't wait forever.

Kahlil Gibran quotes :

• I have learnt silence from the talkative, toleration from the intolerant, and kindness from the unkind; yet strange, Iam ungrateful to these teachers.



• Out of suffering have emerged the strongest souls; the most massive characters are seared with scars.
• Yes, there is a Nirvanah; it is leading your sheep to a green pasture, and in putting your child to sleep, and in writing the last line of your poem.
• An eye for an eye, and the whole world would be blind.
• And ever has it been known that love knows not its own depth until the hour of separation.
• Doubt is a pain too lonely to know that faith is his twin brother.



• Faith is an oasis in the heart which can never be reached by the caravan of thinking.



• Friendship is always a sweet responsibility, never an opportunity



• Hallow the body as a temple to comeliness and sanctify the heart as a sacrifice to love; love recompenses the adorers.



• If the other person injures you, you may forget the injury; but if you injure him you will always remember.



• If you love somebody, let them go, for if they return, they were always yours. And if they don't, they never were.



• Keep me away from the wisdom which does not cry, the philosophy which does not laugh and the greatness which does not bow before children.
• Let there be no purpose in friendship save the deepening of the spirit.
• Nor shall derision prove powerful against those who listen to humanity, for they shall live forever. Forever.
• Of life's two chief prizes, beauty and truth, I found the first in a loving heart and the second in a laborer's hand.
• Perplexity is the beginning of knowledge.
• Safeguarding the rights of others is the most noble and beautiful end of a human being.
• There are those who give with joy, and that joy is their reward.
• What is this world that is hastening me toward I know not what, viewing me with contempt?
• Wisdom ceases to be wisdom when it becomes too proud to weep, too grave to laugh, and too selfish to seek other than itself.
• Work is love made visible. And if you cannot work with love but only with distaste, it is better that you should leave your work and take alms of those who work with joy.
• Your daily life is your temple. When you enter into it take with you your all.
• Your friend is your needs answered.

Another few lines about Templeton

Templeton is described as “one of the handful of true investment greats in a field crowded with mediocrity and bloated reputations.” He believes any investor would be foolish to restrict his investments to his home country. Seek out the world’s best investments, he advises, wherever they reside. In the 1950s, he poured shareholders’ money into the German and Japanese stock markets. With the wounds of WWII still fresh, investing in Japan was about as popular with Americans then as the idea of funding the Taliban today. But as these battered economies were gradually rebuilt, his investment returns were substantial. Today he still favors the investment outlook for emerging markets, particularly China. At the height of the Internet bubble, Templeton sold short dozens of young technology companies just before their shares came out of “lock-up,” the six-month cooling off period following an IPO. He made over $80 million in a matter of weeks. He still calls it “the easiest money I ever made.”
Templeton knows what it means to be a true contrarian. “To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude… and pays the greatest reward.” Wise words for those contemplating what to do in today’s volatile markets.

Templeton quotes social reformer Henry Beecher, “No man can tell whether he is rich or poor by turning to his ledger. It is the heart that makes a man rich. He is rich according to what he is, not according to what he has.” Templeton is a great believer that true wealth doesn’t come from making money, but from fulfilling a purpose outside ourselves, whether that’s exercising our talents, raising our kids to be happy, productive adults, or contributing to our communities in some meaningful way. As Templeton is fond of saying, “Happiness pursued eludes, happiness given returns.” “We’ve made you a few dollars?” I asked.He touched my arm, smiled and said “Oh, I’ve been far too fortunate in this life for money to make much difference.” What a charming answer…

Put beautifully as always by Buffett.

TORONTO (Reuters) - But he warned that the U.S. dollar will continue to slide unless the country can rein in its yawning trade deficit -- the "biggest factor" behind the decline. Still, he said, the U.S. economy will "do very well over time."
Buffett, appeared to see irony in the fact that many of the banks who marketed complex investments which have now crashed are bearing much of the fallout.
"It's sort of a little poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end".

Buffett said that the turmoil that has rocked the U.S. economy in recent months has imbued the markets with a healthy degree of caution, while the rate-cutting response from central bankers has ensured that cheap money remains available for borrowing.
"I wouldn't quite call it a credit crunch. Funds are available," Buffett said during a question and answer session. "Money is available, and it's really quite cheap because of the lowering of rates that has taken place."
He added: "What has happened is a repricing of risk and an unavailability of what I might call 'dumb money,' of which there was plenty around a year ago."
PBTS RULES Buffett tends to favor companies with relatively simple businesses, strong management, consistent earnings, good returns on equity, and little debt.

Hilarious article in the LA times today..

Perhaps a bit too stimulated - Joel Stein
The government should not be in charge of the economy. The government is super-insecure and desperate to be liked. So when the government senses you might blame it for something -- such as the fact that you spent $1 million on a three-bedroom house, and now you owe a ridiculous $1 million for a lousy three-bedroom house -- it panics and sends you a small check in the mail. No reasonable person would give us more money after what we've done with ours. They would tell us to put some cash in the bank and stop using the AmEx to make every appliance in our house either flat or made of stainless steel, as if we were preparing to trap "Superman II" villains.

But the government doesn't want us to bank that money. It believes we will spend the money, and that will make our houses worth a lot again. We would then buy clothes at Bebe, and the person who owns Bebe would buy the crappy house I overpaid for and get me out of the financial predicament. This might soften the recession if Milton Friedman hadn't proved 50 years ago that most people base spending decisions on long-term income projections. Unless we find a new bubble to invest in we're not going to spend our way out of this recession. We got here for the same reason people always get in trouble : We got over-excited. We ignored centuries of data saying real estate is a worse investment than stocks, and instead based our investment strategy on the fact that our neighbor just sold his house for a serious ton of money. We need to prevent our government from going deeper into debt, thus further devaluing our currency. So homeowners need to accept that they're not moving into a bigger house in three years, stock owners have to learn that their portfolios are going down for a while, and large tech companies have to stop paying hundreds of millions for social networking sites that kids get sick of after a while. An empire that believes spending is a patriotic act is perilously close to its end. But at least we will have left future civilizations the invention of the 10-year interest-only adjustable-rate sub-prime mortgage.

Wonderful article in the Washington Post today by the Nickel and Dimed author.

While fortunes were being made in the time it takes to say "IPO," my $6-$8-an-hour co-workers lunched on hot dog buns because that was all they could afford and, in some cases, fretted about whether they could find a safe place to sleep.
We like to attribute our high productivity to technological advances and better education. But a revealing 2001 study by McKinsey & Co. also credited America's productivity growth to "managerial . . . innovations" and cited Wal-Mart as a model performer, meaning that our productivity also relies on fiendish schemes to extract more work for less pay. Yes, you can generate more output per apparent hour of work by falsifying time records, speeding up assembly lines, doubling workloads and cutting back on breaks. That may look good from the top, but at the middle and the bottom, it can feel a lot like pain.
The old liberal certainty was that "full employment" would create a workers' paradise, with higher wages and bargaining power for the little guy and gal. What the liberals weren't counting on was a depressed minimum wage, weak unions and a witch's brew of management strategies to hold wages and salaries down.
I could see this when I was doing research for a book on white-collar unemployment in 2004. I met laid-off people who'd been searching for a job for over a year and ended up taking low-wage work as big-box sales clerks or even janitors.

A century ago, Henry Ford realized that his company would only prosper if his own workers earned enough to buy Fords. But, too many of our employers today haven't figured out that their cruelly low wages would eventually curtail their own growth and profits.