From Janet Lowe's Ben Graham on Value Investing

My fave excerpts:

A true investor seldom is forced to sell his shares

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

Price will tend to fluctuate around value. The price of the security is like a stopped clock it will be right twice a day, and will be wrong all the rest of the time. The main principle in what we are saying is that securities are chronically mispriced in relation to the intrinsic value.

I have found it useful to estimate the central value of the Dow Jones industrial average by the simple method of capitalizing 10 year average earnings at twice the interest rate for high-grade bonds.

Odlum decided the way to make money was to buy companies in trouble and revamp them. Graham debated with him, saying that it was safer to buy a variety of stocks. Odlum later invested all of his money in uranium companies. they went down and he had all his eggs in one basket.

Why not invest your assets in the companies you really like? As Mae West said, ‘Too much of a good thing can be wonderful.” — Warren Buffett

From :
For most of us, it’s easier to understand a business or product we encounter on a regular basis. Investing in what you know allows you to more easily place value on the stock and stay informed on industry trends. If you don’t understand what the company does or how it makes money, how will you be able to manage your investment? (When it dips 50%, would you hold on?)

Finding companies you know is only the beginning; the circle of competence is only meant to help you stay within your arena of expertise. Once you have generated a list of the companies you understand, the next step should be conducting an analysis of the financials. Don’t worry — you don’t have to be a finance whiz to understand the basics of the stock market. Berkshire Hathaway’s investment philosophy is surprisingly simple: The company should have consistent earning power, good return on equity, capable management and be sensibly priced. Investing is less about the stock price and more about the value of the business — is it a good one?

Successful investing is more about learning over time and slowly expanding your circle of competence. For now, stick with what you know and focus on the long term.. 

From an old Economist article : 

Mr Buffett has consistently beaten the market by buying good-quality firms that he is confident he understands, typically outfits operating in a relatively stable industry. His preferred acquisitions have a hard-to-replicate advantage over their competitors—a popular brand, say, or a degree of monopoly power—that he likes to describe as a protective “moat”. He also favours firms with a strong ethical culture, and management that is interested in doing a good job, not just making money. If he gets the shares when they are cheap (just after Coca-Cola’s “new Coke” debacle, for example), all the better: but “it is far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” he says.

Warren Buffet quotes from Janet Lowe's book

Warren Buffet quotes from the Janet Lowe book

- I would take one industry at the time and develop some expertise in half a dozen. I would not take the conventional wisdom now about any industries as meaning a damn thing. I will try to think it through.

If I was looking at an insurance company or a paper company, I would put myself in the frame of mind that I had just inherited the company and it was the only asset my family was ever going to own.

 What would I do with it? What am I thinking about? What am I worried about? who are my competitors? Who are my customers? Go out and talk to them. Find out the strengths and weaknesses of this particular company versus other ones.



-Investing is reporting. I told him to imagine he had been assigned an in-depth article about his own paper. Hed ask a lot of questions And dig up a lot of facts. Hed know the Washington Post. And that's all there is to it.


-Warren talks about these discounted cash flows....I've never seen him do one Munger huffed.. It's true replied buffet if the value of the company doesn't just scream out at you, it's too close.

-You need a moat in business to protect you from the guy who is going to come along and offer your product for a penny cheaper.

-The definition of a great company is one that will be great  for 25-30 years.

-Purchasing junk bonds, we are dealing with enterprises that are far more marginal. These businesses are usually overloaded with debt and often operating in industries characterized by low returns on capital. Additionally the quality of management is sometimes questionable. Management may even have interests that Are directly counter  to does of shareholders. Therefore we expect that we will have occasional large losses in junk issues. So far however we have done reasonably well in this field.

-More than once buffet has acquired an interest in companies that face serious financial difficulties, a condition that did not alter their franchise value. "it was similar to American Express in the late 1963 when the salad oil scandal hit it. It did not put the franchise of the travelers check or the credit card. It could have ruined the balance sheet of American Express, but the answer of course was that American Express with no net worth was worth a tremendous amount of money.
And geico with no net worth was worth a tremendous amount of money, too, except it might get closed up the next day because it had no net worth ; but I was satisfied that the net worth would be there. The truth is a lot of insurance companies for the ownership of it would have put up the net worth. We would have put it up.